Contents Page References 12/2 Introduction and objectives 1/2/3 Resumé 12/4 Topic 1 ‘The well delivery process 1/215 1 Objective 5 2 Map 6 3 Well delivery process scaling 7 4 Web access 8 5 Example 8 Topic 2. Performance improvement - realising the limic 12/10 1 Drilling che limie L 2 Technical limi 12 2.1 Definition 2 2.2 Recording performance against technical limie B 2.3. Value drivers B 3 People and enabling environment 4 4 Mulei-disciplinary approach 5 5 Technology - Business technology maps & implementation staircase 15 6 Servicing the limic 16 7 Producing the limic 16 Topic 3 Well delivery performance measurement 127 1 Wall delivery key performance indicators 7 1.1 Safety performance v 1.2. Bottom line business performance 7 1.3 Excellence in exeerition 18 1.4 Opportunities for improvement 18 1.5. Resourcing levels 18 2 Activity and discipline healthchecks 18 2.1 What is a well delivery healthcheck 18 2.2 The structure and scope of a well delivery healthcheck 19 Topic 4 Wells delivery knowledge managemenc 12/21 1 Background a 2 Components of the wells delivery knowledge management system 23 3. Well minimum standards B 4 — Global standards and guidelines 24 5 Practices worth replicating 24 6 — Wells global network 25 Appendix 1 Glossary 1/2027 Appendix 2 Wells minimum standards 12133 Questions 12135 WDIP- The wall delivery process Pace 1/2/1 v2.00References EP99-5207 “Deliver the Limit” Discussion Note Concepts, Methodology & Implementation ‘Wells engineers who are interested in performance improvement are strongly recommended to review the paper presented to the SPE on Unocal’s drilling operations in the Gulf of Thailand “World Class Drilling in the Gulf of Thailand: North Pailin Project” SPE # 79896, The paper can be accessed via the WGN or the Rijswijk library Page 1/2/2 WO? - The well delivery rocess v2.0.0Introduction and objectives Shell operates in a fiercely competitive business environment. Not only is chere competition from other “super-major” oil & gas companies, but an increasing number of highly successful independents, Petropreneurs and National Oil Companies are also expanding into the global arena. Furthermore, large integrated service companies are able co offer end-ro-end capabili- ties in sub-surface and well delivery, and could replace Shell as che preferred Operator or Partner of first choice to host Governments. In responding to this threat, Shell needs to con- tinuously build discinctive capabilities compared with new and traditional competitors and ‘Well Delivery must be a major contributor in this respect. Well Delivery represents a signifi- cant parc of Shell’s business, accounting for appro» and 10% of Group operating expenditure. ately 50% of Group capital expenditure, ‘This Pare introduces you co the way in which wells activities are governed in the context of the global organisation introduced in 2003. After studying ic, consulting other relevant docu- ments and, if necessary, discussions with your mentor, you will be able co: + Describe the purpose and scructure of the Well Delivery Process. * Explain the intent of DTL/STL and show how it is used in the WDP. + Identify the Wells Activity key performance indicators. + Explain the purpose, methodology and deliverables of an activity Healthcheck. Describe the role of the Wells Global Network and the ways in which well engineers can participate in the activity of the Network. WDLP - The wall delivery process Page 1/2/3 v2.00Resume ‘This Part covers the following topics ‘+ The Well Delivery Process (WDP) ~ origin and links to che Opportunity Realisation Process (ORP), structure and workflow logic, scaling and application. © Performance Improvement ~ DTL/STL, what it is, where and how it appears in the WDP, the main underlying principles of ‘Technical Limit, Multidisciplinary Working, Enabling Environment and Technology. + Performance Measurement ~ Wells Activity KPIs, Activity and Discipline Healchchecks + Wells Global Network - Page 1/2/4 WOIP The well delivery process v2.00INTRODUCTION ‘The Well Delivery Process (WWDP) is one of the core EP business processes, interfacing with a majority of the other ewenty-five Global Processes. It describes how “well” related activities must be managed in a consistent and structured manner co deliver maximum value dering all phases of che opportunity lifecycle. It guides staff towards high performance in all well-related activities and is consistent with the Opportunity Realisation Process (ORP) as described in the Opportunity & Project Management Guide (OPMG). The WDP serves to structure well delivery and is based on four key design features of the ORP: * Decision based project planning with core development and well engineering activity to support so called gate decisions — project milestones decision; © Value Creation based on Realise ‘The Limit (RTLYDrilling The Limit (DTLYService ‘The Limit (STL) way of working; © Quality Assurance via appropriate peer reviews; + A deliberate divergent phase of activity before converging on ‘solutions’. ‘Value creation should not only be seen in the context of introduction of new technologies or a change in work procedures, but has to go hand-in-hand with considering options for manag- ing tisk. In order to maximise che value created, risk management must be integrated throughout the Well Delivery Process. 1 OBJECTIVE ‘The objective of the WDP is to provide a common structure for the way we select, design, execute and evaluate well and well services activities. The WDP will promote closure of per- formance gaps thac exist in varying degrees throughout the Group's well delivery activities * Integration — from functional decision making in the various phases to multi-ciscipli- nary panel decision making at aligned tollgates — project milestone. + Adherence ~ from non-compliance to strong process governance + Learning ~ from local learning to rapid global implementation of lessons learned * Organisation — from inefficiencies and duplication to clear roles and responsibilicies © Risk management — from haphazard to structured risk management + Best Practices — from people-driven uptake of best practices to process-driven uptake Ic does this by outlining processes and standards for assuring the delivery of wells with demonstrated technical integrity over their full life cycle. Ic ensures chat best practices can be Poge 1/2/5applied and provides the basis for continual improve- ment and corporate learning in pursuit of sustained per- formance improvement. (Project mind set. [the WDP originates from the project management guideline, it relies on defin- ing « well delivery project. For an =xpen- 2 MAP sive or complex exploration well, this is [conceptually simple. For lower scale repet-| ‘The five phases of the ORP form the framework for the a c process steps of the WDP. The framework demands eat (ec ee aera integration of all discipline activities across the five See eee cee eee phases of the process. The WDP requites timelines & [if dhey don’e run back co back, and treat incents that are consistent with other Linked processes. | that campaign as the projec. ‘The five process steps of the WDP are: * IDENTIFICATION of oil field development and well design options + SELECTION of the most valuable option + DETAILED DESIGN to optimise the well programme © Operational excellence in EXECUTION + REVIEW of performance vs. plan Value Creation Primary Activity Figure 1.2.1 : The well delivery process ‘The WDP design reflects the following principles: © Key decisions are made and management control is achieved, by a decision gate mecha- nism chat provides a management assessment of the robustness of the opportunity and makes the decision to progress to the next phase of the activity — i.e. open che gate for che project to proceed; © Anexplicit commitment is made to resource the process with multi-disciplinary teams