Well Cost Improvement Advisor
We Need a Sense of Urgency
We have to accept the fact that we Africans struggle with a sense of time. I was once invited to an independence day celebration during my time in the middle east. The events were scheduled to start at 7 pm local time. The venue was two hours drive away from where I lived in the desert. I reckoned that I would spend two hours at the events, and then drive a family member to the airport at 9.30 pm to catch an international flight. We set off at 4 pm and arrived at the venue at 615 pm. To my surprise, there was no sign of any event happening at the venue. After waiting for over two hours, just as I set to leave, that was when the first member of the organizing committee arrived! Needless to say, I missed the celebrations!
Returning home from my various sojourns overseas, I discovered that the “African Time Syndrome” had crept into the Nigerian oil and gas industry.
Examples of poor sense of time:
- on more than one occasion, I have been recruited into a project as a drilling engineer, only on resumption, to discover the rig moving to the new drilling location without the drilling program, not even a draft.
- Wellsite staff was mobilized very late, leaving them with no time to familiarise themselves with the project they were delivering.
- Long decision-making times crippling operations with high invisible lost times.
- Last-minute materials ordering often left teams to use what was available rather than what was optimal.
- Rigs were allowed to remain idle for no obvious reasons, with no consideration for the oil deferment. The produced oil has a time value of money, and the longer it is kept in the ground, the less its value.
No wonder the average non-productive time in Nigeria is 40% vs 20% elsewhere. Likewise, The average well delivery time is 85 days per well in Nigeria, compared to 15 days overseas. Drilling is a highly time-dependent operation – approximately 70% of drilling cost is time-dependent. Therefore the first step to well cost improvement is to build a culture of urgency. Here are a few actions we can implement to create that culture and improve well cost:
- Commence well-planning activities very early. The international oil companies have well delivery processes that run for a duration of 14 – 18 months. They invested their money in front-end activities. This allowed them to achieve a lower cost of field development and optimal produced volumes.
- Resource the team with the right amount of depth and breadth of experience. Unfortunately, the right human resources are very hard to find. It appears that long periods of inactivity have taken their toll on the industry. However, there are many professionals residing outside the country, who are keen to return home.
- Engender a focus on value, rather than cost. Cost focus tends to easily obscure a sense of urgency. However, a focus on value and the bigger picture helps to build the right time perspective.
- Appropriate management training, together with holding people accountable for delivery helps to establish a much-needed performance culture.
- Finally, consider outsourcing well construction through turnkey contracts. Relieve your organization of the burdens of staff management, surplus project materials management, distractions of drilling activities, and un-ending invoices reconciliation following drilling projects.
The Nigerian industry is suffering from under-investment at the moment, and it is imperative for us to optimally use available resources prudently.