Gazprom Neft Launches an Ambitious Programme to Improve Drilling Efficiency – The Technological Frontier

Sofia Zorina, Gazprom Neft
Andre Ragouline, Vice President, RLG International Inc.
Artem Borisov, Project Manager, RLG International Inc.

Being technologically advanced is not just about using modern equipment and performing complex operations. It is also about the proper corporate culture which allows the organization to operate with maximum efficiency. Soon to be launched by Gazprom Neft, the Technological Frontier initiative is aimed at achieving the best drilling results at the lowest cost.

Today, Japan’s Toyota Corporation is the world’s largest automaker, yet in the middle of the 20th century it could hardly make both ends meet trying to survive in a country devastated by the WWII. Toyota made it from near bankruptcy to ultimate prosperity thanks to developing a new production system based on the national philosophy called Kaizen*. There is a lot of material written about what Kaizen is and how you can apply it to any aspect of business and everyday life. The pragmatic West distilled the oriental philosophy into one main principle of continuous improvement of processes like manufacturing, planning and management. Today, the cycle of continuous improvement is implemented by all large serious companies into all their activities, and the oil industry is no exception.

The principle of Technological Frontier in drilling — a sort of Kaizen in oil production — began to be used massively by the industry’s largest companies in the middle of 1990s. The idea is not just to reduce drilling time through incremental improvements, but to find a perfect borehole with the best price/quality ratio and with minimum drilling time, and also to try to ensure that all boreholes are perfect.

With today’s oil prices making companies do whatever it takes to cut costs, the Technological Frontier becomes a universal tool, and what makes it even more effective is the fact that in such a capital-intensive business as drilling 70% of costs are time dependent. Therefore, reducing drilling time in most cases allows to achieve substantial cost savings, improving efficiency of the entire oil production.

Gazprom Neft sees the Technological Frontier as one of the most important components of the technological development strategy for drilling and borehole completion operations. The financial assessment shows that implementing the project at all of the company’s sites will help to save 170 billion roubles, which is three times the amount of the required investment. The approved parameters of a three-year programme that is part of the Technological Frontier initiative include reducing the borehole construction cycle by at least 20%, reducing capital costs by 15%, as well as enhancing the workplace (reducing LTIF** rate by 30%).

Making the Impossible Possible

The goals of the Technological Frontier initiative are ambitious and far reaching. Which is what makes the programme so diverse: the project aims to not just optimise the processes at the drill site, but also to get all the stakeholders involved in creating a perfect wellbore, from top executives to assistant drilling foremen.

Non-Productive Time – NPT

Traditionally, NPT has two parts: visible NPT, such as accidents, downtime and incidents. This part is on the surface, and it is a primary focus of efficiency improvement. The second part is hidden NPT. Everybody believes that a process or an operation are performed as efficiently and as fast as possible. Although closer examination reveals that efficiency can be greatly enhanced.

The entire project can be divided into several components: quality planning, choosing the right technology, performing scheduled tasks, analysis of results and making appropriate conclusions to use them in the next work cycle. As for the perfect wellbore, it is defined at the very beginning. The first thing to do is to build the so-called composite wellbore. For this end, drilling times of certain model wellbores are analysed, with all the work divided into several important operations such as assembling the drill string, running it down, drilling out the shoe track, i.e. the top of the wellbore, drilling the lower interval and bottom hole flushing of the wellbore. A composite borehole is composed of sections with minimum time: it is not simply the best borehole; it is a borehole that combines the best practices of particular operations.

Although the composite borehole is in itself a combination of the best results achieved at a certain site or during a specific type of wellbore drilling, perfection is still a long way to go. Even the best composite borehole will have non-productive time (NPT) wasted on unnecessary activities. Cutting it will make the project almost a perfect wellbore. A perfect, or theoretically possible, wellbore is not simply free from non-productive time, but the one that has achieved maximum efficiency of all operations through the use of best available technology. Obviously, in real life building a theoretically possible well can hurt the project’s bottom line: using the latest technology requires additional investments and is not always justified. However, this particular theoretical technical limit should be considered a benchmark: what is impossible today will become standard tomorrow.

NPT Identification and Solutions

With visible NPT, it’s all pretty obvious. It is on the surface. Productivity teams are created to deal with it: they solve problems systematically, identify root causes and take actions to eliminate them.

Methods of preventing hidden NPT may be different. Since traditionally it is unknown, not everyone is aware that it exists. Therefore the main problem is to identify it. And to prevent it, you need to adopt a full-fledged cycle of continuous improvements, through the cycle “Plan-Execute-Measure-Learn.”

We believe that correct organization of the entire wellbore drilling process is essential for reducing the NPT. This process should include thorough preparation of drilling programs, arranging working groups for well planning wells together with all the contractors participating in the construction project. This has to be followed  by a “Drilling on Paper” session with the drilling team to get the actual implementers on board. Field personnel often have a different vision and different ideas about what can be improved during drilling. An important part of this process is a meeting to discuss the lessons learned shortly after a wellbore is drilled to make sure that all positive and negative experiences of the drilling have been documented immediately and can be used in the preparation of a drilling program for the next wellbore.

