UIBC 2014: Getting the Foundation Right for Asset Development

For 3 days marked by unseasonably cold and windy weather in Northern Virginia, more than 200 exploration and production (E&P) industry company representatives gathered at the Upstream Industry Benchmarking Consortium (UIBC) 2014 the to reassess long-standing oil and gas asset development practices and processes.

Beginning with a research study examining the handover of information from oil and gas reservoir exploration teams to project development teams and ending with a separate study on improving project delivery to production from November 17 to 19, UIBC 2014 attendees reviewed a wide variety of current asset development work process issues, especially those that are driving project costs higher.

In the more comfortable setting at The Lansdowne Resort near Leesburg, Virginia, IPA Exploration & Production Business Area Manager, Neeraj Nandurdikar, asked UIBC participants to shift their thinking about the asset development process that their owner company uses. Business and project team members should recognize that decisions made early on in the process can have significant negative effects on production attainment or overall net present value, he said.

This 19th annual UIBC conference examined ways at “helping you get the foundation right” during the project appraise and select phases of the asset development process. The E&P industry should be adopting thought models that view “asset development as a whole; not [individual] functional excellence” at different development stages, Nandurdikar said.

In addition to the handover of projects to and from E&P project development organizations, IPA analysts and industry presenters at the conference spoke on the following topics:

• Sustainability and social risk mitigation for the development of large projects
• Practices and trends in project risk management
• Strategies for dealing with project team staffing shortages
• Root causes of engineering schedule slip
• A new approach to assessing well construction readiness
• Operation readiness planning and obstacles

Several workshops were also held during the conference that zeroed in on specifi c project diagnostic and action plan implementation issues. As is the case at each annual UIBC gathering, the research studies and topics addressed at the conference are selected in accord with the UIBC steering committee.

Also of note, several owner companies in the mining industry were present as this year’s conference. The oil and gas and mining industries are both extractive industries and share a lot of commonalities in project development.

In the conference’s keynote address, IPA President and Founder Edward Merrow reminded owner company business and project team professionals in attendance that oil prices, which have fallen in recent weeks, are uncontrollable. Project costs, on the other hand, can be controlled. “Let’s worry about what we can control,” Merrow said.

Echoing comments he made at the conference last year about the explosive growth of owner’s costs, Merrow cited IPA data that show owner’s costs have increased 1,000 percent over the last 20 years. The drivers of these project cost increases range from larger owner teams to rising contractor expenses and vendor fees. “We can’t sustain these increases,” Merrow said. Adding later, “Dealing with our cost problem has to be looked at across the whole asset development process. There are a lot of little things we can do, but it has to start early.”