Measuring Land Drilling Performance
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This presentation discusses measuring land drilling performance through financial and operational metrics. It emphasizes using consistent benchmarks to compare actual performance to budgets and past performance. Various charts are presented to evaluate performance at different levels, from overall budget to individual rigs and contractors. Key metrics discussed include cost per foot, feet per day, non-productive time, and comparisons to best wells. The goal is to identify areas for improvement, quantify potential savings, and reduce findings to specific action items to enhance drilling performance.
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Measuring Land Drilling Performance
- 1. Society of Petroleum Engineers Distinguished Lecturer Program www.spe.org/dl 1 John Willis Measuring Land Drilling Performance
- 2. Presentation Outline • Overview • Financial performance • Operational performance • Summary • Q&A 2
- 3. OVERVIEW 3
- 4. Lessons Learned from…. 10 years as a Drilling function: • > 16,000 operated wells • ~21 Drilling Groups • ~15 Business Units • > $20 billion spend 4
- 5. The System Works 5 Occidental Petroleum Corp Second Quarter 2015 Earnings Call Slides
- 6. The System Works 6 Occidental Petroleum Corp Third Quarter 2015 Earnings Call Slides
- 7. Principles • Design for who is reviewing • Focus on who or what is being measured • Define benchmark consistently 7
- 8. Principle: Who is reviewing? Drilling Engineers, Superintendents, Managers: • Feet per day • Non-Productive Time (NPT) • Composite best well • Connection time • And more … Executives, General Managers: • Actual vs Budget • Now vs earlier (trend) • Performance by group • Cost per well • And more … 8
- 9. Principle: Measuring who? Groups in the company • Drilling • Completion • Asset team • Procurement Contractors Crew Person 9
- 10. Safety Performance 10 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 InjuryIllnessRate(IIR)
- 12. Objectives • Senior management performance review – Budget – Trend – Groups • Drilling team performance improvement – Identify – Quantify – Reduce to actions 12 A chart for each
- 13. 0 250 500 750 1,000 1,250 1,500 1,750 2,000 2,250 2,500 CAPEX Budget Actual CAPEX DevelopmentGrossCAPEX ($Mm) The Budget Chart 13 Actual Spend “Budget” 12% Over Budget! “Poor drilling performance!” CumulativeSpend One year, by months
- 14. 0 250 500 750 1,000 1,250 1,500 1,750 2,000 2,250 2,500 CAPEX: Budget w/ Rev. Well Mix Actual CAPEX DevelopmentGrossCAPEX ($Mm) The Budget Chart 14 Actual Spend “Budget” Under Budget! “Good drilling performance!” CumulativeSpend One year, by months
- 15. 0 200 400 600 800 1000 0 250 500 750 1,000 1,250 1,500 1,750 2,000 2,250 2,500 WellCount CAPEX Budget CAPEX: Budget w/ Rev. Well Mix Actual CAPEX WC: Budget Actual Well Count DevelopmentGrossCAPEX ($Mm) The Budget Chart Actual Spend Original Budget “Revised Budget” Budget Well Count Actual Well Count 15 CumulativeSpend One year, by months Benchmark is Original or Revised Budget
- 16. The Trend Chart 56% 67% 34% -20% 0% 20% 40% 60% 80% 100% 120% 140% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec ActualCAPEXvs.Q4BMCAPEX CAPEX: Actual vs. Q4 BM Drilling Actual vs. Q4 BM Completions Actual vs. Q4 BM BU Total - Actual vs Q4 BM (3 month rolling avg) Drilling Completions + Hookup %ofBenchmark 16 3 month average
- 17. Trend Chart Basis • Weighted average of all wells: – Actual cost for each well – Benchmark by Well Type • Benchmark: – Average for first half of previous year – For each “Well Type” • Alternate Bencharks: – Second half, or adjusted similar well 17
- 18. The Trend Chart 56% 67% 34% -20% 0% 20% 40% 60% 80% 100% 120% 140% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec ActualCAPEXvs.Q4BMCAPEX CAPEX: Actual vs. Q4 BM Drilling Actual vs. Q4 BM Completions Actual vs. Q4 BM BU Total - Actual vs Q4 BM (3 month rolling avg) Benchmark from previous year. 100% = same performance. 18 %ofBenchmark