All of these meetings (working groups, “Drilling on Paper” sessions, sessions on lessons learned, etc.) should be organized as structured forums, with the participation of all the necessary experts. The meetings should identify the main types of NPT, their root causes, as well as opportunities to improve existing operations.

It is important that all discussions are as open as possible, close to brainstorming, featuring debates and using the experience and ideas of all participants. This approach maximizes their value, paving the way for the most daring ideas and suggestions. The next step is to prioritize suggestions, appoint individuals responsible for their implementation and monitor the introduction of the Operational Rhythm tools.

I believe that businesses had better have a clear picture in terms of the NPT. Sometimes the NPT levels are lowered artificially. For example, complications can be treated either as NPT or as productive time. In the second case, the NPT is at a “comfortable” level. In the first case, with a transparent approach, you can see all the potential for reducing the NPT. Drilling a well in 50 days with the 20% NPT and trying to further reduce it is more effective that 100 days and 10% respectively.

You cannot make the Technological Frontier a reality without following some guidelines. This concept will not work, unless all of the company’s employees become interested in its success and get involved. That is why continuous interaction and prompt feedback are essential for this method. In reality, this means that the drilling programme for each particular well should be discussed with all stakeholders, from geologists to the drilling team. Only this way you can find the programme’s weaknesses, time wasters and saving opportunities.

“Today, the Technological Frontier concept is actively used by the world’s largest oil companies, such as BP, ConocoPhillips, etc., striving to maximise productivity,” says Artyom Borisov, Project Manager at RLG International Inc., a consulting company. “They believe that it is not just about setting ambitious goals, but also about developing an entire framework to achieve them. This work is based on creating a proper drilling planning system, using data for analysis and decision making, developing leadership at all levels of production, getting all the participants involved, making conclusions and using the lessons learned. Wellbore drilling is an iterative process. The idea is to make each next cycle better than the previous one.”

Implementing the Technological Frontier philosophy will require considerable effort from the company, but these efforts will pay off, as the international experience shows that drilling efficiency improves by at least 50%.

NPT Implementation and Feedback

It is very important that all participants in the construction cycle, especially production staff, receive feedback and know that their ideas and suggestions were somehow implemented in the well drilling. Also, they have to know their current “score,” their current performance (for example, number of days ahead of the Depth-Day schedule, the current NPT).

To make this feedback system work, you need to train and coach the managers: teach them how to coach the staff, point out their successes and not just failures, use KPI boards, demonstrate correct practices by example, encourage creativity. By doing so, the managers should try to inspire all the people people involved, including ordinary drilling technicians, to strive for better performance and care about the overall success of the project.

Orenburg’s Experience

Gazprom Neft began to implement the Technological Frontier initiative in 2014. Orenburg Gazprom Neft was chosen as a platform for testing the new method. Called “Drilling Processes Optimisation” (DPO), the project was launched in co-operation with the consulting company RLG International Inc. The project aims to achieve 30-35% reduction of drilling time in two years.

The optimisation is based on a number of important tools. First, it is building consistency, which in reality means step-by-step systematic preparation of drilling programmes, collection and analysis of results and making conclusions, promoting best practices. This approach allows to continuously improve processes and performance. Interaction of all participants is an important part of drilling planning. For example, every time before wellbore drilling starts, working groups meet with contractors, drilling-on-paper sessions are held with drilling teams. Thus, drilling of every wellbore is comprehensively discussed with both the stakeholders and actual implementers.

The result of the 12 months of work is reducing the drilling time by approximately 15%, which has already helped to save about 400 machine days of drilling. During this time, drilling teams have set a number of records. For example, today’s record drilling speed at Tsarichanskoye field is 11.2 days per 1,000 metres, while in 2014 is was 13.4 days per 1,000 metres.

“Our people have realised what they are capable of,” said Vladimir Nagovitsyn, Deputy General Director for Wellbore Construction of Gazprom Neft Orenburg. “We used to think that drilling a borehole in 70 days at the Tsarichanskoye field is a good result. Then it became 65 days. Today, we are thinking about making it 55 days. It took us 25.5 days to drill a wellbore at the Orenburg field, and we used to consider 30-35 days a record. I would like to note that these results are achieved during horizontal well drilling in very challenging geological conditions, with frequent and disastrous lost circulation and borehole collapsing. Still, at the Tsarichanskoye field, the entire drilling progress may be 5,500 m with a horizontal section up to 1,000 m long.

Another important part of the optimisation project was the introduction of risk assessment directly on the drill site: this assessment occurs before important operations, helping to prevent accidents and incidents.

Drive for Success

For companies, optimisation isn’t just about quick wins producing real savings. Making sure that the effect is long lasting is just as important, and if the efficiency continues to improve, it’s even better. To make continuous improvement happen naturally, you need to change the working culture in teams involved in production at all levels, from management to actual implementers. This is the main challenge in putting the Technological Frontier into action.

