New Tactics for Production Management

providers have struggled to remain profitable as unstable oil prices moved generally lower. In the 1990s, oil companies downsized and started relying on outside services for functions that are not considered core business activities. They turned to outsourcing, alliances, partnerships and, lately, to mergers. The oilfield supply sector also restructured, formed joint ventures, consolidated, and began providing integrated products and services to fulfill operator needs. Once again, market conditions and emerging trends are driving the industry to adopt fresh approaches, including better management of oil and gas fields. To squeeze optimal value from petroleum assets, management of production operations begins at near-well regions of a reservoir, proceeds through completion equipment and surface facilities, and may even extend to sale or export points (next page). Ideally, production management begins before field startup to limit risk and financial exposure, reduce capital investment and minimize time to first commercial output, particularly since many new reservoir discoveries are in frontier areas where expenses are high. For mature reservoirs, this process involves reducing expenses, enhancing productivity and extending field life to improve profitability and maximize recovery. Effective production management may be the difference between saving an asset and divesting or abandoning a property. This tactical process takes quality, health, safety and environmental (QHSE) as well as economic factors into consideration. Local experience and expertise in applying new or existing technology help reduce costs while optimizing field output and hydrocarbon-processing capacity. Use of innovative methodology is a key element. Because technical, managerial and operational aspects are combined to support optimization and asset development strategies, this renewed emphasis on production differs from traditional outsourcing of field operations, often referred to as contract lease, or pumping, services. The past 15 years have been extremely dynamic in the upstream petroleum business. Companies continually reinvented and repositioned themselves in response to business pressures and challenges. This article reviews trends behind a production management renaissance and explains why new approaches are needed. In addition to what and why, we discuss how this process is being reengineered, improved and implemented.