Both technology and practices are changing to meet this challenge: from using data to optimise supply chains better to adopting maintenance practices from other industries. Oliver Wyman supports its Upstream clients across seven broad categories.
For many organisations, portfolio decisions are as much ‘art’ as they are ‘science’ – leaders base their decisions upon analysis, experience and judgement built up over their careers in the industry. Oliver Wyman’s supports these decisions by risk and scenario based portfolio analyses to guide and challenge leaders as they debate the merits of different portfolios.
Poor management of Upstream risks results in significant cost and time overruns on capital projects. Through a careful analysis of the main risk drivers and their potential impact on a project’s plan, clients gain a clear understanding of the impact of their different mitigation measures, with consequential multi-million dollar savings.
We recognise that safe operations are fundamental to the success of any oil & gas business. Oliver Wyman’s holistic approach to safety management in oil & gas includes the development of appropriate management systems to behavioural and leadership programmes.
The twin challenges of safe and reliable operations can be achieved cost effectively through a combination of continuous improvement and better data analysis. Insight and better practice create gains across the spectrum from understanding the conditions that lead to repeated turbine failures to redesigning the logistics and warehousing requirements.
The use of technology is fundamental to many upstream firms’ competitiveness. However, there is wide variation in firms’ abilities to scan the market for technologies (even if from their own R&D function), identify winners and implement them. For many firms, this is as much a cultural issue as a technology one: decision making across organisational boundaries being a frequently significant barrier.
Much of the savings made in Upstream to date have been through headcount reduction and the renegotiation of supplier prices. The next wave of optimisation will require a great level of innovation as suppliers and oil companies find ways to partner more effectively together. Similar to the models in the automotive industry, the oil & gas industry will need to use supply chains to tackle quality, standardisation and cost management outside of the current transactional relationships.
Exploration is starting to ramp up again in certain areas (eg shale and some offshore basins). Effective drilling operations save considerable sums when compared with the less effective. Oliver Wyman works with clients to understand their performance against industry benchmarks and to develop effective improvement strategies.