Agile For Oil and Gas - mixing lifecycle models
June 28, 2013
This post is about Implementing agile at the organizational level across multiple technical domains. I was in Bogotá, Colombia recently working with an oil and gas company to introduce agile to their organization. They were not looking to improve their IT delivery, they were seeing if it could bring benefits to their whole business value stream. Since moving to Calgary 13 years ago I have worked with many oil and gas companies, they are the major employers here and the predominant industry. Lots of energy companies employ lean approaches to exploration, facilities creation and operations to maximize efficiencies and optimize the value stream.
Applying agile techniques to lean processes are a natural compliment and fit especially well with the unique problem solving and collaboration needed to undertake complex projects. Yet, oil and gas projects present a mixture of both these knowledge worker challenges that are a great fit for agile, and industrial engineering that requires traditional approaches. The real benefits come in knowing how to mesh these approaches together and provide some mental models to facilitate planning and problem solving. This is still an emerging field and I don’t think we have all the answers yet, which makes it challenging and rewarding. At the end of the post I outline some questions that I am trying to solve.
The Bigger Picture
Oil and gas development is a long value chain engaging many different groups with unique specializations. Like designing a new car, bringing it to market, producing it, selling and then sustaining it, the skills needed along the way are diverse and often conflicting. Oil and gas development includes the following disciplines:
- Surveys – identifying areas with favourable geological conditions.
- Surface Rights Negotiation – arranging for land access with land owners, environmental surveys, native and community outreach.
- Exploratory Drilling – verifying the presence or absence of hydrocarbon reserves and quantifying the reserve.
- Facilities – creating the infrastructure for oil or gas extraction, initial processing and transportation to market.
- Operations – managing the safe extraction and operation of the well and associated facilities. Performing maintenance and projecting production declines and decommissioning work.
Mixed Project Types
Some of these activities like the collaborative work of the G & G groups (Geologists and Geophysicists) are classic knowledge worker activities. Here specialists with subject matter expertise come together to share information and as a group and build consensus on the most likely areas for further exploration. No two regions are the same, no two geological formations are the same, and just like software teams use agile methods to collaborate on solving complex problems and gain consensus on the direction to move in, so too do G&G teams.
Further down the chain though, some pieces of work can be more traditional in nature. After determining an area to explore, the execution of a seismic survey might involve mobilizing a large workforce of several hundred people and scheduling constrained equipment. While this can be done in an iterative, prioritized manner, many of the benefits of short iterations, reviews and adaptation are diminished so a hybrid approach is preferable.
Surface rights negotiation and exploratory drilling are very much expert driven, collaborative problem solving exercises. Starting the process with incomplete information and uncertainties is the norm. There comes a point where more planning can not remove the remaining uncertainty, instead execution must be used to provide data and remove uncertainty. Activities progress with the acknowledgement of ambiguity and proceed through stages of:
1) Embrace ambiguity – getting stakeholder agreement of areas of uncertainty
- List areas of uncertainty
- Discuss and agree known scope boundaries
2) Sense making – collaboratively forming consensus on exploratory work to undertake
- Agree information gathering steps
- Prioritize sense-making exploratory work
3) Iterate through cycles of Plan, Explore, Learn, Adapt – Learn by doing rather than speculate via planning
- Plan – agree and assemble work plans, guidelines, objectives
- Explore – undertake short period of exploratory work
- Learn – collaboratively analyze findings and gather results
- Adapt – retune upcoming work plans, incorporate learnings
4) Maximize value – once it is agreed that the “Next Best Dollar Spent” is elsewhere on the project AND the iterative learnings have been maximized, finish the experiments
- Gain consensus that the exit criteria has been reached
- Articulate findings, learnings and decisions
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