Guest Editorial: Lower for Longer: Lean Forever
- Tom Knode (Contek Solutions) | Jeff Fuchs (Maryland World Class Consortia)
- Document ID
- Society of Petroleum Engineers
- Journal of Petroleum Technology
- Publication Date
- March 2017
- Document Type
- Journal Paper
- 14 - 15
- 2017. Copyright is retained by the author. This document is distributed by SPE with the permission of the author. Contact the author for permission to use material from this document.
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Lean Thinking is a generic version of the Toyota Production System, which was cobbled together just after World War II. The system was how a resource-poor Toyota, staggering with broken processes and a low-skilled workforce, scrabbled through the harsh post-war economy to become one of the most successful and highly respected enterprises of the 20th century. The 1996 book, Lean Thinking, introduced lean to mainstream business. Since then, lean has propelled operational excellence in construction, software development, healthcare, financial services, state government, and more.
Lean Thinking is a philosophy that engages everyone in systematically solving problems. However, like “eat right, exercise regularly, get plenty of sleep,” lean is a simple concept difficult to live daily. Companies typically struggle through distinct levels of understanding and application of lean. Beginners dabble with lean tools in superficial ways that yield slim results. More developed users imbed lean more broadly across value streams and deeper into business systems to get greater returns. Advanced lean thinkers go much further and get dramatic results by building lean into their culture. Like safety, lean for them is not another project to be implemented; lean thinking is part of how they do everything.
Oil and gas companies have begun to use lean tools in isolated processes aiming to increase business efficiency. There have been measurable benefits in improved drilling times and reducing the cost of bringing a well into production. But what are the benefits beyond drilling and completions, and applying lean across the extended value stream?
Put another way, think about your corner McDonald’s: It fixes some glaring problems at their moneymaker, the drive-through window. But how competitive is it if the orders are incorrect, the assembly is sloppy, and it cannot get ingredients to the right place at the right time? Oil and gas is still in the lean tools era: Lean tools used in the business’ most manufacturing-like processes. A windfall of returns await those who can expand their scope of application and depth of understanding.
Lean Across the Value Stream and the Enterprise
There is clearly business benefit to drilling and completing a well faster. If a land well costs USD 10 million and if you can drill and complete 20% faster (without sacrificing safety or environmental performance), the company could complete five wells for the cost of four. But what about the rest of the value stream and the rest of the cycle? We recognize the many variables in prospect development time: The nature of the well, wildcat vs. infield drilling, onshore vs. deep water, unique company practices, and more. Nevertheless, we can point to the huge potential that makes this worth considering.
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