Indian companies engaged in O&G exploration are yet to fully exploit the marquee project management tools and processes in order to streamline the procedure for optimum results. If domestic O&G exploration companies continue to ignore project management tools and practices, it will result in a setback for the India’s energy requirements, A Shivkamal writes.
Twenty years ago, sometime during a mid-summer in 1992, various government-owned oil compaÂnies were busy exploring deposits of oil and natural gas (O&G) in the desert state of Rajasthan. All they had in their possession was “maps†shared by
the Indian government on prospective deposits near Barmer. The officials were clueless about how long that expÂloration would take. As expected, 15 days into digging, the oil companies did not make any headway and they abandoned the site.
Later, in 1998, Royal Dutch Shell explored the same area for O&G deposits, and discovered what they wanted! Shell and Cairn subsequently went on to drill 184 wells and today, the Mangala fields in Barmer produce 25,000 barrels per day. This was considered a great missed opportunity for Indian exploration comÂpanies because MNCs were able to strike oil on Indian land while domestic firms failed in the same attempt.
If this is an indication of the level of preparedness of Indian O&G exploration companies in the 1990s, the scenario has not changed for the better even today. According to Sanjeev Nair, a retired top executive of Oil India Ltd, India’s expertise in O&G exploration continues to remain as the same of 1990s. “The Indian O&G exploration companies continue to rely on old practices without any industry standard project manÂagement practices. Much of the data is still exchanged in the absence of an online tool. There are several top project management tools available in the market that can complement the efforts of the O&G exploraÂtion companies. But only a few Indian compaÂnies are using them to ensure efficiency at work,†pointed out Abhishek Rao, Project Management Consultant for SAS Exploration Services.
The lack of professional project management tools can cause a severe setback to India’s energy plans and requirements, particularly when it comes to strategic assets, such as O&G. While crude oil output target of 206.73 million tonne in the plan period (2007-2012) was missed by 14 per cent, gas output was 16 per cent less than the 255.76 billion cu m target set for 2007-12. This has already placed the O&G exploration and proÂduction companies under severe strain as domestic proÂduction has not met the target set for the plan period.
Several reasons related to delay in production or poor performance of wells are being cited as the major factors for the reduced crude oil output. However, the need of the hour for the O&G exploration and proÂduction companies is to bring in efficiency in discoverÂing new oil fields and maintaining production at the optimum levels by relying on technology.
There are several products in the market that offer the best of project management practices; this is in vogue in the developed countries, which extensiÂvely use well-known solutions to optimise O&G exploration in a systematic manner for better results. There are also a few legacy products, which have been updated to suit the current requirements of the oil exploration companies.
However, the Indian O&G exploration companies seem to have limited exposure to such tools and procesÂses because of a variety of historical reasons. “Some of the government-controlled O&G exploration compaÂnies in India are highly hierarchy driven and less open to innovation and modernisation. A paradigm shift is not happening as it should have if Indian companies have to compete with global firms,†notes Rao.
Traditional mindset
There have been attempts in the past by Indian companies to adopt technology, but they could not keep pace with the trend because of internal problems. So, what exactly is the role of professional engineering, procurement, construction (EPC) in O&G exploration? Professional EPC offers plenty of benefits to firms that intend to put their projects on a fast-track basis and move on to different projects by commissioning the previous ones.
Modernising large oil exploration and production companies is not an easy task. However, there are seveÂral international firms that have specialised in proÂfessional project management software for O&G expÂloration sector. These products have seen extensive success with multinational oil exploration firms.
Professional EPC management
Project Management (PM) teams provide a full range of services from project planning, site and well construction and execution to coordination of proÂcurement and logistics on location. This end-to-end approach can mitigate the risks, which can help prevent cost overruns. The products can supplement existing resources, or plan, staff and manage the entire project. The system works according to industry best practices in a scalable fashion that can encompass one rig or entire assets. The extensive technical experience in conventional, unconventional and deepwater plays can help O&G exploration companies to undertake biggest development challenges.