and an agreement on che timeframe required to pursue che opportunicys * A logical workflow is retained within each of che five phases, with an initial value creation event leading to decision based plans/activities. © Activities are followed by an appropriate review before final submission to a meeting, where a decision will be made to proceed (decision gate meeting), Page 1/2/6 WDIP - The well delivery process v2.00The same logical workflow is retained within each of the at => case, an initial VALUE CRE- ATION activity is followed by an appropriate REVIEW Ravinw, activity before submission to a DECISION GATE activity ‘Value creation activities are based on proven RTL and Yale en a DTLSTL tools and tech~ cacnin niques. Review activities, with the partici f participation of Wek pets, provide value assurance. Process 3 WELL DELIVERY PROCESS SCALING ‘The Well Delivery Process is intended to Figure 1.2.2 : Well Delivery Process structure be adjustable to the nature and complexity of a project and so guide che effective design, and efficient execution of all well related proj- ects from relatively simple well interventions, workovers and sidetracks of existing wells to the drilling and completion of complex mulei-well projects. ‘The intent of the scaling is co give guidance, dependant on che nature of the project, on: + what is the right work at the right time; + the appropriate level and scale of value creation, review and decision gate activities; © where to prioritise resources; ‘The WDP scaling is based primarily on well complexity. Optimum management of the process, however, will also depend on the Subsurface Complexity Factor as described ia the Hydrocarbon Development Process. In more complex environments, the timing and uncer- tainty of subsurface realisations will impact the WDP, particularly in the Select and Define phases when a greater degree of flexibility may be required. “The “project templace", a cross plot of Project Size/Complexity/Innovation versus Project Environment (see Figure 1.2.3), provides the conceptual basis for scaling in the WDP. ~ Frontier Project : Chge ae etry om in 0 oir A Well Delivery Project (WD Project) may be classified in one of the four categories to pro- vide a starting point for determining the appropriate process scaling tmovaton + New World — complex project in new venture location or environment ~ Nga mhataeigalal MEDIUM to HIGH SCALING standard project of _\ fanilorsope ne * New Environment — standard project Repeat Project \ nu aosnes of familiar scope in a new environment Kemiior environment — MEDIUM to HIGH SCALING hs Proje size/eomalexiy Tie Prajec Eran Figure 1.2. Project templote diogrom WO? - The well delivery process Paye 1/2/7- v2.0.0+ Frontier Project — project of larger size and/or complexity than normal, but in a fimil- iar environment - MEDIUM to HIGH SCALING * Repeat Project ~ project of familiar size and complexity in a familiar environment ~ LOW to MEDIUM SCALING Each of the regions classifies its portfolio of projects on the project template (LOW, MEDI- UM or HIGH) and scales the application of the well delivery process according to regional governance and value assurance requirements. 4 WEB ACCESS ‘The Global Well Delivery Process can be found in full, together with the other global processes, at the following web address: nip Ulswwep sbell.comtprocessesfindex. btm. 5 EVERY DAY EXAMPLE When seen for che first time, the WDP can appear both daunting and abstract. It is, perhaps, worth thinking about it in the every day context of a non-routine job on a drilling rig to illus- trate how the different elements work together. This will also enable us to show how scaling can work. Situation The iron roughneck [a large piece of machinery on the drill floor] has become unserviceable while cripping with pipe inside casing. You are the person in charge of the well site operation and need to decide how best to repair the machine and return it to service. ‘Taking the process in the same five steps (five phases of the ORP) in turn we have: Identify & Assess This step begins with confirming chat che machine has failed and the scope of the repa required. You might then consider all of the different ways thae the repair can be accom- plished and decide chat there are two distinct options ~ repair che machine in-situ on che drill floor or move it from the drill floor to the mechanics workshop. You identify the main queries for which the answers will allow you to choose between the options. They might be: * How long do you estimate that removal and replacement from che drill floor will cake (during which no well related work can proceed)? * How long will che repair itself take if performed in situ and if performed in che work- shop? Note that if repaired on the drill floor, no other work will be possible. * Are there any show stoppers for either option e.g. is there a crane available co move the machine? ‘You review the options and criteria with your well site supervision team, including the mechanic co check that you've covered all of the possibilities. You then decide to proceed with these ewo options. Select Having decided co proceed, your team must estimate che answers to the questions above by making an outline plan for each activity. They need to make a rapid assessment of the feesibil ity of each option, including a risk assessment. This might take 30 minutes or an hour. You then come together again as a team in order to agree which is the better option. Having, Page 1/2/8 WDLP - The well delivery process v2.00reviewed the work of your team the option to remove the iron roughneck to che workshop appears to be the most efficient with the lifting risk offset by the risk co personnel attempting to repair it in place and mitigated by a detailed lifting plan. You decide to proceed with this ‘With a preferred option now selected, you ask the team to optimize che concept and pull together a detailed plan, This might lead to a programme that calls for the machine to be removed from the drill floor in ewo lifes, for a protected area to be created next to the work- shop co avoid a life in to it etc. It also considers and rejects the option of bringing out a spare machine as a replacement due co the modifications required to the drill floor. You review the plan with your team of supervisors and decide to proceed. Execute The eeam who will carry out che work are now called attend to a pre-job meeting. The detail and intent of each step is explained cogether with che risks and mitigations that have been identified. They have an opportunity to comment and detailed modifications are made. Then the team goes ahead and carries out che work, safely and successfully. Once the machine is recumed to the drill floor and cested, you call an end to the Execute step. Operate ‘With the machine back in operation, the last step is to have a post-job meeting to capture how well che job went and how the plan could be improved. Although you hope that the ‘machine will nor require repair again soon, when that does occur, or if it happens on ¢ sister rig, your experience can help the team that has to carry out that job. fhe well delivery process Page 1/2/9INTRODUCTION Realising the Limic is” underpinned by people performance improvement ethos based on the limit approach & ‘Some of the main descriptions/behaviours characteristic of the RTL approach are listed below: © Understanding the project's value drivers * Establish clear shared objectives * Performance ethic, everything is challenged, a hunger co learn * Multidisciplinary approach to process optimisation * Maximises partner and contractor contributions + Uses the Technical Limit co approach a highest value solution from perfection rather than from che ‘normal’ * Engage on a Real Piece of Work - Create tangible results real time to improve the business * Integrated Team - Focus on life-cycle and owned workplan © Opportunity based workplan - Work on che right things + External input - Unlock potential by breaking paradigms * Enabling Environment - Support and challenge. Be There! ‘Technical Limit Ethos - Show the gap, create opportunities and converge to plan RIL is also about the collection, validation and dissemination of best practice eo consistently improve performance throughout Shell. The Limit methodology is one used to achieve tangible results in real cime to improve business - chat is to work down from a point of perfection based on the current levels of technology, rather than from today's performance upwards. In other words creating the right * tension” will pull up perform- ance rowards perfection with far more i aie rapid performance improvement being \ Lacie | achieved than attempting to push up Improvement (4) performance by incremental improve- Peer ments from previous established per- Figure 1.244 + The Limit methodology - RTL and business formance. This limit methodology is inmproverent shown in Figure 1.2.4. 