- 19. Well Types for Benchmark For budget, wells with the same: • Reservoir depth • Lateral length • Production casing size • Completion (frac design) For drilling performance, wells with the same: • Specific casing program • Specific well path Many Well Types (132 for one region)! 19
- 20. The “Group” Chart 20 Benchmark is Well Type cost
- 21. The “Group” Chart 21 Asset Team Procurement Drilling Group Completions Engineering Completions Operations
- 22. Budget Process • Cross-functional activity • For each Well Type: – Scope (completion, logging, lateral length, …) – Drilling, Completion, Hook-Up time and cost – Production “type curves” (rate, recovery) • Document original well mix • Update “Revised Budget” monthly • Track Scope Changes 22
- 24. Objectives • Senior management performance review – Budget – Performance trend – Groups • Drilling team performance improvement – Identify – Quantify – Reduce to actions 24
- 26. Simple can work Other Rigs Adv Rigs Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 DrillingTimePerWell 26
- 27. Identify and Quantify Actual vs: • Best In Class Well (SPE-140172) • Composite Best Well • Technical Limit (SPE 35077, IADC/SPE 59207, OTC 8637) • “Perfect Well” (AADE-06-DF-HO-13, IADC/SPE-178850-MS) • Partners and other operators • Record wells • Good wells 27
- 28. Identify and Quantify Actual vs: • Best In Class Well (SPE-140172) • Composite Best Well • Technical Limit (SPE 35077, IADC/SPE 59207, OTC 8637) • “Perfect Well” (AADE-06-DF-HO-13, IADC/SPE-178850-MS) • Partners and other operators • Record wells • Good wells 28 They all work! (It’s the process)
- 29. Reduce to Actions LEVEL EXAMPLE Conceptual Cost-Per-Foot, Feet-Per-day, % Best Well Group Drilling, Asset Team, Procurement Category Rig, downhole tools, directional, fluids Specific Intermediate hole ROP, connection time, move time, “Contractor A NPT” 29
- 30. Flat Time Q1 Q1 Q1Q4 Q4 Q4 0 10 20 30 40 50 60 BOP RU & Test Connection Time Rig Move Hours Average Time Saved / Well (Q1-Q4) -31% -39% -18% 30
- 31. NPT 31 Monthly NPT - % of total days Percent
- 32. NPT 32 NPT per 10,000 feet of hole, by month Hours
- 34. Rig NPT 34
- 36. Industry Peer Comparison 14000 14500 15000 15500 16000 16500 17000 17500 18000 18500 19000 0 10 20 30 40 50 60 70 80 Others Jan-Aug 2015 From Sept 2015 36
- 37. Much more …. 37
- 38. More from real-time data …. 38
- 39. Data System Required • Executive support • Written standards • Global consistency • Support staff • Training • Data validation • Query tools for easy access 39
- 40. Easy Access to Data 40
- 41. SUMMARY 42
- 42. Summary • Give execs data that makes sense to them • Use consistent benchmarks • Revise the “budget” as the plan changes • Develop Well Types, use for budget, benchmark, and actual • Use metrics that stimulate actions See paper SPE-189683-MS, “Measuring Land Drilling Performance” for more details. 43
- 43. Use These Charts 44 56% 67% 34% -20% 0% 20% 40% 60% 80% 100% 120% 140% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec ActualCAPEXvs.Q4BMCAPEX CAPEX: Actual vs. Q4 BM Drilling Actual vs. Q4 BM Completions Actual vs. Q4 BM BU Total - Actual vs Q4 BM (3 month rolling avg) %ofBenchmark 0 200 400 600 800 1000 0 250 500 750 1,000 1,250 1,500 1,750 2,000 2,250 2,500 WellCount CAPEX Budget CAPEX: Budget w/ Rev. Well Mix Actual CAPEX WC: Budget Actual Well Count DevelopmentGrossCAPEX ($Mm)
- 44. Q&A 45
- 45. Society of Petroleum Engineers Distinguished Lecturer Program www.spe.org/dl 46 Your Feedback is Important Enter your section in the DL Evaluation Contest by completing the evaluation form for this presentation Visit SPE.org/dl 46
- 46. 47
Editor's Notes
- From earnings call.
- We always look first out our safety performance, but safety metrics are well defined and universally used. Our discussion today is on other performance measures.