Using such professional project management tools, O&G exploring companies can work out for wells planning; project planning and management; evaluate geological and offset well data, risk analysis, cost estiÂmation, third-party coordination and management, proÂcurement, materials and logistics provisioning and online collaboration.
Digging a well without scientific homework or assets at disposal can be disastrous for O&G exploration companies. Professional PM products help streamline the process for optimum results. It becomes imperative for governments to insist for professional project manaÂgement incorporated in the tender if they want quick and better results.
Incidentally, in the developed nations, it is mandaÂtory for all O&G exploration companies to set up separate teams for project management based on IT applications to commence digging of wells in prospeÂctive sites.
During 2006, the Directorate General of HydroÂcarbons (DGH) in India made it mandatory for all O&G exploration companies to provide real time details/data to the government. This has already been adopted by the companies engaged in O&G exploration in the country.
“Every O&G exploration operator in India is obli-ged to provide all data elements pertaining to the entire exÂploration and production value chain to the goveÂrnment. This includes but not limited to geological, geoÂphysical, petrophysical, geochemical,
log, map, proÂduÂction data, tapes, cores, cuttings, other interpretation and analytical reports,†points out an official from the DGH. The DGH, which is the nodal agency of Ministry of Petroleum and Natural Gas on upstream exploration and production affairs, has started receiving exploration and production data from operators.
It is widely accepted today that exploration and production dataset is essentially a national asset. This is quite true in view of the ever increasing technological advancement in the field of data processing, data interÂpretation etc. Even age-old exploration and proÂduction dataset might give new results in view of new techÂnological infrastructure. “That is why safeguarding natiÂonal exploration and production data has become a prime area of focus for the DGH recently. This clause, we believe, will prompt the O&G exploration compaÂnies to adopt project management practices aggressively going forward,†the official adds.
The DGH has already set up a data centre to store all unstructured and physical data elements like well drilling completion reports, different study reports, anaÂlytical reports etc. They are scientifically catalogued and maintained. In view of the growing importance of national exploration and production data, the DGH has an ambitious plan for setting up of a National Data Repository (NDR) for India.
The proposed NDR will primarily collate and safeguard data assets relating to O&G exploration and production. It will also enable the DGH to further streamline all associated procedures, policies and workÂflows pertaining to data submission, data cataloguing and data viewing by respective operators. Additionally this will facilitate as a common window for all concerns pertaining to O&G exploration and production domain, including industries, government agencies, academia and common people. The project is being developed on the lines of Build-Operate-Populate and Lease concept.
Although this initiative does not have a deadline, it is the first step towards empowering O&G exploration companies to adopt project management tools and software for optimised results.
A missed bus
Experts believe that the New Exploration License Policy (NELP) should have emphasised the role of project management in O&G exploration. “Some of the bidders of the NELP 9th round have incorporated professional project management as an integral feature of their bid document to showcase their capabilities. They are trying to convince the Indian government that better adoption of technology will result in early output. Subsequently, the professional project manageÂment is retained as an essential element of the entire project. Therefore, such bids raise the profile of the O&G exploration companies in terms of profile and capabilities,†says Vinod Prabhu, a geologist who worked as a consultant for a top company in the NELP 9th round bidding.
The role of O&G in the growth of Indian GDP is huge and the country cannot afford to ignore the shortÂfall in production for the current plan period.
The supply chain for O&G exploration is complex and requires clear business processes to optimise operations. As O&G exploration and production continues to grow at a rapid pace, the major players in the arena have to acquire software technology solutions to support the infrastruÂctures necessary for their business. From O&G exploÂration, supply and production to transÂporÂtation, distriÂbution, and marÂketing; O&G companies need systems that can alleviÂate the heavy burden of not only managing, but leveraging the enormous amoÂunts of data streaming from each point along the supply chain.
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