7 WOIP- The wll v2.00Realising che Limic is composed of a number of teams: * Volumes to Value (V2V) * Capital to Value (C2V) + Explore the Limit (XTL) «Drilling che Limit (DTL) + Producing the Limit (PTL) * Service the Limie (STL) ‘These ceams disseminate best practice by using global networks, building professional com- munities and through the peer assist process. V2V is dedicated to hydrocarbon maturation and aims to achieve step changes in business per- formance improvement and drive the hydrocarbon economic recoveries towards the technical limit, Ir defines the best projects to maximise economic recovery from oil and gas fields C2V is dedicated to project realisation and surface engineering. It selects, defines and realises the value creation potential of a project. The C2V team focuses on Project Definition during the IDENTIFY & ASSESS, SELECT and DEFINE phases. C2V run peer assists, often in part- nership with V2V, to help project teams mature their projects towards FID (Pinal Investment Decision). XT is the operating arm of the exploration forum and was established to build on the sue- cessful work done by the RTL teams, V2V and DTL and co implement RTL methodologies in Exploration. In the past some exploration assets were dealt with under V2V, and exploration wells went through che DTL processes. The intention now is to build on this and to offer a comprehensive suite of products to the exploration business. ‘The main areas of RTL that che Wells community are involved are DTL, STL and PTL and these are outlined in more detail below. 1 DRILLING THE LIMIT (DTL) “Drilling the Limie™” is a structured approach to creating the conditions under which the well delivery team are able to realize che best performance of which they are capable and to maximizing che value resulting from a well delivery project. DL has been embedded within the Well Delivery Process, most explicitly through the three value creation activities (Concept Design, Value Challenge and Drill the Well on Paper) and two of the review activities (After Action Review and Post Production Review). ‘More fundamentally, the DTL approach is based upon four core principles: * Use of the Technical Limic concept to help teams understand how great is the oppor- tunity co improve their project; © Creation of an environment that allows a ream to deliver its best performance; + Mulei-disciplinary working to ensure that the asset or activity that is delivered is che most valuable to the customers + Identifying and implementing the most appropriate cechnology for the well delivery project. DIL is characterized by elegant and simple concepts that are, for the most part, easily under stood. The practical application of the DTL approach, however, offers considerable chellenges and achieving a performance breakthrough never comes for free. WDIP - The well delivery process Page 1/2/11 2.0.02 = TECHNICAL LIMIT ‘The practice of setting and using a eechnical limit for @ Well Delivery Project is the driving force of Drilling The Limit. The intent of the Technical Limit is co induce a team to assess their performance improvement opportunity from the perspective of perfection rather chen the perspective of an incremental improvement on the scacus quo. I is summarised by the ques- tions: + Where are we now? © What is possible? * How do we get there? ‘The application of Technical Limit thinking has shown that 150-250% performance improve- ments are sometimes feasible and that the scope co improve often far exceeds the expectation of the well engineers directly associated with the project. It is critical to the success of this approach to change the mindset of those involved in the process to believe that che norm is not acceptable, that breakthrough levels can be reached and sustained and chat managed calcu- lated risks need co be taken co reach the goal. The technical limit is primarily a business tool that results in people and teams opening their minds and breaking paradigms in order tc identify opportunities for performance improvement. The design of a Technical Limit well forces the well delivery ceam o think very broadly and obliges them co look past existing pre- conceptions. 2.1 TECHNICAL LIMIT DEFINITION ‘The Technical Limic is defined as: "A point of perfection or perfect performance Limited only by current technology and nature In the context of ‘delivering the right well right’ ic is essential that the well delivery team defines what ‘perfect performance’ is and how it addresses the objectives and value drivers (see below) of the well delivery project In designing the Technical Limit for a well delivery project, the well delivery team shoukl consider themselves free from their current local OU constraints and able to plan the use of any (proven) technology with any current technology and equipment worldwide. The ceam should be ee striving to create their world record well which ike: Rett 8 aera. ences oF ebay addresses the value drivers and meets business objec- | hw Ben eetae Gass ane tacal tives - Whac would ic look like? How quickly could [27S se phase, “The debate i fuelled by the we create it? How much would it produce? What ate | perception chat the Technical Limit is unealis-| the economic implications? Fic and hence not worth seriving cowards, Once the Most Valuable Well has been identified [For this reason, the most important dee of a| and designed, the well delivery team then needs co [7 fora well delivery project is chac i is mean- ing fo de well delivery project cam, They decide whether ic can actually be delivered/executed |r nicretand how the TE was st ane whee for their individual project (their forthcoming well). |rechnologies or practices would clore the per-| In some areas, the technical limit design can be oemance gap, ‘The team MUST consider the achieved (moving from che perfect world to the real _ | TL credible ori has no power co change thei world), where, for example, the most valuable tech- japproach to che project. nology (state of the are equipment) is already in use or readily available and/or the time is available for the planning and development required. In other areas it will be concluded that the technical limit well cannot be delivered - for example where the project time-scale does nor allow the work required, or the budget will not stretch co buying new equipment. Page 1/2/12 WOIP - The wellIf che well co be executed is differenc from the Technical Limit well the difference between the two should be captured. ‘This leads to a number of "If we could....." type statements. For ‘example: "If we could get a rig with a top drive we could reduce this well time by 102%". ‘This records what is known as the “value of regret”. Documenting and communicating the value of regret is a structured way of getting better technology or equipment for future wells as the information can be used to generate a business case when several projects identify the same technology as an enabler. This can spread che cost of implementation over a larger proj- ‘ect portfolio and render the technology economic for the individual projects. 