UIBC 2024 Addresses Upstream Industry Project Performance, Engineering Slip, Appraisal Effectiveness, Production Attainment, and More

The annual meeting of the Upstream Industry Benchmarking Consortium (UIBC) took place on Monday, November 18 to Wednesday, November 20, 2024, in McLean, VA. This year, about 90 upstream sector project professionals representing owner companies that benchmark their capital projects with Independent Project Analysis (IPA) attended. Over the course of UIBC 2024, IPA shared exclusive new research studies, highlighted industry trends and metrics, and led focused discussions—all to help UIBC members continuously improve upstream capital project practices and performance.

Continue reading for highlights of selected research studies, focused topic sessions, industry metrics and trends, and presentations delivered at UIBC 2024.

UIBC Metrics & Trends

The Industry Performance Metrics presentations discussed E&P capital project performance metrics and drivers based on the historical data collected by IPA year to year. The presentation showed general industry trends going back several years all the way to the present, with the most recent set of completed and ongoing projects. The reasons and causality behind the observed behavior were discussed as well. We also showed the recent capital project performance metrics and drivers of the UIBC member companies with their respective logos and positioning with respect to their peers.

RESEARCH STUDY: Engineering Schedule Slip for E&P Projects

Cycle time—and the execution schedule, in particular—remains a topic of high interest among E&P operators. Within execution, engineering schedule slip has been a characteristic of E&P developments for many years and, in general, the industry does not have a comprehensive view of the root causes of slip. The pandemic, supply chain issues, and progressive deterioration of engineering quality appear to have made things worse in the last few years. This study addressed the current root causes of engineering slip and propose Best Practices for risk mitigation, measurement, and control.

RESEARCH STUDY: Addressing Optimism Bias in Production Estimates

Early production is the primary driver of value in E&P developments, and production shortfalls are the biggest source of value erosion. This study focused exclusively on reservoir performance (i.e., independent of facility or wells issues), and reservoir performance is driven by appraisal. Previous appraisal studies show that when reservoirs are not well understood, resource promise downgrades are more likely. This suggests optimism bias is creeping into our reservoir estimates, particularly when appraisal information is limited. This study examined wells-adjusted production to directly assess production target setting. We are interested in the interplay between reservoir appraisal and production rate target setting and their influence on per-well production rate performance. Our goal is to better identify when reservoir production targets are unrealistic and which appraisal elements are most important to meeting those production targets.

INDUSTRY TRENDS: Carbon Readiness and Competitiveness

Understanding carbon competitiveness is an important decision factor in opportunity selection and project development. IPA has evaluated the carbon competitiveness targets of many E&P projects over the last few years. In this session, we presented the most current data collected from project teams using IPA’s standard emissions breakdown structure and benchmarking methodology. We presented industry trends in project-level greenhouse gas (GHG) emissions performance and emerging practices that influence this targeted outcome. Finally, we highlighted the key drivers of low-carbon performance and provided quantitative insights into how certain decisions and scope choices influence carbon competitiveness.

FORUM LAUNCH: E&P Decarbonization

IPA announced the launch of the E&P Low Carbon Forum, a sector group of the broader industry Carbon Working Group (CWG). This forum will continue the format of the CWG based on mutual collaboration of client members and IPA to further develop carbon emissions benchmarking capabilities and other decarbonization topics of interest to E&P operators.

STATE OF CONTRACTING IN E&P: Markets and Contracts

Owner companies around the world are struggling to get their major projects contracted using traditional EPC lump-sum wrap arrangements. The number of bidders is thin, and the winning contractor bids are higher than seems reasonable. This squeezes margins on projects that, in many cases, are already stressed. The question addressed here is: Why? Markets are not overheated; indeed, the level of activity in the markets is cool-to-moderate in most parts of the world. We addressed the conditions that have created this market and then address what works—and what clearly does not—to substitute for traditional contracting approaches.

RESEARCH STUDY: Production Attainment: Subsurface and Well Construction Lessons Learned

The economic importance of achieving the planned production is obvious; yet, over the last three decades, there has been no significant industry improvement in our ability to deliver to plan. Over the last 25 years, IPA has developed several studies for UIBC on production attainment, with the latest being a compilation of historical lessons learned presented at UIBC 2022 that covered key areas such as fluid problems, schedule pressure, facility issues, external constraints, and basis of the planned profile. This year’s study provided a deeper understanding of the root cause lessons learned by unpacking the subsurface and well construction issues that affect production performance.

RESEARCH STUDY: Capital Project Governance

In this survey-based study, we presented the findings on the UIBC and IBC clients’ capital projects governance processes. The presentation discussed the governance model and client strengths and weaknesses of each element of the model in relation to project performance metrics.

METRICS & TRENDS: Site and Sustaining Capital (SSC) Projects

The Site and Sustaining Capital (SSC) Performance Metrics presentation discussed SSC E&P capital project performance metrics and drivers based on the historical data collected by IPA year to year. The presentation showed the industry’s status based on the performance from several business units during the last 5 years. The reasons and causality behind the observed behavior were discussed as well. We also showed the performance metrics and drivers of the UIBC member companies with their respective logos and positioning with respect to their peers.

In addition, UIBC members also participated in sessions covering a range of topics, including:

• Managing Engineering Slip
• Project Governance
• E&P Project Manager Competency Development
• Offshore FEL Software Discussion/Demo

Upstream sector companies interested in joining the UIBC are encouraged to complete the web form below to request more information.