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Death to optimisation

Thursday, June 20, 2013

The secrets to success in the oil and gas industry are to engineer first and optimise second, be deterministic and not empirical, and trust in people, reckons Fred E Dupriest, formerly Chief Drilling Engineer with ExxonMobil in Houston

'I think we should be doing a little more engineering and less optimisation.'

The SPE Drilling Engineering Award recognises outstanding achievements in, or contributions to, the advancement of the engineering discipline or field. The 2013 award was presented to Mr Dupriest at the International Association of Drilling Contractors / Society of Petroleum Engineers Annual Drilling Conference in Amsterdam on March 5 2013.

This article reports on remarks made by Mr Dupriest in his acceptance speech.

Rather than trying to optimise all the time, 'You work on the thing that limits you, it's a pretty simple idea,' he said.

'Every dollar we spend on engineering makes us about $10 in profit.'

'We all kind of know what optimisation is,' he said. 'When I was 5-6 years old [sitting] in my kitchen, in our wood frame house, with my mother sitting there, I said something I picked up in school. It took my dad 2 seconds to completely 'optimise' me. 58 years later, I haven't made that mistake twice.'

'Optimisation isn't complicated. We define our boundaries and snuggle up to them. We identify what the limit is. Snuggling up to our risks until we start feeling pain. And there we are when we optimise.'

Abetter approach is, 'let's go figure out how it really works and redesign, until something else becomes a limit,' he said. 'Work on the thing that limits you.'

For example, one oil major did that with differential sticking in 2003, and changed its practises globally, and consequently had no differential sticking for 8 years, he said, moving its limits far away from what it was trying to do.

Another oil major looked closely at the physics of formation damage and found that things worked very differently to how they thought, and as a result re-designed their processes, and consequently lost circulation of drilling mud become a 'relatively minor issue,' he said.

'That's how we change performance, not by doing anything fancy,' he said.

'There's a redesigned solution that's already sitting in the industry for most of these risks,' he said. 'There are SPE papers on differential sticking.'

Redesigning is the only way to 'fundamentally change what your performance will be,' he said.

And on the other hand, as wells get more and more complex, you don't work out how to drill them safely just by 'flawlessly executing', he said.

'Decide who you are, what are your principles and practises, then decide what limits you,' he said.

'Decide a new practise and make that who you are. Over time - you'll see you do not lose control of your base business. You will become better at doing the work.'

'[The amount of] trouble goes down and operations become safer,' he said.

Be deterministic and not empirical

The drilling industry would do better if it would work out how to do things from engineering calculations from first principles('deterministic') rather than passing on knowledge from person to person ('empirical'), he said.

'We're such an empirical industry,' he said.

'We have an industry which passes on knowledge empirically from 1 person to another.'

'Figuring out the physics of something is as easy as reading a SPE paper,' he said.

Getting the most out of people

Mr Dupriest believes in a 50-20-30 rule when it comes to people.

'50 per cent of people will always do the right thing. If they know something is right they'll do it,' he said.

'20 per cent will do it [the right thing] if they have the right environment.'

'30 percent of people probably won't do that. They will go along when other people do it.'

As a manager, it doesn't pay to focus on the 30 per cent of people who don't automatically do the right thing, he said.

'You need to trust the 50 per cent, teach them how things work and get out of the way,' he said.

'You teach people how things work and believe that 50 per cent of people will just go,' he said.

This means that people are being led by showing them something they want to run towards, rather than threatening them.

'ACEO of a successful growth company said I'd rather have people running towards something they aspire to than running away from things they fear,' he said.

It is better to work on the basis that there are no bad people, he said. 'Well there are [bad people] but you don't know who they are.'

Change

The best way to achieve change is for managers to work out and remove obstacles which stop people achieving their objectives, he said.

Resistance to change is not necessarily a bad thing.

Good performance comes from having standardised practises and procedures, having people following them, he said. 'The same culture that makes us really good is also the culture that makes us resistant to change.'

'If you're going to create change, you have to get things out of their way that keep them from doing it [changing]', he said. 'You need a workflow which identifieslimits.'

'The people doing the work might not know there's a problem, you've got to teach them.'

For example, 'most people think, increasing weight on bit wears the bit faster,' he said.

'[But] it doesn't, per foot drilled. Give them enough knowledge.'



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