2.2 RECORDING PERFORMANCE AGAINST TECHNICAL LIMIT ‘Whether or not che initial design of the technical limit well is the one chat is executed, this perfect well design should be captured and documented prior co well execution. It serves as the perfect performance level against which the project will measure its performance. The ‘Technical Limit aspiration in combination with the ‘value of regret’ stacements will generace the continuous creative tension needed to accelerate the rate at which business performance improves. Procose: ‘ise curtent performance (ime) for discret tasks into wall (can ve 200+) ‘Datine bast ever time for incvual asks rom offsat wells and engineering Knowledge. Summation of Individual mes fs the Technical Limit ‘Apply engineering “power to remave the gap between the curent performance and technical iit It Porforre “analogous wo a sports here needs tam wishing to enter ho el ‘Olympics, The team looy knows the farget Toll wold tego! rong: (Technica Lint wich is the present Olymoie Voli orgot cage for current technology record and below. They know hair curent vel of performance ard hence the gap they need to “Nona ‘lose. To cloee the gap they setup and embark besos ne "1 ‘ona waining program wih 7 expert hap. The gap between the Idantifid Technical es mit time ana provious (orthecretcal bes "Peformanca —_—_pesdormorce Performance ean be lovol 190% z wie > % ara AINE DRIVERS Figure 1.2.5 : Technical ini! drilling ‘The term “value driver” is one thac often causes confusion as people have differing, ideas about what it means. For the purposes of the well delivery process (and thus application in DTL), the following definicion applies Value Driver: A project parameter, either cst or benefit, which bas a direct and significant impact on the value that the project delivers ‘The value delivered by a project is the difference beeween che revenue that it generates and the costs that are incurred co in the course of the project. Value is increased when the differ- ence between revenue and cost is increased. (Note that it is necessary to discount for time, buc that is beyond the scope of this discussion.) The obvious approach is to try to increase revenue (i.e. production) and reduce costs but it is important to realize chat sometimes it is worth incurring higher costs because it allows revenue to be increased by a bigger factor. For WOIP- The wall delivery process Poge 1/2/13 v200instance, when buying new cyres for a car, ic might be the case that one make of tyre costs 10% more than its competitor but lasts 25% longer. Under these circumstances it costs more bue delivers greater value Even simple well delivery projects are more complex than the decision described above. In complex projects there may be many different options available co the weam to affect cost or production. To make the task of identifying the optimum solution for the project more man- ageable, therefore, it is valuable to identify the evo or three most imporcant factors ehat will affect either the costs or the production of a well. ‘These factors are the “value drivers". For well engineering activities, particularly offshore, time related costs dominate the cost break- down of a well and the time taken to cary out a well activity is thus often taken as a valie driver. The value drivers for the production of a well depend on the characteristics of the reservoir and the development options chosen, For instance, reservoir management may cictate that che most important factor is achieving perfect zonal isolation on the production casing, Production rates may depend on reservoir exposure. Ultimate recovery may be greatly affected by placemenc of the well bore or on well bore geometry. 3 PEOPLE AND ENABLING ENVIRONMENT Each of the five elements of DL are critical co its successful application but none more so than assembling the right people in the team and creating a working atmosphere, or nabling Environment”, that fosters performance. The team should! ideally have the right mix of competencies and personalities, and be enthused about a common objective of deliver- ing an outstanding performance. Sometimes the composition of a team is more the product of circumstance than of choice but we always have influence, if not on the people on the team, then on the way the ceam inceracts*. Enabling Environment as used in the DTL process is defined in che following bullet poirts: '* Support and never criticism * Every person's job as important as the next Withoue doube it isa erucal pare of © Equal rights and stacus for contractors and staf Ree ateeeeik case ‘© Shared set of ream values Jculcuce, BUT ic starts wich each one| lof us. Too often people sit back andl ‘© Trust in each other capabilities and endeavours fale Ge wuescine eloties Gx tie problem. We each have to lock first fac our own behaviours and fix chose| ‘+ Clear priorities and clearly aligned goals + Rigorous adherence co Technical Limi goals fies. Improvement starts with each lof us ~ choose your attitude! * Full disclosure of errors, lose time and inefficiencies * Celebration of every success Embedded across all of these points (and essential to the success of this environment) is clear ‘communication of these principles co all staff involved in che well delivery process. A sign of a successful enabling environment is transparent communications between all involved (e.g., no fear of disclosure of errors, clearly aligned goals and clear common understanding of tasks). “This is a critical success factor for sustained business performance improvement in well deliv- ery. The absence of this environment prevents the organisation from defining che full scope for improvement and identifying the inefficiencies in the current process. If DTI. is viewed as % There is large body of research on team behaviour Consul che Shell Open University for learning opportunities on this subject. ul ie fa is too great a subject co cover here even briefly. Page 1/2/14 WOIP The well delivery process. v2.00a tool, then it is certainly che case chac che performance of a good team with an enabling envi- ronment but without DIL will far exceed the performance of a poor team that is required co use the DT process. 4 MULTI-DISCIPLINARY APPROACH DTL uses multi-disciplinary working, particularly in the value creation events, in order to set shared, prioritised (bottom line) objectives for the well delivery process. Well engineers have sometimes been accused, by their customers, of constructing the cheapest or quickest well instead of the well with the most valuable functional performance ‘The setting of common objectives for a project requires « fundamental sharing of understand ing of value, cost and risk drivers across disciplines. It also requires an environment and careful facilitation that As well as conseructing wells that ate %9] allows dogmas and paradigms from any discipline to be ing well iene on erp One lenge openly. well in the Middle East has eight lateral] Another strong reason for multi-discipline work ng is sections in the reservoir, each hundreds of] thar significant changes or insights usually come from outsiders". Since, for instance, a reservoir engineer is rarely involved in derailed well design work, (s)he repre- sents such an outsider who can bring a fresh perspective [Beware the "because we can” trap. meters long. ‘This represented a record breaking technical performance but it has proven to be impossible o determine or eontrol where the production comes from rendering reservoir management extreme-| Of course, the well engineer concerned may have to y diffcule. remind him/herself to view any suggestions as an oppor- tunity rather than a threat to self-esteem! 