Improving unconventional shale operations

JW Marriott
Houston, Texas
June 9, 2014
Improving speed and efficiency while reducing
cost in unconventional shale plays
Integrated Activity Planning & Scheduling (IAP)

2
What keeps the c-suite awake at night?
Stakeholder
demands
Return on
capital
employed
Complexity
CEO CFO COO
Copyright © 2014 Accenture All rights reserved.

Increased
Complexity
Poor
Execution
Loss of
Control
Poor
Business
Results
Reactive
& Poor
Decisions
3
Increasing business challenges and complexity
Break out of the vicious cycle - “Execution Excellence”

4
Value chain convergence
 Increasing complexity
 Merging of physical goods with information flow
 Proliferation of available data and information
 Improving business intelligence and visualization
 Flexibility to quickly adopt and adapt to changes in the business environment
 Customizing solutions for different segments of customers and business
Digitalization is disrupting and converging traditional value chains
Financial
supply chain
Physical
supply chain
Information
supply chain
Talent
supply chain
Social media
Mobility
Analytics /
big data
Cloud
Value chain
Digital technologies
Business
Digital supply
network

Unconventional well delivery challenges
 Increasing complexity and drilling costs
 Immature organizational capability and experience
 Reactive decision making
 Lack of fully integrated activity planning and scheduling
 Inaccurate forecasting and predictability
 Supply chain and procurement inefficiencies
 Significant non productive time in the field
Field
Develop
Plan
Lease &
Title App
Staking &
Permitting
Water
Sourcing
& Mgt
Construct Drilling
Complete
& Flow
Back
Regulatory
Complete
Operate
Poor “Execution Excellence” across well delivery value chain
Well Delivery - Concept to production value chain
5
Visibility lacking
between operations
and supply chain
Organizational silos
with reactive
execution
Manual processes
non-standard and
disconnected
Individual well site
focus vs. basin
wide approach
Multiple
disconnected data
and technologies

Numerous Spreadsheets to “Single Integrated
Activity Plan” Leading to an IAP Management
SystemWhere are organizations today?
Disconnected
Spreadsheets &
Whiteboards
Master Planning &
Scheduling (Offline)
Struggling to implement fully integrated activity planning and
scheduling which is essential for safe and efficient well delivery
~75% ~20%
Integrated Business
Systems – Digitally
Enabled
<5%
Copyright © 2014 Accenture All rights reserved. 6

High performing well delivery management system
Strategy
Vision: Adopt a “Factory” style, integrated well delivery approach
7Copyright © 2014 Accenture All rights reserved.
Units
Pads
Wells
Wells
Digitally enabled
Integration of business systems

8
Seven elements leading companies are getting right
Value
Chain
Execution
Excellence
Well delivery management system
Supply chain management
Operational excellence
Organizational effectiveness
Business performance
management
Strategy deployment
p
Technology enablement
Reduce
Cycle Time
Reduce
Cost
Improve
Forecasting
Improve
Operational
Excellence

9
1. Strategy deployment
 Establish true north – WHY?
 Define strategic clear goals and objectives
 Alignment top to bottom
 Holistic basin and well development plan
 Limited organizational boundaries and
bureaucratic constraints
 Execute strategy more consistently and
reliably than competition
Without strategy, execution is aimless
Without execution, strategy is useless
=

10
2. Well delivery management system
Digitally enabled integrated activity planning and scheduling
well delivery management system
Integrated activity planning and scheduling (IAP)
Digitally enabled
Efficient
workflow
Integrated
planning
and scheduling
“What if” scenario
planning
Proactive
materials and
management
Production and
financial
forecasting
Cost
controls
Well Delivery Process

11
Overall integrated schedule for the entire basin
Inventory of ready wells with visibility of potential scheduling issues,
enabling proactive resource, supply chain, pad and rig management
Integrated with business systems

Resource planning, forecasting and cost management
 Integrated schedule with disciplined cost control
 Reporting and forecast updates at asset and corporate level
 “What if” scenarios
 Benefits
 Improved forecasting: cost/accruals, forward capital requirements,
production, OPEX and cash flow, driven by integrated well schedule
 Predictable financial performance and insight into workforce requirements
Integration of drilling schedule, cost and production forecast to
increase confidence and predictability
Digitally enabled

Current state:
Supplier 1
Supplier 2
Supplier 3
Supplier 4
Well Readiness
“Virtual Warehouse”
Consolidation Point :
 Vendor managed inventory
 Reserved inventory
 Returns
 Excess Inventory
Production Basin
Transportation Services:
 Carrier management
 Planning and execution
 Freight bill audit and pay
 Expedited services
 Milk runs
3. Supply chain management
Future state:
Pro-active “Kit”
Logistics with Managed
Transportation
13
“Our Rig Supervisors
make 700 phone calls
per well delivery”
Proactive kit logistics can reduce field supervision fire fighting to
increase focus on efficient and effective well delivery
Digitally enabled
Manual work processes

Demand planning and materials management
 Structured demand planning
 Long term contracts with Information sharing with vendors
 Benefits
 Reduce cost of goods and services
 Enable vendor managed inventory
 Standardize bill of material for well types
 Limited crisis “spot” purchases
 Minimal non productive time associated with lack of materials
“What if” Demand Planning Proactive Materials Management
Shared insight to material and services forecast with suppliers
14Copyright © 2014 Accenture All rights reserved.
Digitally enabled

