LEAN MANAGEMENT IN UPSTREAM OIL

& GAS SERVICE INDUSTRY

SYNOPSIS

FEBRUARY 27, 2017

UNMESH P.U. V. MURALI
500036154 Technical Manager
 SYNOPSIS
LEAN MANAGEMENT IN UPSTREAM OILFIELD SERVICES INDUSTRY

ABSTRACT

This project aims to investigate the implementation of lean management tools and implement lean
thinking in the oil and gas industry with a focus on the upstream oilfield service industry. Lean
managements audits, Gemba walks, review analysis of available data, lean management tool-5S,
SIPOC Charts, Value stream mapping are the tools used to implement lean management in GULF
ENERGY SAOC. The project results and conclusions to be analyzed for the effectiveness and
improvement made from the initial stage and to include lean management as a part of the
management system and continually improve the services, improve efficiency and reduce waste.

1. INTRODUCTION

The oil Industry is ever changing. A Slump in the Oil & Gas Industry is not a new phenomenon.
We had seen these in 2009 -2010 and now after 5 years its back. The Oil Prices has faced a steep
drop from around $145.00 to $25.00 a barrel. While the Production rate has not slowed down, the
requirement of Oil is going flat or dropping. The Overhauling companies to Drilling Rigs, the
service companies within the Petroleum Industry are facing Immense pressure to improve
productivity efficiency due to the fall in Oil Prices and urge to provide prices at a better price,
delivery and with limited man power and assets. Lean management and lean thinking is gaining
importance in the Oil industry in defining the value to be delivered to the customer and wastes in
their operations. This is very important to eliminate inefficiencies, increase business volumes and
profits.

2. GULF ENERGY SAOC AND KEY FINDINGS

Gulf Energy SAOC established in 2005, is one of the most innovative and fastest growing solution
provider in Energy Industry in the Middle East and North Africa region. Gulf Energy Head
Quarters is located in Muscat, Sultanate of Oman and works with the major operators in Oman
including Petroluem Development Oman, British Petroleum, Occidental Petroleum Corporation,
PTTEP, Medco Energy, Oman Oil Company Exploration and Production (OOCEP), Petro Tel
Oman, DNO Oman, MOL Group, Petrogas E&P and Daleel Petroleum. Gulf Energy also works
with international clients like Saudi Aramco, Sonatrach and Kuwait Oil Company in the GCC +
MENA Region. Gulf Energy provides various services in the Upstream Oil Industry namely

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  Geological Survey
 Drilling Technologies
 Cementing
 Performance Drilling and Evaluation
 Machine Shop
 Fishing
 Thru Tubing
 Reservoir Optimization and Well Intervention Services
 Production & Completion Services,
 Workover Services
The price recession worldwide has also affected Gulf Energy SAOC and the pressure from
various operators specially PDO is encouraging the management of GE to run the services to
the most efficient way and to implement Lean Management throughout GE divisions. After
the initial Survey the following areas were selected and issues identified to implement Lean
Management.
1. Machine Shop – reduce idle time, remove waste and improve efficiency.
2. Hoist Services – Major overhauling and recertification exceeding budget.
3. Directional Drilling Services– Insufficient stock of spare parts affecting operation.
4. Maintenance of Vital Equipment – reduce maintenance delays and avoid NPT.
5. Procedure requirements – Lack of procedures in Coiled tubing operations result in
NPT
6. Accounts – Invoicing lead times to be reduced and improve cash flow.

3. SOLUTION

 Management initiative: The key decision makers and top management understanding of
lean and support is essential. Define a vision of lean for the company. Create an
implementation plan. Ensure coordinated people and teams programme are along with lean
activity and ensure that all members of staff are coached effectively. Preparing a team of
Lean Trainer, Lean Champion and Lean Practitioner for various areas of issues found.

 Applying Lean to the Operations: Lean project team surveys and conducts lean audits and
discover areas need change. The middle management and the concerned heads and the
operators, riggers etc are selected for implementation of Lean. Lean coaching is to be
provided to the project members The current design is mapped and wastes to be identified.

 Transform to Lean: Based on the Lean method used redesign the current design and
implement them. Verify the effectiveness. Share and educate the results to the project team
and ensure the employees understand the advantages of Lean.

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  Sustain and Improve: Procedure to be implemented to sustain the Lean implementation.
Periodic audits and review the process for further redesigns to keep continual improvement
and sustainability.

4. TOOLS & TECHNIQUES

 Gemba Walks: The action of going to see the actual process, understand the work, ask
questions and learn. The objective of Gemba Walks is to understand the value stream and
its problems rather that review results and superficial comments.

 Value stream mapping (VSM) is a means of analyzing an existing product flow to

determine where waste exists. The process involves tracing the product from customer
order to product delivery, including all material movements and information flows. The
result is a complete and thorough map of products and information flows, as it currently
exists. The next step is to develop a "future-state" map that eliminates waste from the
process. Typical results from VSM are reductions in inventories, material handling, and
lead times.

