Back to Volume 2 | Summer 2017

Adopting Production Control: The Example of Onshore Field Development

September, 2017

Abstract

Since 2010, Hess has led the oil & gas industry in the application of Project Production Control to the execution of oil & gas operations. Using methods and techniques originally developed for optimizing manufacturing and production processes to work execution in oil & gas operations, the company has achieved both significant cost reductions and increased reliability for the completion of work. Navigating the journey to adopt production control methodology presents several challenges for organizations as they learn how to collaboratively plan and control their work execution at a level of granularity typically unprecedented for them. Experts in operations management and production control can certainly teach companies what needs to be implemented at a detailed level. However, true organizational change and implementation is accomplished by employees who may not be experts in production control, but who nevertheless are sufficiently committed to delivering the ultimate potential of production control by leading their teams to successful adoption.

Several of the challenges in implementing production control in onshore field development, encountered and overcome by Hess, are described in an interview with Michelle Nehring, Sr. Engineering Technician at Hess Corp. Her perspective is that of someone charged with the responsibility for motivating and leading teams through the change necessary in Hess’ Bakken asset in North Dakota.

Keywords: Project Production Control; Onshore Field Development; PPM Adoption

Author:
Michelle Nehring, Sr. Engineering Technician, Hess Corporation, mnehring@hess.com

Editor’s Introduction

This article is in the form of an interview with Michelle Nehring, a member of a project team, and describes the challenges of PPM implementation from her perspective. It is useful to relate the article’s remarks in the context of the PPM framework illustrated in Figure 1 below.

Figure 1: Project Production Management Framework

Figure 1: Project Production Management Framework

For every application of PPM, the practitioner has a number of levers at their disposal to optimize production system performance. They need to understand the variability in the system, and can use process design to mitigate detrimental variability. To manage residual variability, they can use some combination of capacity, inventory and time buffers to meet production system objectives. Depending upon the application, some or all of the levers may be constrained, or unavailable, but others may be available for the practitioner to use. In this interview with Michelle Nehring of Hess, the company introduced PPM at the early stages of a ramp-up in activity in onshore field development. The article concentrates primarily on the changes necessary in process design to organize and control the work activities between different well planning and development functions, in order to mitigate the effects of variability.

Discussion

Tell us about yourself. Did your background help you become an expert in production control?

I don’t claim to be an expert in the implementation of production control; I am just a five-foot kid from North Dakota who was raised to never stop or take no for an answer for something you believe in. Using production control, frankly, fits that mold for me. I get it, I understand it, and now I get to teach and support others in the implementation of production control.

I am honestly a volleyball coach at heart – I coached volleyball to high school girls for 15 years. Why I stayed that long, getting beat up for trying to implement change is beyond me. It’s like what I do now. Some days I question my sanity and then I remember: I’m a kid who doesn’t take no. I also firmly believe that my history of teaching high school girls to do something they don’t understand or want to do paved the way. Heck, if I can teach them, then there isn’t a driller, electrician or manager I can’t teach.

I have been an employee of Hess Corporation for eight years. I started working as an administrative assistant in the construction function. That led to an opportunity to work with the Bakken Planning Team, specifically to support and implement production control.

What is the best way to understand the experience of the Hess journey in implementing Production Control for onshore field development?

Well, it’s worthwhile to start with the history of the Bakken Well Factory. From there I think it’s useful to look at the Bakken Well Planning function as a case study. Then, I can talk a bit about the next endeavor I’m involved in at Hess – initiating production control in a new entity in the Hess Bakken organization. As we walk through these, keep in mind there are similarities and differences between the case examples of Well Planning and the new entity.

Let us start with the Bakken Well Factory’s history. Please elaborate.

The Bakken Well Factory started off as a primary flow of work from one function to another, illustrated below in Figure 2. Work went sequentially from one function to the next and the cycle times were atrocious. When we started in 2010, there were very few simultaneous activities (SIMOPS).

Figure 2: Functions working on the Bakken Well Factory

Figure 2: Functions working on the Bakken Well Factory

David McKay joined Hess in 2010, bringing with him the desire to implement production control. He was certainly not anyone we knew personally, nor did we grasp the extent of his career achievements. Shortly after his arrival, he informed us that work activities would be increasing exponentially in a very short time. I admit it, I didn’t believe him.

