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Case Study: Integrated Business Plan Provides Assurance for Field Development Execution
ZADCO integrated business planning model (i-BiZ) maximizes field development opportunities and values using SIS Merak software
Challenge
Meet production targets and improve the granularity of field development options while providing assurance of the robustness of business plans.
Solution
Aligned existing ZADCO Value Assurance Process (VAP) for governing investment proposals with i-BiZ process; established consistent foundation and standardized data-capture and risk quantification process for optimal understanding of proposals and their economic value.
Results
Aligned field development plans with facility projects for maximum flexibility and significant improvement in the clarity and quality of the business plan. Incorporated modern portfolio management techniques into business planning to set a transparent discussion platform for investment decisions.
Improve field development planning
To better manage and meet production targets and improve the quantification of uncertainty for field development planning, ZADCO implemented a proactive and integrated business planning process (i-BiZ) in 2003 and enlisted Schlumberger Information Solutions (SIS) for assistance with both the design and implementation. A phased implementation approach was agreed upon to deliver the following objectives:
- Promote techno-economic integration throughout the business planning cycle
- Ensure the alignment of field development plans, facility plans for capacityenhancement, and facility replacement plans
- Ensure alignment between different asset unit proposals and within ZADCO ventures and nearby operating companies
- Create and maintain an inventory of investment opportunities with many alternatives
- Conduct systematic and speedy ranking and prioritization against different criteria
- Perform corporate-level sensitivity and consequence analysis and identify mitigation against potential risks
- Create value through use of portfolio management principles in field development decisions
Align VAP with i -BiZ implementation
The i-BiZ implementation is closely aligned with the existing ZADCO Value Assurance Process (VAP) and represents both the maturity level of field development options and the potential consequences of uncertainty. Additionally, ZADCO established dependency logic in i-BiZ so that any field planning changes and consequences can be easily and quickly identified. This ensures full alignment within field development plans, facility capacity, and replacement initiatives, and provides a consistent foundation for understanding all future proposals and their economic contribution.
Identify process limitations, establish objectives
ZADCO and SIS identified several shortcomings in the existing process and systems. On the process side this included a lack of consideration for development alternatives, unclear options and concept sequencing, time-consuming data manipulation, and lack of integration within business units—which together led to reduced business planning flexibility. System shortcomings included a lack of shared data access across the organization, inconsistent assumptions in business unit outputs, and a lack of data security. The following improvement goals were identified:
- Ensure business plan flexibility (from multiple field development alternatives)
- Establish clear data-gathering, storage, and presentation standards
- Ensure transparent data access across all business units and well communicated ranking and decision criteria
- Lock in corporate assumptions to ensure the same premises for all economic calculations
- Perform comparable economic evaluations using consistent criteria
To mitigate the change-management risks inherent in the project, the ZADCO and SIS team established guidelines to ensure adequate training and senior management support. Alongside these, strong leadership was provided in the key roles of business unit and corporate planning, and a practical plan was established with clear deliverables and milestones.
Improved data and i -BiZ workflow enhancements
A number of key milestones were achieved during Phase I, including the ability to capture many options and centralize data storage and data classification, which enabled distributed access for data mining and consolidation in support of the business plan sequence. During Phase II, the process was streamlined to facilitate the introduction of more advanced techniques into the next business plan cycle, including a convention for uncertainty (P90 < P10) and three custom software tools—reservoir to economics, reservoir to facilities, and facilities costing—to facilitate the transfer of multiple project outcomes through multiple iterations.
While data capture at the well level (production, capex, opex, etc.) provided the minimum building blocks for the planning process, the custom tools allowed ZADCO to improve data granularity to the string level by transferring production and injection profiles directly from the ECLIPSE reservoir simulation software. The availability of string level data was a significant step toward improvement of the management and analysis of portfolio options, using the data-mining capabilities in Merak Capital Planning software to aggregate production/injection profiles to any level (string/well/tower/scheme/area/reservoir).
To account for the range of outcomes and the most likely (P50) production profiles, the risks inherentin each project needed to be characterized. Uncertainties related to reservoir properties, well performance and sweep efficiency, facilities project approval, and completion and drilling rig availability were taken into consideration, with quantification provided by reservoir and facilities engineers using a simple and practical methodology. Data capture, modeling, and quantitative risk analysis were carried out with ZADCO’s i-BiZ tools (Merak Peep and Merak Decision Tool Kit) using Visual Monte Carlo simulations. Dependency logic was established between project execution, well construction, and production buildup.
Improved understanding, greater decision-making confidence The resulting process, supported by suitable information systems, provides better alignment of field development plans with facility projects. The incorporation of risk assessment and options for mitigation enable better understanding of outcomes and more confidence in decision making, providing maximum flexibility and avoiding instances in which short-term decisions conflict with long-term plans. Significant business improvement has been achieved through the i-BiZ initiative, demonstrated by the ability to optimize the investment decision for a process capacity enhancement project in terms of capacity or timing.
Using the outputs from i-BiZ, managers are better able to understand the key drivers, quantify the uncertainty, and make confident decisions for the next stage of field investment. The fully integrated and optimized business plan for multiventures and fields are now far more visible through i-BiZ. This would have been difficult to achieve without the foundation of a standardized data-capture and risk-quantification process. Availability of consistent planning data at the well level, quantitative risk assessment for each project, and integration of long-range planning information established in the early stages of the project laid the foundation for added value creation in each investment decision, which will be repeated as the field and facility development stage progresses.
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