Best Practices in Upstream Asset Management


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Best Practices in Upstream Asset Management

  1. 1. Best PracticesinUpstream Asset Management <br />AkaChidike K<br />Sunlink Petroleum Limited<br />
  2. 2. Upstream asset management<br />Define Asset as anything that has value or returns value<br />Upstream assets refer to:<br /><ul><li> Reservoirs, facilities,infrastructures
  3. 3. Data, technology, know-how
  4. 4. Relationships, social capital
  5. 5. “tangible” (reservoir/facility) or “intangible” (technology, relationships)assets</li></ul>Acquisition, development, operation, disposal of oil & gas assets<br />
  6. 6. VIPs & BPs<br />Tools used in planning, development and operation of O&G assets<br />Why VIPs & BPs? <br /><ul><li>Intrinsically high-risk, capital-intensive ‘ventures’
  7. 7. Multidiscipline integration and cross-functional alignment
  8. 8. Effective decision making
  9. 9. Safety, cost and operational excellence (OE)</li></ul>BPs & VIPs affects bottomline & OE thru improved decision making <br />
  10. 10. Value engineering<br />A creative and organized method for optimizing the cost and function of an asset.<br /><ul><li>Focuses on lowest life-cycle cost without reducing quality
  11. 11. Questions the opportunity/project requirements
  12. 12. Advises on the cost/benefit of those requirements
  13. 13. Proposes cost-saving alternatives</li></li></ul><li>Influence - Expenditures<br />Rapidly Decreasing Influence<br />Major Influence<br />Low Influence<br />Final Authorization<br />Influence<br />Expenditures<br />Front-end Loading<br />Best<br />Practical<br />FEL<br />D-G<br />D-G<br />D-G<br />Phase 3<br />Phase 1<br />Phase 2<br />Phase 4<br />Phase 5<br />D-G<br />Identify & Assess<br />Develop<br />Select<br />Execute<br />Operate<br />FEL - All the activities done in phases 1, 2 and 3 defining the business opportunity, alternatives and developing a good understanding of the selected alternative.<br />Front-end loading <br />
  14. 14. Peer review<br />Review of<br /><ul><li> underlying assumptions
  15. 15. methodologies
  16. 16. decision logic
  17. 17. alternatives and forward plans </li></ul>to constructively challenge and validate information (DSP).<br />Phase 5<br />Phase 4<br />Phase 1<br />Phase 3<br />Phase 2<br />DSP<br />DSP<br />DSP<br />DRB<br />DRB<br />DRB<br />Phase 2 Peer Review<br />
  18. 18. Decision Review Board (DRB)<br />DRB: a cross- multi-functional team, lead by the project sponsor who “referees” an asset development project<br /><ul><li>Communicates business strategy to the project/dev team
  19. 19. Defines the deliverables– “Decision Support Package”
  20. 20. Verifies that value drivers are aligned with business goals
  21. 21. Communicates ‘up’ with senior management on behalf of project team and informs the team of business goal
  22. 22. Endorses, recycles or kills projectteam’s recommendations</li></li></ul><li>Project Execution Plan<br />A tool for strategic planning with the purpose of maximizing probability of project success<br />Addresses What, Why, Who, When, Where & How<br />Identifies issues and action plans<br />Assures communication, consistency, coordination & control<br />Delivers high impact on project outcome<br />
  23. 23. Safety<br />Mgmt Plan<br />Security<br /> Mgmt Plan<br />Design<br /> Mgmt Plan<br />Information<br /> Mgmt Plan<br />Contracting Plan<br />Organization<br /> Plan<br />Risk<br /> Mgmt Plan<br />Quality<br /> Mgmt Plan<br />Special<br />Factors Plan<br />Materials<br />Mgmt Plan<br />Milestone<br /> Schedule<br />Environmental & Regulatory Comp. Plan<br />Cost<br /> Mgmt Plan<br />Drilling / <br />Construction<br />Mgmt Plan<br />Funding<br /> Plan<br />Schedule<br /> Mgmt Plan<br />Value Improving /<br />Best Practices Plan<br />Startup<br /> Mgmt Plan<br />Elements of PEP<br />
  24. 24. Opportunity realisastion profiles<br />Value Identification<br />Value Realization<br />Good Project Execution<br />Good Project Definition<br />A<br />B<br />VALUE<br />Poor Project Execution<br />A - Selecting the right project and doing it well<br />B - Selecting the right project and executing poorly and eroding value.<br />C - Doing the wrong project well<br />D - Doing the wrong project poorly.<br />Planning is critical in managing portfolio because this is where value is identified and created<br />C<br />Poor Project Definition<br />D<br />
  25. 25. Constructability & operations readiness<br />Optimum application of construction & operations knowledge and experience in asset planning, design, procurement and commissioning <br />Analysis/review of design by experienced construction/operations persons to reduce cost & time during construction, start and operations<br />Optimum interface between project & operation groups<br />
  26. 26. Stakeholder Management<br />Support vs. Influence Grid<br />Support><br />Influence><br />What can be done to convert high-influence, low-support stakeholders into a supportive position?<br />Stakeholder management<br /><ul><li>Stakeholders: people with vested interest in the asset and ability to influence outcomes
  27. 27. Stakeholder analysis helps to:
  28. 28. understand stakeholders’ interests, their ability and influence
  29. 29. develop strategy to deal with it</li></li></ul><li>Benchmarking<br />Comparison of our performance against ourselves and our competitors within the industry<br />Sources used:<br /><ul><li>Independent Project Analysis (IPA)
  30. 30. Internal Data
  31. 31. Rushmore Reviews
  32. 32. etc</li></li></ul><li>Look-Back and Lessons Learned<br />Review of performance in respect of plan for improvement<br />What went well?<br />What didn't go well?<br />Are there any future opportunities?<br />Conclusion /Lessons learned<br />
  33. 33. Many thanks!<br />Questions?<br /><br />