Thursday, 26 March 2009

Quantified success stories number 3 - cutting well costs

An oil company drill crew were given an aggressive stretch challenge - to drill the wells on a new field for a budget of $100m less than that on the previous benchmark field. They realised that to do this, they would need to effectively eliminate the learning curve, and to start their program with a complete set of knowledge.

They set up a program of "learning before doing", to access all relevant existing knowledge before the start of the program. They set up a system of identifying, validating and reapplying lessons from each well in their own program. They hired three knowledge managers to manage the process. And they addressed the cultural aspects of "not invented here".

As a result they very nearly hit the stretch target, delivering a saving of $86 million on the previous benchmark performance. In fact, the first well on the field was drilled at a performance equal to the previous best well in the basin.

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