By Salma Essam
Several energy industries have been guilty of overlooking opportunities for operational optimization when the tide is high and the oil prices are dwindling. But Egypt’s oil and gas sector should be on the cutting edge in its application of technical expertise, at least on the production side. As part of the balancing equation, IOCs, NOCs, and service companies need to collaborate on a novel technical approach for performance development in Egypt’s industry.
People are the True Asset
It is crucial for organizational development and success oof any workplace to adopt an efficient training scheme for its workers. In heavy industries, such as that of the oil and gas, performance development for the overall sector substantially relies on strengthening the capacities of its people. It goes without doubt that training presents a prime opportunity to unlock people’s potential and expand the knowledge base of all employees. Training programs provide its trainees with the tools, know-how, and expertise needed for better outcomes. As many employers are extremely concerned with the huge budget allocated to training programs, the issue is different for IOCs, NOCs, and service companies. In fact, the intensity of oil and gas activities is time-consuming, which means that employees are subject to miss out on work time while attending training sessions. Nevertheless, giant IOCs and local energy companies have realized the essentiality of providing training manuals to its workers, and despite the potential drawbacks, “training and development provides both the company as a whole and the individual employees with benefits that make the cost and time a worthwhile investment,” explained an article titled ‘The Importance of Training & Development in the Workplace’.
It is true that recruitment processes are strictly based on technical and soft skills of the potential candidates, which means that hired personnel should have a specific level of professionalism. But performance development is largely bound to offering proper training needed to enhance the skills of the employees, hence reflect on their work. Indeed, most employees have some weaknesses in their workplace skills. Training for oil and gas personnel strengthens technical and communication skills. It further brings all employees to a higher level so they all have similar skills and knowledge. This helps reduce any weak links within the company’s workers who frequently rely on others to complete basic work tasks. In addition, providing the necessary training creates an overall knowledgeable staff with employees who can take over for one another as needed, work on teams or work independently without constant help and supervision from others.
Given the extreme importance of performance development in the oil and gas industry, it becomes clear that training is a cardinal element in any workplace. On its side, the Egyptian government has proved it is aware of this issue and has previously endorsed a new strategy to enhance people’s capacity. Undersecretary for Production at the Ministry of Petroleum, Mohamed Mounes, said at the People Development Roundtable held in December 2016: “we plan to design an efficient people development agenda to make the best use of the existing human capital and expertise. It aims to put up an efficient and comprehensive talent management system that will be formed by and for the people in the industry through training and exchange programs that will set benchmark practices for talent management.”
People development may be regarded as the most essential part of the equation but other elements should be considered as well.
Production Optimization: Analytics and Software
Performing analysis can guarantee remarkable performance development in the IOCs and local companies. Analysis ensures managing, tracking, reporting, and analyzing well-level profitability, which in turn, impacts the ability to optimize operational performance. Although this method requires huge costs, it captures estimated production loss and downtime. This will help the oil and gas companies to bring in timely reporting manners and visibility to identify the root causes of downtime. With that, oil companies will be able to determine and prioritize the highly impacted wells that should receive immediate attention to minimize any loss. This will both boost and accelerate production levels.
Carrying out analysis on production and well profitability makes it easier for oil and gas companies to monitor production performance indicators which point out to low producing wells. However, this process is expansive and all-consuming, thus carried out once or twice a year. Tailored analytics solutions automate the manual work and allow for daily reviews, helping decision-making process to be more accessible. Depending on the organization’s size, these solutions are to improve performance by an average of 1-2%.
On the other hand, software used for well delivery management plays a key role in process efficiency and well drilling acceleration. This software automates, integrates, and streamlines numerous pre-drilling tasks and departments including resource development, geology, and production, to allow the management of activities on one platform. Oil & Gas Finance Journal article – Optimizing Operational Efficiency, published in 2015, explained that “this software can reduce the lead-time associated with planning and drilling by an average of 5%, allowing companies to begin production and reach targets for their numerous wells several days early.”
From this, it can be inferred that the impact on the rig scheduling and utilization is positive. Oil & Gas Finance Journal article said that the use of this software “each day can save between $30,000/rig to $100,000/rig” and that will further generate millions of dollars in annual saving for the oil and gas companies.
In today’s pricing environment and the forecast offered by energy expert, the days of $120 per oil barrel seem a distant memory. The revenues of the oil companies, NOCs and IOCs altogether, have slumped, in effect. That said, the Egyptian government along with foreign operators need to focus on doing more with less. Performance development of the oil and gas organizations is inevitable and thus energy companies operating in Egypt should consider accelerating the transformation of the organizations to be data and analytics-driven in order to cope with the changing business landscape. In addition, companies should consider improvement of technology solutions that can enhance production capacity and providing tailored training for the workers. If these strategies are applied correctly, they will help drive better decisions, cost reduction and increased productivity.