John S. Leggate*, John B. Gregory*, Simon C. Bennett * SPE Members
BPX recognised that a radically different approach was required in the management of its mature North Sea oil fields. In January 1994 the Beatrice, Buchan, Clyde and Thistle fields were brought together into a single mature asset - MAST - with the objectives of maximising economic recovery, extending the delivery of positive cash flows and deferring non-value adding abandonment expenditure. During 1994 the MAST team has achieved top quartile business performance when compared to other North Sea operators and aims to be best in class by the end of 1995. This has come about through aggressive cost reduction and maintaining/enhancing oil production, yet sustaining an already good HSE performance.
Key to this success has been the use of benchmarking data, the setting of extra-ordinary targets, the proactive evolution of the market place, the use of novel organisational structures and the encouragement of certain behaviours within the team. Success to date has provided the space to consider opportunities for growth such that there is now confidence that the MAST business will continue to make a positive cash flow contribution to BPX into the next millenium.
During the second half of 1993, in the face of the oil price collapsing to its lowest real level for 20 years, BP reviewed the shape of its UKCS upstream portfolio and identified four mature assets from which financial returns were extremely limited in comparison with the effort involved in managing them. Typically, the fields in question were producing between 10,000 and 25,000 barrels of oil per day, off a cost base which, by UKCS standards, was probably no better than average. Clearly, something different was required to improve the cash generation of these assets, so top quartile operating cost targets were set and the fields placed under the management of a small, highly-incentivised team (MAST), whose emphasis was placed clearly on performance delivery. This paper describes the events of 1994, which have resulted in significant improvements in business performance and some extremely important and value-adding learning from BP's perspective.
Prior to a new approach being taken with Beatrice, Buchan, Clyde and Thistle, the contribution of these fields amounted to just 4% of BP's upstream UKCS production, yet accounted for more than 17% of the resource base (operating costs, people, etc.). More than 1000 individual service contracts were in operation in the marketplace and we were handling 50,000 invoices each year. The organisation was characterised by complexity, many interfaces, unclear accountabilities and large staff numbers. Additionally, there were complex partnerships with no fewer than 14 different Partners. Overall BP equity share across the four fields was round one third.