15
4. Operational excellence
 State of alignment for achieving business strategies
 Holistic approach to leveraging improvement methodologies
 Focused, simplified and constantly attacking complexity
 Corporate culture committed to continuous improvement
 Achieved by design and not by coincidence
 Sustained with the right attitude, the right mindset and the right competencies
Strengthen economic and competitive position of the business
Reducing
cycle-time
for project
delivery
Reducing
productivity
losses
Reducing
variation in
supply
chain
Sustainably
lowering
costs
Maximizing
value
delivered
from portfolio
Digitally enabled

16
5. Organizational effectiveness
 Strong and visible leadership
 Deep workforce engagement
 Role clarity and accountability
 Right technical, functional skills
and capabilities
 Effective knowledge transfer
 Sharing of best practices
 Corporate culture committed to
continuous and deliberate
improvement
When leaders don’t lead,
Followers won’t follow

Asset centric organization functionally supported
Integrated Field Development Plan
Functions
Asset Team Leads
Supply Chain &
Operations
Drilling
Completions
Facilities
Pad
Construction
AssetTeam
AssetTeam
AssetTeam
AssetTeam
AssetTeam
AssetTeam
Asset
Planner
Asset
Planner
Asset
Planner
Asset
Planner
Planner
Planner
Planner
Master
Schedule
Integrated Planning & Scheduling Meetings
Asset KPI Scorecards
FunctionalKPIScorecards
Asset Plans
Functional Schedules
Breaking down organizational silos to operate as a aligned,
collaborative and integrated team with shared goals and metrics
Digitally Enabled
Lead
Planner
Asset
Planner
Asset
Planner
IntegratedTechnologyPlatform
17
Digitally Enabled

18
6. Business performance management
 Insights and information
 Visibility of performance
 Manage by exception
 Increase accountability
 Closed loop
management system
High performing organization
Alignment
Near real–time data
collection (asset,
production)
Automatic filtering
and data quality
improvement
Merge of data from
multiple sources
Transform data
into insights
Visualize the Right info
to the Right people
Right time
Digitally enabled
Asset,
planning &
scheduling
metrics
Corporate
metrics
Functional &
Individual
metrics
Key performance
Indicators and
dashboards

19
7. Technology enablement
 Connected, collaborative, contextual and capable
 Revolutionize how data is acquired and processed
 Visualization of entire well delivery value chain—end to end
 Intelligent analytics and information
 Improve speed, quality and effectiveness of decision making
Every business is a digital business
Big dataCloud
Data
velocity
Mobile
Digital
well
Digital
pipeline
Predictive
analytics
Real-time
process
visualization

Integrated activity planning & scheduling systems map
Scheduling
• Well Docs
• Locations
• Rigs
• Fracs
• Facilities
• Start-up
Cost
Management
• Program
Funding
• Budgeting
• Field Est.
• Accruals
• Actuals
Risk & Issues
Management
Rig & Activity
Management
Prepare, Pre-Spud
Docs: GeoProg,
Permits, Land, etc.
Reports &
KPI Scorecards
Workflow
Management
Reporting /
Tracking
Workflow+Doc
Management
Field Development
Plan
Workflow and
Analytics
Planning and
Scheduling
Well Info
Database
Morning
Reports
Wellsite
Management
Field Cost
Estimating
Inventories
and POs
Reporting
Accounting,
AFEs,
Accruals/Actuals
Maintenance
Management
Interface
Custom
Interface
Bottleneck Reporting
Supply / Demand
Forecasting
What-if Analysis
Supply Chain
Integrated S&OP
Process
Interface
Interface Interface Interface
ERPWell Systems
20

Oracle’s industry leading project portfolio and value chain planning products
with Accenture’s industry expertise, services and value proposition
 Leading project portfolio
and value chain
planning software suites
 Comprehensive solution
 Integrated planning
and scheduling
 What if / scenario
enablement
 Electronic workflow
 Analytics / reporting
 Easy to use
 Flexible deployment
 Leading global
management consulting,
technology and
outsourcing services
 Comprehensive solution
 Workflow optimization
 Systems Integration
and training
 Value driven culture
 Fit for purpose
 Results focused
 Change management
Summary: Jointly developed well delivery solution
KPI Dashboard / Performance
Management
Field Development Plan
Well Readiness Rig/Drilling
Schedule Mgmt
Site & Facility
Schedule Mgmt
Completions
Schedule Mgmt
Cost Management and Forecasting
Supply Chain, Material and
Logistics Planning
Integrated to
Financials, Procurement, Inventory
Change management
Digitally enabled
Integration of systems

Seven Key
Organizational Capabilities
Seven ways effective IAP drives value in well delivery
1. Strategy deployment
2. Well delivery management system
3. Supply chain management
4. Operational excellence
5. Organizational effectiveness
6. Business performance management
7. Technology enablement
Value Drivers
Reduce
Cost
Reduce
Cycle Time
Improve
Forecasting
 Labor, materials,
goods and services
 Capital efficiency
 Predictability
 HES & field productivity
Improve
Operational
Excellence
Improving capital efficiency, time to value, cost and reducing risk
22

Numerous Spreadsheets to “Single Integrated
Activity Plan” Leading to an IAP Management
SystemWhere is your organization today?
Robust integrated digitally enabled activity planning and scheduling
is essential to ensure safe, reliable and cost effective operations
Disconnected
Spreadsheets &
Whiteboards
Master Planning &
Scheduling (Offline)
~75% ~20%
Integrated Business
Systems – Digitally
Enabled
<5%

24
Final remarks
“Perfection is not attainable,
but if we chase perfection
we can catch excellence.”
Vince Lombardi
(USA NFL Football Coach)

Improving unconventional shale operations

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