5 TECHNOLOGY - BUSINESS TECHNOLOGY MAPS (BTM) & IMPLE- MENTATION STAIRCASE A key route to performance improvement is through the application of new cechnology. This ‘can mean both technology that bas recencly been developed and technology that is meture but has yet to be brought to the operation under consideration. There are several challenges associ ated with applying new technology, some of which are interrelac + Identifying the technology opportunities chac could potentially be applicable to the project; * Quantifying the likely benefits of a new technology and constructing a business case; + Identifying and managing che risks associated with applying the technology; * Overcoming che resistance to change (“not invented here”, “we've always done it that way”) and generating che necessary enthusiasm; ‘The DTL process encourages technology application by raising it as a specific question throughour che process, particularly in the setting of the Technical Limit. The onus, however, is on the Well Delivery Project Manager to draw on various resources, such as WGN, the OUs, Business Technology Maps (BTM) and Global Implementation Teams (GITS), to address these challenges. It is particularly effective to invite peers with experience of a target rechnolo- ay to participate in the value creation events. ‘Their direct and personal experience of a tech- nology helps co make it “real” ro the members of the team who have not seen ic before Stacements like “we do that all che time” can be a huge boost to people's willingness <0 try something, that might otherwise seem like an abstract or experimental idea. Bear in mind that if you put the same people in a workshop, considering the same problem with the same infor- mation to hand, ic is unlikely chat you'll obtain a different result ~ peers are essential. WOIP- The wall delivary process Poge 1/2/15 v2.006 SERVICING THE LIMIT (STL) ( Servicing che Limit (STL) describes an enabling, performance-oriented working culture sap- ported by an amalgam of industry best practice processes applied in the area of well servicing. cis an extension of Drilling The Limic. ‘Well servicing operations, by the nature of the business, cannot have the same level of input as say a multi well project, at the feasibility stages, In many cases the required course of action is predetermined and the number of options will be limited, i.e. che original well design may determine the equipment and che repair/maintenance activities that require to be undertaken, Many well servicing activities involve repeat application of the same procedures, e.g. safety valve change/gas lift valve change/pressure survey/wellhead and tree maintenance. In some cases it will be more appropriate to approve or review a series of the same activity rather than individual operations on a periodic basis. Handlling of different project scales was discussed under Well Delivery Process Scaling. The same processes, procedures and philosophies apply to STI. as were discussed in detail for DTL. Servicing the Limit (STI) is in fact DTL as applied to the Well Services/Completicns ‘community. The intent is that these processes are the same with the only difference being at ( what stage in the Well Delivery process or well life cycle they are applied. 7 PRODUCING THE LIMIT (PTL) PTL is dedicated to enhancing production and is all about “getting the most from what you've got”. Creating the environment, culcure and will to produce and deliver sustained increases in hydrocarbon production from existing wells and facilities. Applying che process to mature fields has typically raised production by 10%, but has been as much as 25%. PTI. peer assists are not an audit or operational review, they are a collaboration between EP professionals, to identify how best to maximise an asset's potential in cerms of production and ultimate value. The Wells community maybe involved in the peer assists, especially when modification to a well is likely co be considered or when well entry — either routine or non routine is required. I is essential chat Wells community concributions are considered here for ensuing that operational aspects are fully considered and appropriately handled from a well integticy and risk management view point. Page 1/2/16 WOIP - The well delivery process v2.00INTRODUCTION One of the earliest maxims of management science was: “If you do not measure it, you can wot manage it! ” That is as crue today as it ever was. In the informacion age, however, most businesses are over- whelmed with information of all sorts, much of it relaced to che measurement of different business paramecers. The critical challenge has become reducing the information that we use to manage our activities to a manageable quantity without losing the detail chat can point to the reasons for performance variances. ‘The Wells Activity Leadership Team has decided co assess the performance, and potertial for performance, of their well delivery organizations in ewo distinct ways: + By reporting, on a regional and operacing unit basis, against eleven key performance indi- cators. * By carrying out periodic Activity and Discipline Healthchecks to assess process adherence and performance culeure within well engineering organizations against recognized best practice. 1 WELL DELIVERY KEY PERFORMANCE INDICATORS (KPIS) ‘The ethos that underpins the Well Delivery Process is one of Performance, and the success of the process will be measured chrough rigorous tracking and reporting of a balanced set of well delivery performance metrics. ‘The following eleven measures (KPIs) have been selected co capture safety performance, bot- tom line business performance, potential opporcunities for furcher improvement and current resource levels. Comparison is mace with respect to the planned performance that was prom- ised at che Approval decision gate. 1.1 SAFETY PERFORMANCE * Total Recordable Case Frequency (TRCF) While che drive for performance is high, due attention MUST be given co safety. No ob is too important to compromise Safety. 1.2 BOTTOM LINE BUSINESS PERFORMANCE * Unit Development Cost (UDC) © Unit Finding Cost (UFC) * Unit Operating Cost (UOC) © Production added by Well activities WIP. The well delivery process Page 1/2/17 v2.00We are in the business of finding, developing and producing hydrocarbons. Therefore all our activities should directly or indirectly relate to the bottom line of che entire E & P business. ‘These are measures by which our performance is assessed against promises made to Shareholders/Investors and against the competition. 1.3 EXCELLENCE IN EXECUTION © Well Coses © Well Times During the “Capical Allocation” process in E&P, projects compete for funds based on project robustness, profitability and strategic imperative. Capital discipline (spending and returning the forecast sums) is required in both the planning and execution phases of any project. The ability co execute a project without exceeding the budget is as important as the ability ro deliver a project within the estimated time. Since most wells projects are linked or tied bigger projects of Company-wide interest or/and National interests, delivery on our time and cost promises is a highly relevant measure of our performance. 