And then, IT HAPPENED. He was right: our activity level blew up. We were swamped and needed to find a way to plan our work. In response, we implemented production control. We started with the implementation of SPS|PM as the software tool for production control. There was considerable change in training employees to perform the necessary collaboration so that their work activities were appropriately synchronized. They reported reliable data on tasks completed vs. tasks non-completed, which the software consolidated. That enabled us to map and track the production system for the Well Factory process, illustrated in Figure 3, which shows the Well Factory functions originally illustrated in Figure 2 aligned with a screen capture of the sequence of operations each function performed and the work-in-process that results at the end of each operation (denoted by the triangles). It provided an accurate picture of where issues in the well factory process were arising due to variability, and where further control was needed.

Figure 3: The Bakken Well Factory Process

Figure 3: The Bakken Well Factory Process

The application of production control moved the overall well factory from a state of chaos with missed production dates to a state of calm, even in an ever-changing environment. Most functions came on board and embraced the changes, except for the well planning team.

Why did the well planning team have difficulty embracing the change?

The well planning function was led by someone who felt very safe handling all the work herself. She needed to find locations, plan wells, permit the wells, build them and repeat. Sounds easy enough, right? However, because of the rapid increase in activity and growing regulations, coupled with seasonal and resource constraints, wells were moving at a snail’s pace through her function. She was managing all the work using spreadsheets during marathon meetings and with email after email.

However, Hess Leadership wanted all functions to develop standard work processes, with production controls to be implemented and used daily. Leadership also desired dashboards for visibility with work in process (WIP) and buffer targets based on demand, cycle times and known variability. Additionally, leadership was looking to managers to implement conditions of satisfaction (COS) for the handover of a well from the supplier to the customer. Finally, it was required that functions understood the quality of the handovers, meaning, were they occurring as anticipated, and if not, what were the issues?

What leadership initially received from their request, in return, was strong resistance from the well planning manager. This resistance was not out of malice and instead was related to a series of reasons that tie back to the basic human response to change. One thing we must keep in the forefront is, simply stated, change is difficult. To some, it does not come naturally to change what they are doing, what they are used to and what is comfortable. It takes understanding what is in it for them to motivate them to change. For some, the motivation is monetary gain, others are driven by positive feedback, some will strive to do more and be more, and then there are those that simply won’t change unless forced.

What were some of the objections that you heard?

The well planning manager made a series of declarations that resounded throughout the beginning of the process, such as:

  • “We don’t have extra time to map our work; we are out in the field actually DOING it.”
  • “We will spend more time planning our work than executing it. Spending all of this time planning is the real waste.”
  • “I didn’t hear anyone complaining, so our design must have been just fine.”
  • “We know what the problem is, and we’ve got a solution. If the solution doesn’t work, we will try something different.”
  • “Metrics?! We received our permits roughly on time, and the pad is ready, so we are good.”

And how did you address these objections?

The interesting piece is that production control could not only eliminate the concerns for change, it also allowed for a more efficient team for the well planning managers. We learned we needed to break each concern down to be able to move forward.

