I particularly liked the latest SPE Distinguished Lecture by Reidar Bratvold, Professor of Petroleum Investment and Decision Analysis at the University of Stavanger in Norway, about ‘Creating Value from Uncertainty and Flexibility’, because it also points to a potential solution. He suggests that there is value to be realized by modest incremental investments to provide flexibility for future decision making, in order to accommodate a wider range of possible outcomes. So, somewhat belatedly, I just ordered the 2010 textbook on “Making Good Decisions” that he co-authored with Steve Begg.
Apparently, his research team is developing Advanced Decision Analysis Tools that better reflect the reality that each branch of a decision tree leads to further decisions that will be informed by the outcome of the previous decisions. I am led to understand that greater reliance on Options Theory would also allow us to quantify the value of incremental investments to defer a greater number of decisions.
This brings me to my recurrent theme in this blog about the value of Continual Training in helping mid-career professionals and Decision Makers to have a clearer understanding of modern Decision Analysis Processes and Tools.
But, what else should those of us responsible for finding, developing, producing, processing and transporting hydrocarbons and/or for developing staff competency and Artificial Intelligence and robotics be studying or adopting in order to change our approaches and value creation efficiency?
The apt title of the JPT April 2017 Guest Editorial by Martin Craighead is: Needed: Radical Efficiencies. As the CEO of a Service Company and Technology provider, he is optimistic that performance can be improved as a result of ongoing R & D efforts into the application of:
- Nanotechnologies to modify fluid properties at the molecular level.
- Materials science, including shape-memory alloys that can change shape bi-directionally multiple times.
- 3D printing of components, potentially, including adaptable, customized drill bits.
- Data mining and the application of Artificial Intelligence to improve our simulations, decision making, and automation tools.
- Maintenance and process control systems that not only mitigate risks and reduce Non-productive Time (NPT), but also reduce the frequency and impact of HSSE incidents.
As a Petroleum Engineer, I am inclined to focus on value creation opportunities through Enhanced or Accelerated Oil and Gas Recovery with modest incremental investments that reduce the discounted unit technical costs ($/boe). At a recent SPE meeting in Calgary, Bertrand Grouix, President of Verdazo Analytics, presented a number of case histories demonstrating how tangible value was quickly created through the use of Visual Analytics for Integrated Asset Reviews that simultaneously looked at Production and Financial Performance Indicators, as well as comparing those Performance Indicators to the Plans. (This presentation will be posted on their website (http://www.verdazo.com/learn/ ) in May 2017).
Based on concepts presented by Grouix1 the following figure illustrates of how data, data governance, visual analysis (VA) technology, people and processes form an interlocking train of gears that create value through improved decision making (DA) by providing the ability to rapidly respond to things that we cannot control, such as changes in product pricing.
As a Technical Consultant and Training Workshop Facilitator for IHRDC and a long-time active member of SPE, I strongly believe that Continuous Professional Development and Cross-disciplinary Training are key enablers in effectively implementing and managing change.
The nature of that corrective change will vary. It heavily depends on the starting point, the dominant corporate culture, and the perception to personal and career risk in pilot testing new technologies and processes.
- For some, it may simply be a matter of using Peer Review Teams to temper biases and disseminate lessons learnt in one region to other projects; and/or in stream-lining an effective decision making process.
- Others projects could benefit from greater process discipline; and, especially, from a greater effort to investigate an increased number of viable alternatives.
- A reasonable data set is required as a basis of for these pre-design studies.
- Starting to look at these options too early in the process risks introducing an anchoring bias, because the team is so keen to move forward, encouraged by the apparent net present value of acceleration.
- There may be processes and technologies that we can transfer from mega-projects or manufacturing operations in other industries, as we did in the past with Total Quality Management (TQM) initiatives, for example.
- There may be things we can learn from modern military practice in terms of funding Research and Development on enabling technologies; scenario planning; logistics management; and in the delegation of tactical decision making.
- Conversely, in some companies, it may be empowering the project teams to challenge and modify unwieldy processes in order to capture more opportunities in a timely manner; and/or to avoid getting bogged down in unnecessary analysis that do not materially reduce the residual risks or uncertainty ranges.
Clearly, we all need to change; but to quote Rear Admiral Grace Hopper (1906 – 1992) “Humans are allergic to change!”, so we are going to need some help!