Facing threats in your oil wells drilling projects
We live in a world full of uncertainty—one that may require lasting changes. When we select a project, we make the decision to face all of its threats and opportunities. We face a difficult situation: companies want to be more profitable, but they are not very attentive to risks. A lack of risk management culture causes a great number of problems to appear throughout the project—problems that could have been foreseen. We do not have time to identify a risk, but we do invest the necessary time and cost to solve a problem; this results in the project not finishing on time, and, consequently, the costs rise.
In oil wells drilling, the application of A Guide to the Project Management Body of Knowledge (PMBOK Guide®) (Project Management Institute [PMI], 2008) good practices has improved. However, when operation risks occur, they have a very high cost. This presentation will describe a practical risk management methodology that is easy to use and that is aligned to the petroleum industry. Our methodology adapts to different types of oil wells drilling projects of the Peruvian forest. We will show detailed processes and risk register templates that integrate the management and engineering risks.
We will focus on risk identification, evaluation and application of probability and impact matrix, as well as activities to control risks associated with operations and engineering. The role of the risk manager is necessary in the petroleum industry. As someone near to the operations, the risk manager realizes risks more effectively and generates more risk culture to the project team members, including the sellers that make the operation. Finally, we will introduce the lessons learned of our experiences in the oil wells drilling.
Petroleum Industry Environment
Exhibit 1: Factors in the Petroleum industry environment
- There is a lack of risk management culture.
- Not enough training in risk management is given to the engineers who execute the oil wells drilling projects and there is a lack of interest from senior management.
- It is necessary to have a methodology and tools to optimize the impact of the following on the life cycle of the project: the costs, the performance, and the exposure to risk, associated with reliability, availability, efficiency, and fulfillment of the regulations of security and environment, and of the physical goods, in harmony with the community and the people.
- The senior management doesn't know that the methodology exists; they approach the oil wells drilling project as they would an engineering project and ROI.
- A high level of drilling activity has always characterized the technical work at Troll West, with up to four drilling rigs active at the same time. In this work environment, with high drilling rates, high rig cost, and new wells continuously being drilled, an appropriate organization and technical-work process are crucial. Important success factors have been the good work environment, the right organization, and the right combination of people working together.
- Delegation of both planning and operational responsibility is vital to achieve a dynamic work process with as much decision making as possible occurring within dedicated well groups.
- All well activity is carried out by these groups, which consist of a geophysicist, geologist, reservoir engineer, and production engineer. The well groups collaborate closely with the drilling engineers, drilling contractor, and the staff.
Exhibit 2 - Blocks 1AB & 8 Location Map
Exhibit 3 - Block 8 - Location Map
Impact on the Environment
Technologies to reduce the impact: drilling fluid systems with water base with biodegradable products, reinjection of cuts, and drilling fluids and reinjection of the production water.
Risk Management Methodology Applied to Operation and Engineering
- Risk management is not only the execution of the oil drilling project, but also includes the environment and operation management.
- During the lifetime (environmental impact plan, engineering and drilling, and operations) of the project, it is important to apply risk management: identification, assessment, response, and contingency plan.
- Risk management involves thinking always in terms of the people, community, physical good, operation and environment.
- The risk manager provides help to the team so that the risk can be understood, assessed, and managed within projects in order to achieve project success.
- Calculate the expenses during the life cycle of the well probabilistic estimation. Define the probable cost of operation and expenditures product of failures or undesired event. Establish actions to mitigate these risks.
- The proposal considers a training the personnel involved during the project development.
- Improve the time and cost estimation of the well when the team assesses risks.
- The team can use statistical tools: Distribution Normal, Triangular, Uniform, Beta, @risk, etc.
Exhibit 4: Integrating risk management into project life cycle
Exhibit 5: The methodology has four processes.
Exhibit 6: Risk Breakdown Structure.
Exhibit 7: Risk Register.
Exhibit10: Criticality level.
Actions to control: Avoid the risk, mitigate the risk, and transfer the risk.
What do you do if the risk occurs?: Solution to the problem.
The Role of the Risk Manager in a Project
- Develop a project risk management plan in spite of the uncertain future.
- Identify and assess risk.
- Lead or delegate the response for each risk identified.
