“A company that makes good decisions quickly has a higher metabolism, which allows it to act on opportunities and overcome obstacles.” – Harvard Business Review
Surgical Approach to Operational Expenses
The technological advances of unconventional oil has come at the price of a never ending OPEX treadmill that we face today. E&Y reports that OPEX has been rising at an average of 10% rise YoY . When current oil prices do not give us the flexibility in our upper limits, experience shows that broad based mandates on operational expenses can often impact production performance negatively. For instance, issuing a chemicals cost reduction mandate sounds practical on paper especially when that is the highest general cost code. Except when you consider that without truly knowing costs applied to each asset, some of these wells might already have lowered their chemical costs down, and now enforcing this new blanket mandate begins to negatively penalize production of assets that have managed their chemical costs well. Wouldn’t it be far more helpful to identify the managers in the field who have contained such costs and cross-pollinate best practices across the company?
Mold Behavior in the Field Using Technology
Forward thinking Oil and Gas professionals are providing trusted, actionable insights to the field and ensuring that everyone in the organization is looking at the same information to make collaborative decisions. Grounded in transformative business processes and technology solutions, one Seven Lakes’ customer with 6,000 wells has benefited from reduction of 5-10% in most of their cost codes. Such leading companies bring onboard highly adoptable enterprise-wide technology solutions that remove data silos, improve field data capture, and ensure everyone is looking at the same data while making decisions. More specifically, we see our customers are:
1. Ensuring consistent visibility of insights across the organization, from the field to corporate. Having a detailed, deep, real time level of data allows managers to see exactly where they need to make changes in operations to increase production and reduce cost.
2. Increase confidence in decision making because the field knows the executives are viewing the same data as them, and vice versa. All levels of management must be able to see the same reports that allow them to make cuts that will optimize production in the most effective way.
3. Increase speed to decision making because they can click through to actionable invoices straight from their LOE dashboards.
4. Reduce costs by turning data insights into specific cost-cut decisions tailored for specific asset and cost center owners.
5. Maintain high performing assets by the strategic and continuous allocation/re-allocation of cost.
Self-service reports populated by multiple departments while critical to provide their functional-level details, actually misdirects executive decisions and kills company-wide objectives because of department incentives and assumptions. An Enterprise Analytics solutions is a must to drive towards a single set of metrics.
Moving from Self Serviced to Centralized BI
Wayne Eckerson (BI Expert) explains the heartache of inconsistent and siloed analytics, “While self-service BI is critical for power users, it is overkill for casual users. Many companies carry self-service BI too far, and the result is report chaos, which ultimately causes usage to drop among casual users. One large energy company embraced self-service BI tools several years ago and recently found it had 26,000 reports stored on its servers in one department alone. The reports were generated by 450 users in a department of 3,500, most of whom found the tools and maze of reports too overwhelming to use. The company is now pulling back from self-service, implementing 300 ‘standardized reports’ that encompass the majority of metrics and dimensions in the 26,000 reports, and reserving self-service BI for ad hoc requirements outside standard information views.”
Learn more by downloading “Analytics in the Oil Patch” by Shrivan Kamdar. Click Here.