Field Development Strategy for a major oil and gas company

The Challenge

Eight years into operating on a deep-water oil field, a major oil and gas company had yet to maximize the potential (in net present value) of the field. Ambitious to achieve higher revenues, the client had not yet overcome significant challenges with complex subsurface characteristics, sub par and limited human resources, a low percentage of successful drilling and completions, and a poor quality drilling rig. Decision Strategies was brought in to help determine the optimal strategy for the field development (rig type, labor, etc.) that would create the highest value.

Our Approach

Our team facilitated a collaborative framing session consisting of 20 professionals from the client team spanning various business functions to identify and categorize the underlying issues, constraints, and uncertainties of the oil field project. Through the interviews and framing sessions, it was apparent that realization of any incremental value was contingent on several unquantifiable factors such as communication and organization issues. We evaluated the quantifiable uncertainties with a model which utilized the Schlumberger software package PEEP for its fiscal and economic terms.

By bringing subject matter experts across all disciplines together, our framing process merged ideas from siloed business areas that led to the following insights:

  • An aggressive strategy proved to be the most valuable even in the face of high drilling and completion costs due to price of oil and favorable production sharing agreement terms for capital investments.
  • Contracting a rig which had batch drilling capabilities offered considerable synergies and added significant value.
  • Drilling vertical wells with smart completions proved to be the most economic allowing smaller targets to be produced.

Results

Approximately $300MM value was added in only three months. Our work was well received by the client professionals, which was followed by a second invitation to give talks to the client management team

Decision Strategies