  • “We don’t have extra time to map our work; we are out in the field actually DOING it.” It is a challenge for individuals in the field to see past the work that needs to be completed. Without  understanding why the team should use standard work, they may not see the value in creating and using standard work. Answering the question of WHY helps ease the resistance.
  • “We will spend more time planning our work than executing it. Spending all of this time planning is the real waste.” It is an honest and real frustration for those working that they would now have to spend extra time planning. The thinking is that planning takes endless hours and seems like a roadblock to execution for those people who are working in the trenches. They honestly don’t feel that they have extra time to give. However, a properly coordinated and continually reviewed plan takes less effort than it takes for them to redo their spreadsheets and send an email to their distribution lists daily. Demonstrating an efficient use of planning allows individuals to be open to the change.
  • “I didn’t hear anyone complaining, so our design must have been just fine.” Have you ever had something built for you, a cabinet, a house or even a custom-ordered car? When you first got it, it looked shiny and perfect. And then you started using it. The knobs fell off or the door swung the wrong way in the bathroom, or the blinker didn’t work when you turned left. Sometimes, there is no complaining because either the customer has fixed it themselves or has learned to accept the defect. Without reflection and an agreed upon set of conditions of satisfaction with our customers, we have no way of knowing when things are not right. Working with our customers creates a cohesive environment for all teams to work toward the same goal.
  • “We know what the problem is, and we’ve got a solution. If the solution doesn’t work, we will try something different (but secretly we will just keep doing things the way we always have).” This is reminiscent of my coaching years and watching athletes struggle through trying to make their arm hit the ball straight down the line. I might even dare to say my boss has watched me work harder and not smarter to get to a solution. We have all been guilty of this. We must take a bit of a time out, step back and take an objective view of the current state, the desired state, and the gap. Taking the time to effectively problem solve using the right tools and the right people may take some effort and time, but in the end when a player would look at me as the ball hit the line out of play from the defense…well, there is no greater high for either one of us. Taking the time to find the problem and create solutions, followed by a review and adjustment of those solutions to evaluate their effectiveness, is extremely powerful.
  • “Metrics?! We received our permits roughly on time, and the pad is ready, so we are good.” Who hasn’t heard this? The notion that ‘nobody was hurt, so we are fine,’ seems to stick out as someone who is not working toward optimization. “Roughly on time” may not fit the overall schedule. Knowing what the main issues are and working through each one to eliminate the problems through the overall use of metrics allows for accountability.

How did this team change?

These comments are not unusual during an implementation of production control, or really any change. This team was not unique. What set them apart was how they decided to move forward. The manager had the option to comply or not to comply. What is important here is to distinguish what is in it for her: Did she simply need the support of someone as they worked through the changes, was she looking for monetary gain or notoriety, or would she be one that needed a proverbial headlock to move forward? No matter where the momentum comes from, it is important to find it and lock onto it to allow the change to occur. Leadership has two key roles in the change process: to be supportive and to be engaged in the process. Without one or the other, the change will either be drawn out or cease to occur. If leadership can identify the needs of their employees through the implementation of change, they will be initiating the supportive environment for change.

Once the manager started to buy in and see the benefits of production control, the well planning team started creating standard work processes that immediately identified waste in the system. Parallel and clear predecessors could be arranged so effective work could occur. The complexity of the handovers to their customer was visible, cohesive and functional.

Daily planning allowed for controlled work, resource optimization and waste elimination. Gone were the days of focusing on emailing distribution lists with ever-changing schedules. One daily meeting and a single weekly meeting took the place of marathon meetings and feverishly updating schedules with all the variability hitting the team.

As their work continued, the well planning team began creating dashboards linked to high-level milestones that drove their completion dates. This allowed for project visibility for everyone. Beyond the visibility, the dashboards allowed for clear WIP and buffer targets to be created and adhered to. As the WIP numbers decreased, the variability and cycle times were reduced while throughput increased.

Figure 4: Creating standard work processes to synchronize work activities

Figure 4: Creating standard work processes to synchronize work activities

What was the result of this change?

Now in a steady state of equilibrium, the well planning team can focus on metrics to evaluate the process health. Metrics now tell the story. There is a process in place to identify gaps or opportunities for improvement. Furthermore, problem solving is completed using fact-based data by the individuals at the coalface. During times of change, this team now views change as no big deal. They can roll through the changes rather than being reactionary.

Once the team could move past the largest roadblock, acceptance to change, they could then focus on making change work for them. Embracing the change allowed for bigger things to come. The manager could now focus her efforts on enhancement and innovation rather than having endless meetings engulfing her entire day.

What is an example of enhancement and innovation that the team would undertake?

The implementation of seasonable builds is an example of an innovation project that was started. North Dakota faces harsh winters with enough snow to cripple construction activities from November through April. The team thought that it would be advantageous to build well pad locations only in the months of June through October. After exhaustive efforts, and rigorous planning, the well planning team could deliver pads to construction in a way that would allow construction to be a focused effort in the summer months. This implementation significantly reduced costs and increased the quality of the pad (see Figure 5). Downstream customers have reaped the benefits of this team taking time and innovation to determine a new and better way.

Figure 5: Reduction in WIP as Production Control gets adopted

Figure 5: Reduction in WIP as Production Control gets adopted

What’s next for Production Control adoption in Hess?

