Project Management in the Oil Thesis

Excerpt from Thesis :

(Braunschweig; Day, 150)

Most of the current generation of project managers expects the project management tools to furnish them with almost real-time knowledge in order to facilitate their decision-making. Some of these tools like DOFF, "Field of the Future," "Smart Fields," Microsoft's "Oilfield Connectivity" and i-Fields are currently being examined by exploration and production oil companies. Some of these tools have the capability of generating information from apparently incongruent data and helping managers take important decisions based on them. (Oilfield Connectivity - Capturing the Value of the Digital Era)

There is substantial amount of risk in oil exploration and production since the concerned target is located many thousands of feet under the ground. There are a number of factors that can cause uncertainties and risks in these fields which may include the weather, people, geology, safety, and availability of tools and equipment. Agility is an important requirement in the oil fields, especially for the upstream business aspect. To improve on this aspect, it is essential that proper project data is maintained in an organized manner. Just maintaining data is not enough. It is important that the data is available to the required staff in real-time and facilitate decision-making. Project data is usually stored across several systems which may even be spread across various locations in different parts of the country or continent. This may give rise to various problems. Both agility and decision making can be enhanced by having a project data set which is centrally located which is accessible to all the project team members. (Cook, 20)

Moreover, this data set should be stored for use by future executives. Many a times, crucial data is lost when project managers leave or retire. Engineers as well as producers agree on the point that critical data sharing and data collaboration are very important. Risk management and cost control are also essential elements of project management. Many unforeseen surprises have been in store for oil companies in recent times and this necessitates the need for improvements in project processes which can help accomplish project objectives within the limited budget and time-frames and also reduce the surprises which give rise to various uncertainties and risks. Change management is also an important aspect of project management since the design aspect of most of the projects is finished by the time construction starts. Therefore, any sort of change in the project design or in other areas has to be done in collaboration of the fabricator, owner and engineers. This can result in significant gains in terms of increased margins, enhanced savings and can result in better schedule adherence. (Cook, 20)

An entire project may be categorized into four stages - the conception phase, the definition phase, the implementation phase and the completion phase. The conception phase may involve initial screening, basic data collection, conceptual project scheme, feasibility studies, project execution scenario, estimating screening cost, project proposal and approval to proceed. Feasibility studies in turn involve outlining the objectives of the project, technical studies, economic feasibility studies, participation of stakeholders, initial financing plan, and risk analysis. The definition phase of a project may involve owner's project team, front-end engineering, estimating budgetary cost, contracting strategy and key project execution plans, risk analysis, project definition package, approval to proceed; EPC -- engineering, procurement and construction, contractor selection, and company's financing plans. Front-end engineering may involve process flow diagram, equipment datasheets, instrument datasheets, P&I diagrams, and plot plans. (Cleland; Gareis, p. 26)

The implementation phase includes contractor or owner project teams, contractor or owner kick-off, project execution planning, project follow-up, analytical and planning engineering, production engineering, services and materials procurement, construction, project management and control, and project administration. The completion phase involves testing and inspection, pre-commissioning and commissioning, final acceptance, close-out of contract, and post-projection evaluation. The project management involvement in these four phases of a project's life cycle varies. It is fairly limited in the conception phase but is considerably higher in the definition phase. Project management involvement ranges from heavy to very heavy in the implementation and completion phases of the life cycle of a project. (Cleland; Gareis, p. 26)

There is integration between the various stages of exploration and production projects in the oil industry. In fact, integration is present even between the suppliers and the oil production companies on common projects. Petroleum engineers are known to work in close coordination with the suppliers. This is where project integration management comes in. (Glomsrod; Osmundsen, 5) Project integration management refers to the integration or coordination of every activity with every other activity so that the desired project objectives are achieved. Project integration management guarantees that the project is suitably planned, implemented, monitored and controlled. (Lewis, 20)

The concept of project integration management is "forward-looking" and starts out with the individual and fans out to encompass the project objectives, the project team, organization, technology, business systems, the industry, consumers, market system and lastly the world economy. Complete and successful project integration results in better value and performance for customers as well as the producers, suppliers and owners. Proper integration management is reflected in the final outcome and schedule maintenance in terms of quality, cost, risk factors, schedule and ongoing changes. Successful integration between the technical and professional project team members, like mechanical engineers, electrical engineers, support staff, constructions engineers, software engineers and other workers lifts the morale of the staff and results in new lessons being learned. Project integration is performed at two levels - internal and external. Internal integration refers to the connection between deliverables, systems and project work packages. External integration refers to the integration between the customer systems and the project producing value both for the consumer as well as the whole industry. Project integration management requires integration support systems which link the chief aspects of project performance, facilitating automatic data generation based on quality, cost and schedule which in turn can help executives to take better decisions. (Barkley, 10)

Project integration can be of two types - horizontal and vertical. Vertical integration is the integration between various components project, product or service and program components within the organization. Vertical integration can also be referred to as program integration. It penetrates deep down into the project and into the product configuration and project processes. This sort of project integration management targets the improvement of customer satisfaction and product performance. Horizontal integration refers to the integration of the external environment with the project components within the organization. It concentrates on external forces that introduce uncertainties, market forces, risks, and opportunities to the project and ultimately influence the product. Both these types of integration are vital success factors and important components of project integration management. (Barkley, 12)

Vertical and horizontal integration are interrelated since a project that takes environmental scanning information and external factors into account are more likely to show better performance as these factors have the capability of making or breaking a project. Project integration management contains the following components: (i) applicable strategic objectives and business plan (ii) project management processes that will be utilized (iii) product line and program framework (iv) documentation needs (v) monitoring and reporting approach (vi) cost control, cost-benefit analysis and financial issues (vii) approach to conflict resolution (viii) chief milestones and project schedule (ix) stage-gate review requirements (x) roles and responsibilities (xi) business and project organization (xii) team contact directory (xiii) change control procedures (xiv) industry standards (xv) design review requirements (xvi) documentation relating to technical requirements (xvii) data dictionary and generic WBS (xviii) user approval and testing procedures (xix) international and regulatory technical constraints (xx) requirements for configuration management to facilitate the transition from design to production. (Barkley, 12)

Like other industries, the oil industry too has some unique requirements to maintain its strategy and operations in various functional spheres. These requirements pertain to production, processing, transportation, order management, supply chain security and physical distribution. These involve equipments and piping for onshore and offshore pipelines, pump stations, pressure-regulating stations, measuring stations, pipeline terminals, pipe-type storage vessels and tank farms. The gas industry may require additional gas compressor stations and bottle-type gas storage vessels. These also involve installing specialized services like explosives and hazardous cargo handling, importation of rigs, FPSO -- Floating Production, Storage and Offloading systems and FSO -- Floating Storage and Offloading system in main areas. The oil industry also requires specially tailored transportation shipping services and global logistics. There is a need for professional "Rig Move Task Force." It should also have a department dedicated for customer-service and a specialized account management structure. It is extremely essential to have a 24-hour worldwide emergency-response network. Hub operations are required to be set up at chief oil-related locations. FCPA -- Foreign Corrupt Practices Act compliance programs are also required to be initiated. (Oil & Gas Supply Chain Management); (Canadian Standards Association)

Exploration at offshore sites requires equipments like "deep water drill ships," "jackup drill rigs" and "semi-submersible drill rigs."…

Sources Used in Document:


Barkley, Bruce T. Integrated Project Management.

McGraw-Hill Professional, 2006.

Braunschweig, Bertrand; Day, Ron. Artificial Intelligence in the Petroleum Industry:

Symbolic and Computational Applications. TECHNIP. 1995.

Cite This Thesis:

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