“Optimisation cannot just happen after the management decide so,” says Artyom Borisov. “It takes time and patience to change the culture and introduce the system of continuous improvement. The project needs to remain the centre of attention for the management. Support from the management is crucial, if we want the entire system to function. The leader must be a bearer of the improvement culture.”

There is a reason for such a wide-scope approach to seemingly quite pragmatic and reasonable goals as improving the efficiency and cutting the costs. In order for the Technological Frontier to work as it should, all the participants of the process need to be strongly motivated. And tangible benefits are just one of a number of motivational tools. For instance, passion for best results as an integral part of the working culture could make motivation much stronger and deeper.

“We are building a system of motivation, where all the participants are rewarded for achieving the same results, so they can feel as if they are in the same boat,” says Vladimir Nagovitsyn. “In drilling, reduction of wellbore construction time while meeting occupational health and safety standards could become a performance indicator in the employee incentive program. This also applies to our experts who provide planning and support for the wells, field supervisors, drill site teams and service contractors. Drilling and supervision contractors are remunerated based on performance at each particular well. Our specialists receive quarterly bonuses for good performance.”

The introduction of the Technological Frontier initiative at Gazprom Neft’s other production sites will begin this year. This is why the company is busy developing an effective incentive system for its own employees and for contractors by studying best practices and the feedback from contractors. The final concept should reflect the main idea of the Technological Frontier philosophy: it is a project promoting the culture of leadership and team work, with passion for achieving the best results.

*Kaizen is a Japanese philosophy or practice, which focuses on continuous improvement of production processes, development, support business processes and management, as well as all aspects of everyday life.

**LTIF (Lost Time Injury Frequency) is the frequency rate for accidents with lost time injuries per one million man-hours over a certain period.

The main goal of the Technological Frontier is to achieve minimum drilling time at the lowest possible cost. Our survey showed that a number of subsidiaries had potential for reducing drilling time by 30-40%. This goal becomes even more relevant after the oil price crash which had made all oil companies optimise their production costs.

At the same time, the Technological Frontier for us is not just an important method of improving drilling efficiency, with drilling being one of the major and capital-intensive activities for Gazpromneft. It is also a way to promote the culture of leadership in the company, covering everyone from drilling foremen and supervisors to functional leaders on the regional level and more senior executives.

We want to use this project to teach people think beyond their core responsibilities, consider the interests of the company as a whole, work as a team, be honest and open-minded. This is why the project includes all production levels.

By launching a pilot project in Gazpromneft Orenburg, we wanted to develop a model for implementing the Technological Frontier at a site with 25-30 drilling machines running. More than 50 supervisors and more than 20 of our office workers are undergoing drilling improvement training. The project has an ambitious goal to cut drilling time by 30% in two years.

Being halfway there after 12 months of the project shows that we are on the right track. In addition to these achievements, the Orenburg team set seven drilling records in one year.

The example of Gazpromneft Orenburg proves that the Technological Frontier philosophy has really taken hold. All the key elements of the method – like good wellbore planning, training of office staff and supervisors, getting all the stakeholders involved in the process – demonstrated their effectiveness and became part of the company’s culture.

IGOR RUSTAMOV,

Head of Drilling and Wellwork at Gazpromneft

NPT Reduction Uplift

In our experience, if the entire Technical Frontier framework is properly adopted by the facility, as well as the continuous improvement culture, then well construction cycles can be reduced by 30-40% in 1-2 years.

The project “Optimisation of Drilling Processes” in Gazpromneft Orenburg has three main targets: introduction of productivity tools, creating the operational rhythm for interaction between the participants, employee competencies development.

All productivity tools are arranged around the model of continuous improvement: “Plan – Do – Measure – Study.” In the course of this work, high-quality well planning tools are being introduced, such as the preparation of detailed drilling programmes incorporating all the necessary sections, planning-focused meetings with contractors, drilling-on-paper sessions with mandatory visits to drilling site teams, specialists having to defend their drilling programmes. The operational management stage includes the introduction of proper procedures for briefings with drilling teams and in the office, risk analysis and current performance monitoring.

In order to achieve the Technological Frontier at the planning stage, the method of theoretical peak performance (TPP) is actively used. The idea of the method is to use brainstorming techniques to get planning specialists and actual implementers (i.e. those who are best familiar with all the aspects of operations) involved in decision making to achieve better results. During TPP-sessions, the people start thinking about how to improve performance. This makes the participants really passionate with suggestions sometimes coming hours or even days after the session is over!

Creating operational rhythm means building effective communication among all the participants with a focus on the shared performance indicators. An important element of the Technological Frontier initiative is developing the competencies of the participants and improving their leadership skills. The introduction of all these tools creates a sustainable culture of continuous improvement.

ANDREY RAGULIN,

Vice President, RLG INTERNATIONAL Inc.

Published with thanks to Gazprom Neft & Sibirskaya Neft MAGAZINE