Lean Manufacturing Applications in Oil and Gas Businesses
Lean Manufacturing techniques provide one of the most significant methods to improve overall business performance in the upstream oil and gas business. These techniques are applicable to Drilling / Completion Operations, Production / Maintenance Operations and Facilities Construction as well as all the supplier (drilling contractors, service companies, construction companies) businesses that support these operations.
In the early 1990’s a few key individuals, including John de Wardt, recognized the value of applying Lean Manufacturing to oil and gas businesses. Early adopters created a huge value differentiation through delivering best in class performance in industry benchmark surveys around the world and manufacturing high technology equipment in the USA at lower product cost than offshore manufacturing in low cost environments.
de Wardt and Company have been a leader in integrating Lean Manufacturing techniques into upstream oil and gas operations following a landmark paper published in 1993 through the unique combination of in-depth knowledge of both Lean Manufacturing and Oilfield Operations. Clients have benefitted financially and competitively through step changes in business performance including doubling throughput, thirty percent reduction in costs, halving of cycle times and setting the benchmark performance across the industry.
Oil Companies
Incorporating Lean Manufacturing techniques into the well delivery process drives improved performance and well quality - higher wellbore integrity and less formation impairment.
Drilling Contractors
Rig operations have improved dramatically with the application of Lean Manufacturing techniques leading to significant improvement in customer satisfaction.
Service Companies
Lower cost and higher throughput have been consistently achieved in the delivery of services through regional and branch operations leading to increased profitability by applying Lean Manufacturing techniques.
History of Lean Manufacturing Origins
In the 1950’s, Taiichi Ohno, the production manager of Toyota, faced a difficult challenge. Unlike others in the automobile manufacturing industry at the time, he was forced to build a large variety of vehicles with very little inventory.
Ohno succeeded by developing new techniques to restructure workflow and involve suppliers in the process of design and manufacture. Ohno continued to improve through the development and application of other techniques.
In the late 1980’ the Massachusetts Institute of Technology undertook a major study of automobile manufacturing around the world. Through this study, they discovered that the companies which had followed Ohno’s techniques achieved double the productivity with twenty five percent less defects than their nearest competitors.
The term “lean” was coined to describe this new breed of world-class companies - simply put, they achieve more with less.
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Testimonials
His recent corporate strategy development work resulted in a set of strategic initiatives that are already beginning to deliver value only a few months into their implementation.
John’s emphasis on rigorous planning has resulted in tangible and measurable results in the area of drilling and completing wells. A true step-change.
His insight into the oil and gas industry is invaluable, and his knowledge of best practice in manufacturing has added measurable value to several of our investments.
John de Wardt provided us with a straight forward, hard driving, no nonsense approach to strategic planning that is still helping us define and achieve new business goals.
...substantial improvement in product delivery and resultant reductions of inventory. The catalyst for these new processes was the Strategic Planning workshop lead by John de Wardt.
We have seen significant improvements in results and have adopted the principles in our planning and operations efforts.
Case Studies
Excellent performance in a challenging environment
When depletion strategies for BP Amoco's Valhall field on Norway's continental shelf required the drilling of extended reach drilling (ERD) wells, problems appeared which threatened the project economics. Average trouble costs approached 35% and occasionally exceeded 50%, while some wells failed to reach their objectives. Lean Drilling was applied to a very challenging ERD well. Starting with a slot recovery that historically took 29 days being completed in 18, the well concluded 31 days (30%) ahead of past performance including a 1000m horizontal section. The challenges that were overcome to achieve this performance included active faulting in the over burden section, very tight equivalent circulating density (a narrow band between rock strength and pore pressure), lost circulation, over pressurized shale, proximity of well bores, distorted seismic date with non-homogeneous pressure depletion and flowing chalk in the reservoir.
Breakthrough reverses a deteriorating trend.
A semi submersible drilling campaign for multiple operators showed a significant deterioration in performance during the initial three wells. This caused the operator planning the fifth well to seriously reconsider the planning and execution methodology traditionally applied. They selected Lean Drilling as the tool to deliver a step change improvement in performance and reverse the deteriorating trend. The base well plan was 46 days in duration. The project team improved this to a trouble free time of 29 days as they built their detailed plan and focused on high performance. The actual result of 27 days confirmed the success of Lean Drilling in delivering the desired step change (left plot). Beyond this excellent performance, the value delivered by this exploration well in terms of the quality and breadth of data acquired exceeded all past experience.