1.4 OPPORTUNITIES FOR IMPROVEMENT © Non Productive Time (NPT) % © Invisible Lost Time (ILT) % ‘The gap becween where we are and where we would like to be puts performance tension in our organisation. The size of the gap is determined by high quality application of Technical Limic methodology. Identifying the gap is good, but useless if there is no plan/resources to close the gap. 1.5 RESOURCING LEVELS © Number of staff vacancies (7%) © Number of consultants (%) ‘These measures help to identify staff need of the operating units. Competent Well Engineers are a limited resource and the efficient deployment of staff is a value driver for the business. ‘We need to put the right people in che right place at the right time. 2 ACTIVITY AND DISCIPLINE HEALTHCHECKS (2.1 WHAT IS A WELL DELIVERY HEALTHCHECK? A Well Delivery Healthcheck is a benchmark of a Regional or local Well Delivery organisa- tion’s “health” against globally agreed best practices. It examines how wells are currently being delivered from a business process, cultural and organisational point of view. Objectives of healthcheck in order of priority are: * To develop a Performance Improvement Plan co realise or exceed Well Delivery Performance as demanded in the Regional Business Plan © To evaluate the Well Delivery Performance Management System * To identify Well Delivery strengchs and weaknesses and agreement on opportunities for improvement + To promote embedment and sustainability of the global Well Delivery Process * To disseminate lessons-learnt and practices worth replicating co or from other Regions. Page 1/2/18 WDLP - The well delivery process v2.00‘The Region/OU gets ‘a look in che mirror’ — an understanding of where they stand compared to current Best Practice, and an indication of where they need to focus their attention in order to improve performance. 2.2 STRUCTURE AND SCOPE OF A WELL DELIVERY HEALTHCHECK ‘The healeh check team may use several complimentary approaches. The core of the health check is a series of structured interviews with personnel that span che full specerum of disci- plines thae contribute ¢o well delivery. From the interviews, and from an analysis of perform- ance data provided by the OU, the healthcheck team builds up an understanding of areas of strength and weakness within the Region/OU. A Health Check should: ‘+ Meet business needs (input into planning cycle) and deliver performance improvement plan on a yearly basis + Flag areas chat may benefic from audit + Bea structured two stage process - internal (self) assessment ancl external (peer ~ a review + Identify Practices Worth Replicating in other areas + Conduct data gathering via a standard & repeatable set of questions ‘The procedure is: © Prepare Develop and agree on date and “Terms of Reference” + Gather data Use all available hard data to establish base case and possibly performance gaps © Verify Systematically interview all relevant personnel and ask for more data/information when necessary + Analyse Review data/information collected to identify the contributory factors to observed per- formance gaps + Priotitise Rank observations and focus on items thac will have significant impact on the Well delivery performance + Action planning/best practice sharing (PWR — practices worth replicating) A clear road map fully resourced to close oF minimise the gap identified. Combining che well delivery key performance indicators and healthcheck allows a proper understanding of the relationship beeween business/safery performance and process compliance and attitudes and behaviours. The outcome can be displayed as a “Well Delivery Dastboard” as shown in Figure 1.2.6 overleaf. very process Page 17219Wor ncr ar cuerc) Laggingrls Leading Pls Press ee Figure 1.2.6 : Well Delivery Dashboord Page 1/2/20 WOLP The wall delivery process. v2.00INTRODUCTION DIL and che Well Delivery Process rely on effective knowledge management (KM) as a driv- ing force: wichoue best available knowledge, and technology, the Drilling the Limit aspiration is unlikely co be achieved. The effectiveness of knowledge management systems (as well as the motivation of individuals and teams to use them) is key co avoiding repetitive mistakes and unnecessary effort in retrieving information 1) BACKGROUND During the 1980s, knowledge management in Shell was very much focused around the central organization Shel] International Petroleum Maatschappij (SIPM). SIPM provided Group Training facilities and recruited centrally managed staff, headed by discipline godfathers that sponsored and coordinated in-house research in one of the two world-class research centres (KSEPL and KSLA) as well as managing a global skillpool. SIPM also had positions for global consultants (“gurus”) that issued Shell guidelines and advised individual projects in the oper- ating units. All communication from operating unit to operating unit had co go through these central resources, and quality of this information was thus well assured. The system was opti- mal for a controlled growth during roller-coaster oil price changes of the 1980's and elped to give Shell the stability and long term continuity co grow into the largest private enterprise in the world. On the other hand, the so called “3G" system (Godfathers, Gurus, Guidelines), in combination with decentralized decision-making in operations, was slow to innovate - hori- zontal well technology took 5 years ro spread around the Shell world During che low oil price yeats of the 1990s, the 3G system also became too expensive, and was finally retired in the 1995 re-organisation. It was replaced by a cocally decentralized asset organisation in which the individual or his/her team were “enabled” co look after their own career and knowledge needs. In che newly formed, multi-disciplinary asset teams the team leader was much less able to carry out functional quality control than the old-style discipline head that he replaced. Line management control shifted chus from functional control 10 process concrol, and cross-asset peer challenges were brought in to ensure that good technical practices were employed in a project. This system was low cost and contributed ¢o a rapidly increasing ROACE (recurn on average capital employed) in the company, but it failed to ensure consistency in high-quality technical delivery. Whilst some operating units achieved ‘good results in industry benchmarks, others belonged to the 3rd quartile performers amongst their regional peers. The eypical approach of treating asset teams as core, with drilling teams and contractors as suppliers, did not help to ensure that best-value project alcernacives were identified and macured jointly. ‘The current Drilling che Limit approach was designed in 1998 in order to ensure a more con- sistent well delivery chrough joinc ownership and process challenge. At the same time, the WDIP.- The well delivery process _ ~ Page 1/2/21 v2.0.0‘Wells Global Network (WGN) was formed to enable worldwide peer discussion and effizient searching for experiences. Within a short time the DTL and WGN approach became the lead- ing industry model, and Shell's ranking in drilling benchmark surveys as well as Knowledge Management benchmarks increased significantly to regular cop quartile performance. Shell also converted itself from a leading research company into a leading technology implementa- tion company. High impact cechnologies such as expandable sand screens were rolled out across the entire Group within 18 months, making Shell che marker leader in chis technology with a 60% share of the world market (2001). ‘The DTL and WGN model is based on joint ownership for knowledge and innovation between the individual and the company. Through global Minimum Standards, Value~ Assurance Reviews, and selective training courses, the company defines the minimum require- ‘ments to ensure cechnical quality, whilst the individual finds sufficient space to implement innovative ideas after thorough discussion with peers. The Shell Open University follows the same principle of joint ownership for knowledge and professional development, wich the com- ing the technical resources and the individual providing the time. pany provi In 2002, the Technical & Operational Excellence (T&OE) organisation was created to further minimize duplication of effore between the Operating Companies and to strengthen the tech- nical/professional career