 SIPOC: In process improvement, a SIPOC is a tool that summarizes the inputs and outputs
of one or more processes in table form. The acronym SIPOC stands for suppliers, inputs,
process, outputs, and customers which form the columns of the table.

 Standard SOP: Written procedure prescribed for repetitive use as a practice, in accordance
with agreed upon specifications aimed at obtaining a desired outcome.

 5S organization—sort, store, shine, standardize, and sustain—maintains good

housekeeping practices. The objectives are to remove the need to search for material and
tooling and create an atmosphere that allows team members to perform as efficiently as
possible with little distraction. After the work environment is organized, then standardized
work methods and rules can be applied to keep every operation running smoothly.

5. APPLICATION OF THE PROJECT.

The Project is being implemented in Gulf Energy SAOC at various departments. Below are
the areas for project implementation and the scope of work
 Machine Shop: The scope of work is to identify the work flow through the machine shop.
Identify the wastes of all sorts like delay in loading the job on the machine, delay in getting

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 instructions, lack of resources and proper tools, machine breakdowns etc. Writing SIPOC
for the processes and Implement 5S in the work shop

 Directional Drilling Services: Meetings were held with focal personnel to review the spare
parts order issues. Develop SOP’s accordingly. Cut back some of unnecessarily/ repeated
process. Identifying the root causes of the issues and eliminate them. Generate action plan
to tackle the major contributors to the problem.
 Maintenance of Mud Cooler : Create Value stream mapping .Understand Timelines and
opportunities understood. Conduct Gemba walk in the field. Gemba walk of maintenance
process Nizwa facility yard. Analyze Inventory at Nizwa yard. Investigate manufacturers
recommendations for maintenance process . Identify manpower requirements identified.

 Hoist Services: Develop SIPOC. Develop VSM A3 Is of the current process. Analyse the
VSM As Is and identify the opportunities. Identified information flow . Generate actions
list to tackle the major waste contributors.

 Coil Tubing Operations : Make A3 Map . Gemba walk the process & Nizwa yard. Conduct
Value Stream mapping. Identify Opportunities. Key actions prioritized.

 Accounts: Perform “Gamba walk” in PDO rig 44, SGG Nizwa base and SGEE Head
Office. Develop “SIPOC” & clearly identify the process boundaries. Develop “VSM As
Is” of the current invoicing process. Analysed the “VSM As Is” and identify the
opportunities. Develop “VSM To Be” for the process. Generate actions list to tackle the
major waste contributors.

6. FEASIBILITY STUDY

a. INTRODUCTION

Oil field services are continually striving to increase productivity and output. Lean
management is basically a cost reduction project. The aim is to achieve an efficient
production by eliminating waste in forms excess production, inventory, movement
of material, waiting and delays in operations process, unwanted movement of
employees, rework etc. Lean enables us to remove the non value added work and
improve current process and meet increased customer demand through reduced
working time.

b. PURPOSE

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 The major purpose looking for through lean management is reduced inventory
levels, decreased material usage, optimized equipment, reduced need for facilities,
improve flexibility in production

c. ECONOMIC FEASIBILITY

The Most attractive about Lean Management is that rather that the old method
where the price needs to be increase to get a better profit, lean management enables
us to get the better profit without increasing the selling price Just by improving and
removing all wastes.

d. TECHNICAL FEASIBILITY

The Lean management implementation in the current technological situation can

be implemented without much problems if proper coaching is provided. If for
reducing waste with new technology, then the feasibility will depend on the
economic impact and the competency of the employees using the new technology

e. BEHAVIOURAL FEASIBILITY

This is one of the major threats where we can face issues as employees will be
reluctant for change which they have been following for years. Proper training and
continuous supervision will tackle this issue. Also the nature of the people is to
think that Lean is waste of time.

f. TIME FEASIBILITY

The Initial time Spent for the training and implementation of Lean is worth when
considering the considering the time that it can save while in operation.

g. RESOURCE FEASIBILITY

Gulf Energy has enough resources to implement Lean. Lean project team and
trainers has been already arranged and has the facility to conduct training as well
as implementation

7. EXPECTED OUTCOME

 Reduction of IDLE Time due to various reason

 Quality performance, fewer defects and rework (in house and at customer).
 Fewer Machine and Process Breakdowns.
 Lower levels of Inventory.
 Greater levels of Stock Turnover.

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  Less Space Required.
 Higher efficiencies, more output per man hour.
 Improved delivery performance.
 Faster Development.
 Greater Customer Satisfaction.
 Improved employee morale and involvement.
 Improved Supplier Relations.
 HIGHER PROFITS
 INCREASED BUSINESS

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