- Estimate the reserve contingency cost (difficult to achieve).
- Document risk response plan and communicate it to the stakeholders.
- Assign risk responsibility.
- Gain agreement from key stakeholders for the project risk response plan.
- Perform risk monitoring and control.
- Update risk response plan.
- Recognize when unknown risks occur.
- Establish workarounds.
- Review risk response strategies.
- Facilitate audits.
Case of Application in a Petroleum Industry
General Well Information
Operating Company: Pluspetrol Peru Corp.
Well Name: Pagoreni-1004D; Block 56 – Camisea - Perú.
Type Well: Development Gas Well
1. Environmental Impact Plan (EIP)
The objective is to take precautions /mitigate and/or correct the adverse impacts about which warnings have been given with regard to physical, biological, socioeconomical, and cultural components, as a consequence of the execution of the Development Drilling Projects, in the geographical scope of its influence, through environmental technical means that consider the different environmental activity in the country.
Exhibit 11: Environment management role during the exploration activities
- The mitigation and prevention plan includes the actions for the environmental effects control in an efficient and productive way. Such a plan defines appropriate temporality, space, and responsibilities to put the reference actions into practice.
To implement the company environmental policy alignments in the EIP, the following programs have been considered:
- Preventive, corrective, and/or mitigating program
- Specific environmental program
- Residue monitoring program
- Reforestation program
- Environmental monitoring program
- Community relations plan
- Training plan
- Training is perhaps one of the most important tools for reducing risk. It is essential that all personnel be fully trained in operations.
Monitoring and Control
- The monitoring program includes parameters and environmental monitoring actions to establish and verify environmental changes (that is to say, the effects of the project on the environmental base) and indicative actions to evaluate the effects in these cases in which specific problems are generated.
- A contingency plan is composed of emergency response processes, accidents, or possible events not wished.
- Closing and/or abandon plan that describes the actions that will be realized during the dismoving after the exploration. and abandon steps.
- The considered tasks are linked to the restoration of biotic and abiotic environments, replacing of the floor cover, removal of the superficial/subfloor structures, and revegetation work.
2. Engineering and Drilling
- Analyze the expected conditions of design and operation to the well.
- Identify the variables that generate more uncertainty to make a risk mitigation plan.
- Explore the range of probable values of the uncertainty variables using probabilistic model.
- Identify the probable deviation variables to affect time and cost. For instance: weather conditions, geological place, waits for transportation, program change, stuck tubing, waiting for service company, etc.
- Analyze the historic information and classify to find frequent behaviors.
- Save the historic data in data bases and look for expert opinion.
Exhibit 12: Integrating Risk into Project Management
Exhibit 13: Work Breakdown Structure of the oil well drilling project.
Exhibit 14: Diagram during project.
Exhibit 15: Roles and Responsibilities
Exhibit 16 Risk register.
Learned Lessons and Conclusions With a Case of Success
- It's necessary to have a risk manager:
- to support the risk management during the entire project life cycle
- to recognize risk management as a profession
- to quantify the benefits of risk management
- to apply risk management in engineering and operations
- Integration Process Learned Lessons and continuous improvement
- The use of a management methodology aligned to PMI was enabled to improve the organization of the resources to direct correctly the functions and responsibilities of each member in the project.
- The communications towards the stakeholders was made faster and the progress and current state of the project was better observed.
- In drilling, the planning is essentials for the success of the objectives.
- During the project planning meetings, the risk management plan is presented to all of the members, the project team, and the sellers.
- Sellers must respect the security standard norms and protect the environment.
- Care must be taken during the transport over the river to avoid affecting the community and the environment.
- It's important to coordinate with the community the contingency plan when the environment is affected.
- Monitor, control, and verify the correct work fulfillment in the operation.
Project Management Institute (2008). A guide to the project management body of knowledge (PMBOK® guide)—Fourth edition. Newtown Square, PA: Author.
People – Keystone for success. (2005, November). Journal of Petroleum Technology, 50.
Probabilistic risk analysis for well drilling and work-over activities. (2006, February 16). Reliability and Risk Management – R2M.
© 2009, Felipe Meléndez De La Cruz, PMP
Originally published as a part of 2009 PMI Global Congress Proceedings – Orlando, Florida