Friday, 31 July 2009

Quantified value case study number 10

To continue this occasional series - here is a story told to me about a quantified benefit identified in a Technical Limit meeting. Technical Limit is a Knowledge Management technique used in the oil sector, pioneered by Shell, for detailed knowledge-based operational planning. It is a combination of learning from the past (in that the planning is based on a through understanding of past performance), tacit knowledge exchange (in that the operational crews bring their detailed knowledge to the event), and innovation (in that the driver for the meeting is to innovate beyond the best of past performance). The story is told by someone who was running one of these meetings, and the story starts in the technical limit meeting, where the operational teams are being challenged on performance improvement on one small step in the process of drilling the next well. As you read this story, remember that in oil drilling, time is money, as offshore drilling rigs can cost $250,000 per day to hire. The pressure is therefore to shave as much time as possible off the process, and the key knowledge is "How to drill quickly".

The rig crew had taken a look at the task of 'running the riser' (constructing the large pipe that connects the rig to the seabed), and they felt that based on the best of the past performance, they could run the riser in 48 hours. When they were challenged to do it a bit faster, they worked on things that would shave maybe an hour or two off the time. So the next step was to get them to analyse why it took 48 hours, and what the critical things in the path were that caused it to take 48 hours, and it turned out that the hydraulic wrench, which was used to bolt the riser sections together was the critical element.

And the next question was, 'What would it take to run two hydraulic wrenches', because if they could run two hydraulic wrenches, they could cut the riser running time from 48 hours to 24hours. Then they said they actually had two hydraulic wrenches on the rig, as they had a back-up in case the primary one failed.

So why they couldn't run those two simultaneously? And the answer back was that they only had one hydraulic pump.

What would it take to run two pumps? It would take $16,000 to buy the second pump.

What would it take to buy the second pump, and they said that they hadn't been able to get anyone to authorise that $16,000 capital expenditure.

So it turned out that for saving $16,000, the company was spending an additional $250,000 in rig time running the riser. So a deal was made with the rig contractor to add a second hydraulic pump and adjust the dayrate, and cut a day off the well time.

Technical Limit meetings can identify many such savings in a single meeting, and can result in overall time and cost savings of 40%, as shown in this example from Oman

1 comment:

Dick Bonnet said...

I represent a hydraulic wrench company, TorcUP and our pumps can be configured to run up to 4 tools simultaneously. We actually market this feature for large pressure vessels where gasket compression is critical. Suggest you call us.

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