An Integrated Engineering Service (IES) Contract covering drilling and completion services was formed to develop two sixteen well platforms for Phillips Petroleum International Corporation Asia (PPICA) in the South China Sea. The purpose of the contract was to improve well quality and to reduce the cost and development time to PPICA by taking advantage of existing service company/lead contractor infrastructure in the area. Through a cooperative team environment, a cycle of continuous improvement has resulted in dramatically reduced drilling/ completion times, improved production, and a much lower development cost to the operator.

This paper views the IES relationship from both the per-spective of the operator and the lead contractor and its sub-contractors. It reviews in detail: 1.) the project history and background (including why an IES Contract was the right fit in this case) 2.) the "Team Xijiang" structure, roles and responsibilities, and decision making process 3.) the pricing mecha-nisms and how interests are aligned through incentive pricing 4.) the continuous improvement cycle and 5.) the actual results of the project as compared to anticipated results from previous experience in the area. This new business relationship has laid important groundwork for future opportunities in the industry, for both the operator and lead contractor. An atmosphere of cooperation and trust has removed many of the. barriers that exist in a traditional buyer/supplier relationship (or even in an expanded alliance).

By empowering team members to make decisions at the lowest possible level, personnel from all organizations involved are encouraged to contribute freely to the overall success of the project. The industry is continually faced with the need to improve efficiencies through unique solutions to problems. For any given circumstance, there are numerous alternatives to meet the need. In this case, employing an Integrated approach via one lead contractor, has been a great success.

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