path in che company. ‘The hiscorical changes in knowledge management chat are discussed above reflect che recuire- ments of changing oil prices and new organizational developments, but they also account for a changing global knowledge economy. Prior co arrival of the internet and the networked com- puter, the individual well engineer had a shortage of knowledge resources ac hand and needed to spend extensive time on communicating via paper reports co share experiences across the organisation. Prior to the asset organisation, it was not unusual that an engineer spent up to 40% of his/her time on writing reports, whilst participation in other chan discipline meetings ‘was strictly limited to less chan 10%. The creation of the Shell-wide-web and of email geve access (0 a flood of information, the shortage of information curned into an oversupply. These tools also enabled round-the-globe sharing of experiences, and thus created awareness anc demand for global knowledge. At che same time, the asset organisation demanded more meet- ings becween (geographically separated) team members, and by the late 1990's it was not unusual for an engineer to spend 40% of his/her time in meetings but less than 10% on reporting. Knowledge was increasingly documented and shared ad-hoc, on demand, rather chan systemaically captured. The Wells Global Network discussions and the project chal- lenge process through peers are ideal tools for this purpose. However, this sharing can only work efficiently when people remain static in cheir position. The job-mobility (but not che ‘geographical mobility) of staff has increased rapidly in recent years, and the oil industry has aged such that nearly half of ies staff will retire within che nexe 10 years. Therefore the access to an oversupply of knowledge is temporary, and more efforts need to be taken to safeguard as much of che operational experiences through pro-active reporting. The Drilling the Limir well delivery process accounts for this requirement through adoption of the After Action Review (AAR) from che American Army, and the need for more formalized de-briefing processes prior to moving staff into new jobs is widely recognised. These initiatives can only capcure a small part of the experiences made, Knowledge Management experts reckon that as much as 90% of 2 person's knowledge is never made “explicit”, i.e. communicated to others. The conversion of “tacit” to “explicit” knowledge is accounted for by regular peer assists and virtual peer assists. Knowledge retrieval costs time and money, so much of the more recent developments in KM are spent on making the access to knowledge easier, be it by enabling virtual meetings (web conferences) with experts or by improving the clarity of the reporcing structures and ease of Page 1/2/22 WDIP The wall delivery process v2.00searching for information. The latter, especially, is a never-ending efforc, since knowledge doc- umentation is still increasing at a fast rate. 2 COMPONENTS OF THE WELL DELIVERY KNOWLEDGE MANAGEMENT SYSTEM ‘As mentioned above, Shell's current KM system is designed to cteate joint ownership for knowledge between the professional individual and che organisation. In this joint owrership, the processes and guidelines managed by che organisation ensure that everyone has a mini- mum amount of guidance and support at hand co deliver the desired quality projects. These processes and guidelines encourage the passionate individual to bring in their own prefessional standards (as long as they are higher chan those of the organi- Peerteesieniims knowledge Management in Wells through discussion with peers aa int and nominations for Practices aera ‘Worth Replicating (PWR). The figure below illustrates the main ERT KM components that are cur~ Perera es ea rently used in Shell Well Delivery, a webpage with an overview of all globally available lpatsiceruprerieeneeraiien knowledge repositories for all technical disciplines is called can be found from the main EP webpage. Figure 1.2. 3 > WELLS MINIMUM STANDARDS When you think about the way we (humans in general) manage our personal actions, t becomes very apparent that we are continuously choosing between doing things the way they are meant (or intended) co be done and the way we (as individuals) chose to do them. Safety is always the prime example. The difference between the two ways of doing things may seem small when taken in isolation, but when seen in the context of potential consequences it is anything but small. Running the orange/red light at the end of a queue of cars crossing a junction is absolurely the norm in certain countries. It isn't until the driver, taking that deci~ sion, kills a pedescrian, that the potential consequence of rule breaking becomes devastatingly apparent. + Knowledge management in wells ‘The same applies to our E&P business. ‘There are excellene rules (procedures) in Shell E&P for all aspects of our business, from exploration and well surveillance through to abandonment and soil restoration. These procedures have been buile up through literally chousands of man- years of experienced input and represent, if not best practice, certainly a way co manage the business without major upset — neither to our HSE nor to our EP core performance. During reviews of operating companies’ performance in the early 2000s, it became more and more apparent thac what used to be che norm in applying these minimum standards was no longer the case. The number of injuries caused or thousands of bbW/d lost by noc running oper ations to (at least) minimum standards remains un-quantified. It is evident, however, that there was and is enormous scope to improve — simply by doing properly what we should have been doing all along. WDIP- The well delivery process Page 172/23 v2.0.0Thus T&OE sec out co harness thac scope by issuing clear and concise minimum standards, which are mandatory in all Shell operaced ventures. These standards were not developed in isolation by “the centre” but in consultation with senior technical staff from all the QU's. The standards don't tell you how you should achieve something only what the key minimum stan- dards are, Every OU has the corporate knowledge re the how. ‘The purpose of defining the minimum standards for Well Engineering and Well Services is to secure basic quality of work co “deliver what has been promised”, in a responsible and sustain- able manner. Compliance should lead to: + Technical and operational integrity in planning, design and execution * Integrity of decision making + Effective performance management Minimum standards should also help us to improve continually and converge globally on best-in-class processes in an environment in which corporate learning is fast and effective Us will clearly define single point accountability for compliance with Minimum Operating, Standards. Compliance with Minimum Operating Standards shall be monitored through inde- ( pendent reviews with involvement of T&OE, The Wells Forum is the custodian of this mini- mum standard, ‘The current Wells Minimum Standards (as ac October 2004) are attached as Appendix 2, 4 GLOBAL STANDARDS & GUIDELINES Shell has adopted a number of external (industry or national) standards for ies global ope-ation in form of the “Design and Engineering Practices” (DEPs). These should be used in countries were the local legislation does not require co use local seandards, or where local standards are less strict. The DEPs can be found at: uipettsuwep-w.shell.coml depsldepsceb. btm In addition, Shell Drilling Engineering has developed a number of global Guidelines that are published together in the Drilling Engineering Documentation (DED) at: uipellsvwsiep shell comldedlbome.bim “These should be used in addition co any local guidelines. ( 5 PRACTICES WORTH REPLICATING (PWR) ‘The global PoWeR system (Practices worth replicating