Dave McKay, Vice President, Well Factory Execution– Bakken, for Hess Corporation, was recently quoted in a Wall Street Journal article “Shale Drillers’ Key to Survival: Efficiency.” McKay, who sits on the Project Production Institute Advisory Board, also won the 2015 PPI Technical Excellence Award, which is awarded each year to recognize contributions and thought leadership in the area of Project Production Management.
Low oil prices are reshaping the shale industry in North Dakota, and Hess has adopted Project Production Management (PPM) methods to become more efficient and add value. “Hess, which exported the first cargo of Bakken crude from the U.S. Gulf Coast last month, says it is implementing lean manufacturing techniques borrowed from Toyota Motor Corp such as just-in-time supply chain logistics and greater use of standardized parts. It is operating three rigs, down from a high of 17 in 2014, but it has increased the number of wells drilled per rig to 22 a year, up from 16 wells a year 18 months ago.”
Project Production Management – the definition and control of the actual work – has helped to increase efficiency and deliver value to Hess Corporation. By focusing on planning and controlling the work, rather than on reporting and forecasting schedule and budget, variability is reduced, cycle time is improved, throughput is increased, and a greater degree of control and predictability is achievable.
“Mr. McKay credits the downturn for forcing producers to rethink their operations. ‘There was a time when we were all cheeks and heels’ in the rush to boost output, he said in an interview. ‘The slowdown actually has helped convince people of the need to do everything more efficiently,’ he said.”
“Mr. McKay says those efforts have reduced completion costs by one-third over the past 12 months to around $2 million per well, cut the time it takes to frack a well to one day from up to three days two years ago, and boosted average initial well production by up to 20%.”
The implementation of Production Management principles and methods allows operators to more efficiently allocate increasingly scarce capacity, improve operating efficiencies, and remain competitive even at current oil prices.
To see the WSJ article: http://www.wsj.com/articles/shale-drillers-key-to-survival-efficiency-1463514347
Project Production Institute researches and disseminates knowledge related to the application of operations science for the optimization of complex and critical energy, industrial and civil infrastructure projects.