There are all types of organizations within the oil and gas business. Most of them providing services and products towards the exploration and enhancement of oil and gas production.
Exploration costs, the services, and products supporting exploration are increasing more than ever. The need to obtain operational excellence has never been greater.
The majority of these oilfield organizational types are applying Lean Sigma methodologies in order to reach operational excellence. Almost all of these organizations seek improvement within the same business categories; 1) Safety 2) Environmental 3) Process design 4) Supply chain management.
There are some fundamental Lean Sigma tools which, when applied correctly, and with leadership support, will provide the needed results for these business categories. Some lean sigma tools will benefit more than one category.
Safety and Environmental
5S – Organizing the workplace for efficiency, effectiveness, and cleanliness provides the platform for any safety and environmental program. A workplace properly sorted, straightened, and swept will enhance even the best in class safety and environmental programs. A workplace is anywhere work applications are executed. Workplaces like the storing of hazardous materials, the transfer of hazardous material, the cab and deck of trucks, maintenance shops, drilling floor, derrick platform, pipe storage, control rooms, wash bays, dispatch office, administration offices, etc. The sorting, straightening, and sweeping will provide efficient and correct access to Personal Protective Equipment (PPE), proper labeling and disposing of hazardous materials, tools available at the time of need and close to the application, DOT, EPA, OSHA, and ISO procedural compliance. When something is out of place, like a chemical that could react with another, a valve that should be closed, a cable that may cause a tripping hazard, a truck load not secured properly or too heavy, a gauge indicating a measure out of specification, and even a critical process step that has been skipped, a 5S workplace will highlight and prevent these possible safety or environmental incidents.
Standard Work – This Lean Sigma tool works alongside the safety and environmental training program. The standard work training process starts with the identification of important steps, key points, and reasons for the key points by precisely observing people performing tasks as they are completed today. Only the important steps become part of the standard work document which facilitates learning. Then during the observation process “key points” essential to performing each important step, safely, with quality, and efficiently will be documented. Finally, the reasons for these key points are also documented. For example, in the process of transferring a hazardous material from a drum to a tank the first important step; Review the Material Safety Data Sheet (MSDS), Key Point – Understand required PPE for handling, Reason for Key Point – Prevents injury from chemical that might get on exposed parts of skin. There can also be other key points for each important step and for this example it might be how to dispose or clean up any spilled chemical. Once these standard work documents are completed by observation and validated by experts all appropriate work positions can be trained. As new key points and reasons are found or developed by employees a new standard is set and employees can be re-trained on these new found improvements. This standard work training process can be a safety and environmental improvement program by itself as employees will immediately take ownership.
Process Design
Value Stream Mapping – This process uses a diverse team to both identify what is value-add and what is non-value add steps. It also provides an alignment with the overall strategy so that valuable improvement resources are not wasted. In manufacturing the time spent on non-value added tasks is typically 80%. In most oilfield processes the ratio is typically higher than 90%. Defining value add: in drilling the value add time is when the drilling rig is drilling, in fracturing, acidizing, and cementing it is only when pumping, in running down hole tools it is only during the setting process, and in seismic it is only when readings are being processed. Value Stream Mapping determines the non-value added steps in time, cost, safety, and quality. The analysis visually and quantitatively determines where to focus valuable improvement resources. This focus, on non-value added tasks, must always be aligned with the strategy and not necessarily where the most time is being absorbed. For example almost all oilfield organizations have safety as an integral part of their overall strategy so the parts of the process that have higher safety incidents would be one area where improvement resources must be sent.
Setup Reduction – Value Stream Mapping will identify where setting up activities, getting ready to perform the value add steps, are an impairment to flow of services and products. In drilling operations setup time is in spotting the rig, spotting ancillary equipment, and moving the rig, in fracturing, acidizing, and cementing services setup time is in spotting trucks and rigging up to the well, in logging a well setup time is in spotting trucks, running in the well, and computer setup. In oilfield operations setup time is always significant compared to value add time and it should always be quantified during the Value Stream Mapping process.
Standard Work – There can be many operational benefits gained from standard work, I have already discussed the importance it has on safety, quality, and efficiency. Any operation that has significant time devoted to shutdown processes, like service companies during “road restrictions” and refineries for maintenance can save a significant amount of resources and related costs by standardizing these related processes. Shutdown events can run into unplanned events like, materials not being ordered, errors in inventory counts, employee shortage, supplier capacity, and the wrong specifications given to suppliers. Through value stream mapping and subsequent standard work developed for these supplementary processes a significant amount of cost can be prevented.
Supply Chain Management
Partnerships and Statistical Process Control (SPC) – Restricting process improvements to within your organization’s process step scope will not bring best in class products and service. So much of oilfield operations depend on the capabilities of their organization’s suppliers. Whether it is moving a rig, expanding a refinery, or purging a pipeline, suppliers play a significant role. Supplier partnerships can be extremely beneficial when communicating and aligning the strategy with longer term supplier contracts. An improvement team of both the customer and supplier must be formed first. There must be objectives set with the main objective related to improving the value stream to meet the customer’s strategy. The supplier also benefits from a known revenue stream for a longer period than the projects gained from traditional “bidding.” A key Lean Sigma tool to be applied, by the supplier, is SPC. It is used to measure the key input variables of the customer’s value streams. For example, suppliers can use control charts to measure the supplier’s setup time, variable data for products, safety incidents and near misses, lead time, errors, etc. It is the responsibility of the supplier to provide these key input variable SPC charts to the customer anytime a product or service is delivered. If there is an out of control condition identified then the customer-supplier improvement team initiates the problem solving process for improvements. Improvement activities are not limited to the supplier, some will be owned by the customer. It is not only the supplier’s process that might need improving.
I have just summarized some Lean Sigma tools that are very much applicable in meeting the needs of oilfield operational excellence but in order to bring best in class results there must be full leadership involvement and support. There are three Lean Sigma tools the leaders can use to maintain continuous improvement momentum and sustain gains; Leadership Standard Work, Visual Management, and Gemba Walk.