Field Development: Agile Value Optimisation

Abstract

Abstract In 2011 78% of upstream oil & gas megaprojects faced either cost or schedule overruns according to an industry study by the Independent Project Analysis (Merrow, 2012). In 2014, research by EY found 64% of projects faced cost overruns (EY, 2014) and 73% of projects faced schedule overruns. In 2017 the UK Oil & Gas Authority (OGA) published a study of lessons learned from UKCS oil & gas projects between 2011-2016, which reported "since 2011 fewer than 25% of oil and gas projects have been delivered on time with projects averaging 10 months’ delay and coming in around 35% over budget." (OGA, 2017) This level of cost and schedule underperformance was not sustainable in the high oil price economic environment and is inconceivable in the lower oil price environment in which we now operate. Both the EY and the OGA reports identify factors for these overruns and lessons that can be learned. These include organisational learnings, project management failings, inadequate planning and cognitive biases within the team. One of the key lessons identified in the OGA report was that high-quality Front-End Loading (FEL) is critical to project success. A successful FEL should develop sufficient strategic information to allow decisions to be made that maximise the chance of a successful project. As part of its unique approach to field development, which brings projects to market faster and with more certainty, we have created a methodology, based on the approach developed by Professor Ronald A. Howard at Stanford University, to deliver a high quality FEL. This methodology is underpinned by a number of unique tools and techniques and draws on best practice from a variety of industries, including aerospace, smart cities and software development. The methodology paves the way for a digital project execution and the evolution of an operational digital twin.