As Hess continues its journey, there are new teams who want to implement production control. Now, it goes without saying that this is something Hess wants. However, it is necessary to allocate sufficient time to achieve a successful implementation. For example, another entity in the Bakken has decided to implement production control for a segment of their work, and the new team is comprised of various functions working together to meet the aggressive deadlines for compliance.

One of the first things I normally do is conduct an observation of the meetings, not only to understand the current state but also to see the behaviors and personalities of those sitting around the table. With this group, there was an immediate understanding of the redundancy of work that individuals were completing to appease management. Individuals completing work, or who were responsible for the work, were required to update three spreadsheets and one white board with the same exact information every day. They first needed to complete updates on a central spreadsheet; this was typically done through phone calls, emails or through meetings. One central planner updated the spreadsheet. Additionally, each function had their own planning spreadsheet to ensure that they knew the status of locations and the most current schedule. The manager had a white board to visualize the status of the locations, covering an entire wall of a small conference room. Each function was expected to take the name of their location and move it to each work flow as the work was completed. Because these functions are spread across the state, it was necessary to make the work visible. To do that, a shared spreadsheet was created that all individuals were expected to update, to indicate the status of the work. In total, there were three spreadsheets and one white board that were updated with the same information every day. My conclusion from observing the group was that it would not take long for individuals to push back on the redundant work requirements and in turn find the document they liked, or were used to, and update only that one. Not updating all four of the status components resulted in confusion, inaccurate information, execution constraints and overall frustration.

After the observation, a plan is usually created including a determination of what is in it for them. How will each organizational level of the team benefit from production control? Why should they change? Alignment of workflows across multiple functions will create harmony in the schedule. Managers will be able to accurately report project status to leadership. A single source of planning will eliminate the chaos, frustration and inaccurate data for supervisors trying to schedule work. The actual responsibility of work will allow crews to understand the expectations without frustration. By being able to see the work coming down the pipe, crews knew what to expect, where they were going next and what they needed to complete the upcoming work.

Again, as we did with well planning, we started with understanding the flow of the value stream. We then created the detailed processes necessary for daily planning of the work. Finally, space was created for the meetings along with a daily/weekly rhythm for production planning.

How did the team initially respond to this new approach?

The team coming off the blocks was lackluster, to say the least. We had the workhorses who were out of the gates and running around the first turn, and there were also those who well, let’s just say they forgot their shoes at home. Needless to say, they were functioning.

To say that we high-fived each other and skipped down the hall would be a lie. Yes, they were off and running, but to be successful, we needed constant support of the process from the entire team, as well as leadership engagement and support. Initially, we faced the same resistance that we did with well planning. We anticipated this but as we moved to the final stages of implementation, we were met with additional resistance from the manager. Here’s the deal – support of change cannot stop. Managers need to be supportive of the process, mechanism of change and the individuals involved. Engagement is also necessary. Managers cannot be gone when you need them and overbearing when you don’t. Managers who struggle to understand the importance of production control must be educated. One thing we have learned is that production control doesn’t come naturally to everyone. It is no different from frontline workers in the sense that managers need to understand what is in it for them, how they benefit and what their roles and responsibilities are throughout the process.

What would you suggest the reader take away from your interview?

The priority of production control at Hess is demonstrating a shift in the culture of how planning and scheduling are completed. The expectations of leadership will only come to fruition with the support and engagement of leaders and managers. Resistance is in some cases inevitable, but understanding how to work through it and what causes it will begin to shift resistance from chaos to composure. When teams see what is possible, it is so gratifying and why I keep pushing to get them to have breakthroughs, because it is worth it!

References

  1. M. Nehring, “Onshore Field Development at Hess”, Project Production Institute Annual Symposium presentation, 30 November 2016.

About the Author

Michelle Nehring is currently Senior Engineering Technician at Hess Corporation. She attended Dickinson State University in Dickinson, ND, where she concentrated in social work. Michelle started working at the Domestic Violence and Rape Crisis Center in 2001. She left the social work field in 2008 to pursue a different career at Hess Corporation, starting as a Technical Assistant in the Construction team. In 2010, Michelle switched to the Bakken Planning Team where her primary responsibilities are to ensure teams were supported with their use of SPS|PM, a software solution for production control. Simultaneously, Michelle was the varsity volleyball coach at 3 different schools for a total of 15 years. She is currently seeking a degree in Business Management with an Operations Management Certificate.