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.
Incorporating Lean Manufacturing techniques into the well delivery process drives improved performance and well quality - higher wellbore integrity and less formation impairment.
Rig operations have improved dramatically with the application of Lean Manufacturing techniques leading to significant improvement in customer satisfaction.
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.
Lean Drilling has enabled many clients to set the industry benchmark in drilling and completion performance across the globe onshore and offshore since 1995. This program delivers step change improvements in drilling / completion performance often in the order of 50% reduction in time and 30% reduction in well costs with commensurate improvements in quality and safety.
Manufactured Wells combines Lean Drilling™ and industrial manufacturing methodologies to enable repetitive well drilling / completion projects, such as shale gas and oil wells, to generate a step change improvement in schedule of well delivery on stream and reduction in costs. This program can be combined with the application of Drilling Systems Automation (link to new page) to deliver greater consistency in performance, reduced risk of schedule overruns and further enhancements in well costs.
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.
...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.
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.
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’s emphasis on rigorous planning has resulted in tangible and measurable results in the area of drilling and completing wells. A true step-change.
We have seen significant improvements in results and have adopted the principles in our planning and operations efforts.
"ELITE" - A success for GF Satellites.
The Lean Drilling program was applied to a 4400 meters development well with an 1100 meters horizontal section, which was planned to include an intelligent completion, in the Norwegian sector of the N Sea. The well was drilled in 25.4 days with an overall drilling performance of 171 meters / day compared to a historic average of 80 meters / day, using a type 2 semi-submersible unit in some 350 meters of water (left plot). The completion activity was performed in 12.9 days compared to a historic completion time of 24 days (right plot). Statoil stated in their magazine "Well Informed" that the result was even better than the Technical Limit Curve for this well. This result realized capital cost savings of US$ 7.5 million and additional value from earlier production of oil.
One of the fastest offshore gas developments.
Sangu achieved first gas only seventeen months from the Field Development approval and just over two years from the discovery by Cairn. Cairn and its co-venturers were able to remain on schedule with the field development notwithstanding the many problems caused by the difficult operating conditions that are a feature of the Bay of Bengal. This is the first project to develop and supply gas from the Bay of Bengal into the domestic market of Bangladesh. Cairn and its co-venturer Halliburton jointly undertook this project that included sub-surface modeling together with the design and construction of the wells, platform, pipeline and onshore plant. DE WARDT AND COMPANY organized this multi-discipline, multi-location team and implemented management processes that aligned the team to very aggressive goals through their Lean Hydrocarbon Development program.