for operational excellence) will be implemented by late Q2/2004 and replace all local "Best Practice sharing” systems. Every employee can nominate a new PWR, by filling in the electronic input form, as long as che new PWR involves a practice that has been implemented in the Shell environment hence no untried ideas). A nominated PWR will be forwarded to a technical expert eeam to validate, and at least stored for everyone's retrieval as a “Lesson learne”. If experts and wells managers judge the value of replication potential of the PWR as high enough, they can forward it co all peers within a region and ask them to accept or reject (whilst giving reasons). The responses will be monitored. The PWR system is thus a powerful tool not only for storing knowledge, but also for pushing its implementation within the Group. Nominations for PWR will cypically be identified in review meetings or in After Action Reviews, but can be entered at any time. Page 1/2/24 WOLP The well delivery process v2.006 WELLS GLOBAL NETWORK ‘The WGN is che preferred cool to carry out technical discussions within the Wells communi- ty, currently neatly 3,500 engineers are registered co it. The WGN can be found at: busps{/suglobal-networks.shell.com forums/networks! dispatch cgi/wellslworkspace Whilse PWR entries contain expert-validated advice, the WGN discussions are open for shar- ing of ideas, suggestions, and new developments of general interest. The WGN is also a great tool to ask the community for help with urgene or non-routine technical problems. Everyone can post entries or reply with advice, but co save everyone's time the users are requested ( search the archives for information prior to asking a new question. Ifa user has received replies co a query, he/she should also provide feedback on how this advice has been used, in the form of a reply called “close-out” to their own question. WDIP- The well delivery process Pogo 1/2/25 v2.00Page 1/2/26 WDLP - The well delivery process v2.00After Action Review (AAR) Approval For Expenditure (AFE) Best Practice/Practice worth replicating Big Lever Club (BLC) Concepeual Design Workshop Decision Based Plan Decision Gate Decision Maker Decision Review Board (DRB) A structured review of past experiences, in order to improve future performance. It is a professional discussion of an event chat enables the parcicipants in that event to discover for chemselves whac hap- pened, why ic happened, how to sustain strengths and how to improve on weaknesses. An AAR can be used to review anything (ie. a meeting) however in che well delivery concext AARs generally cake place in the ‘execute! phase of the WDP and are operational reviews. The agreed planned cost for the Well Delivery Project for which funds have been released by the WD Project Sponsor: A best practice is a process, technique or innovative use of tecanolo- gy, equipment or resources that has a proven track record of success in providing significant performance improvement (i.e. in terms of cost, quality, safery etc.). A best practice should be globally applica- ble rather than just OU or situation applicable. ‘The Big Lever Club (BLC) is the Shell EP global procurement net- work operating in che Wells discipline The Conceptual Well Design workshop enables multi-disciplinary teams to work collaboratively co come up with the fullest range of porentially viable well conceprs thar will deliver the maximura recurn from every technical, operational and commercial perspective. A Technical Limit Concept should be agreed upon, together with the actions to realise it at some stage in the fucure. A plan thae defines project milestones in cerms of che decisions chat are taken at those points and is geared to delivering the necessary inpuc to those decisions on an appropriate timescale. ‘A WD Project milestone event at which the decision is made that the project will proceed co the next (or first) Process Step. The individuals with che authority to approve the way forward with respect to a specific asset, project ot portfolio. A group of Decision Makers coming together to approve or modify the proposed way forward for a specific asset, project or portfolio. v2.00 Page 1/2/27Drilling the Limit (DT) Drill the Well On Paper (DWOP) Feasibility Decision Gate Field Development Plan (FDP) Learning Review Level 1, 2, 3 Cost Estimates Opportunity Catalogue Opporcunicy Framing Opportunity Project Management Guide (OPMG) Opportunity Realisation Process (ORP) Page 1/2/28 Drilling che Limit is a performance improvement ethos in the Well Delivery arena based on the Limit methodology and underpinned by people. It involves the collection, validation and dissemination of best practice to consistently improve performance throughout Shell A Drilling the Well on Paper (DWOP) exercise is a cheap simula- tion of the actual drilling of a well involving all key personal who have been involved in the design and will be involved in the well execution. It cakes place in the Execute phase of the Well Delivery Process. “Activity On Paper” events can be held for the drilling phase alone, completion phase (CWOP), logging phase (LWOP). testing phase (TWOP), well servicing phase (SWOP), logistical operations and any other operational activity. ‘The term DWOP s used collectively in the Well Delivery Process to cover any or all of these ‘The Decision Gate that occurs at the end of Process Step 1 of the WDpP. A formal Project Specification for sub-surface and surface faciliies and che operational philosophy required to support a proposal for production from a new reservoir or an extension, or any substantial supplementary schemes ‘The After Action Review and the Post Production Review are together considered Learning Reviews, reflecting their main objec- tive of capturing learning and best practice. Project cost breakclowns designated as screening (+40%/-25%), fea- sibility (+2596/-15%), or budget (+15%/-10%) estimates. A lise of opportunities co close the performance gap to technical limi ‘A structured, robust and decision driven approach to evaluating an individual opportunity over its prospective life cycle. Ensures align- ment between work teams and their decision makers, the Decisicn Review Board and guarantees that the real value drivers and critical issues are identified and understood up-front. Gives rise to a stake- holder management plan, an initial risk inventory and a decision based project plan. ‘The Opportunity Project Management Guide, EP 2001-5500, describes the Opportunity Realisation Process, A five-phase, full-life-cycle process for realising an opportunity. The five phases are: Phase 1 - Identify and Assess. Determine potential value of the opportunity and alignmene with the business strategy. WOLP - The well delivery process v2.00Phase 2 - Select Generate and select the preferred opporcunicy realisation concept. Phase 3 - Define Finalise che scope, cost and schedule for the preferred concept and obtain project execution finding, Phase 4 - Execute Produce an operating asset consistent with scope, cost and sched- ule Phase 5 - Operate Stare-up, operate and evaluate the asset ro ensure performance specifications and recurn to shareholders. ‘The process: * Defines the opportunity (Opportunity Framing) + Plans the opportunity (Roadmap) ‘+ Maximises the value of the opportunity (Toolbox) + Assures the value of the opportunicy (Decision-making and Value Assurance) Peer A person external co the project team who has the expe Input and advice on an aspect of the WD Project. te give Peer Assist Assistance provided co opportunity/project/asset teams by people external to the team in ensuring maximisation of value. Post Production A Post Production Review (PPR) is a higher level review thar an Review (PPR) AAR, thae takes place in the 'operace' phase of the Well Delivery Process after sufficient project performance daca has been gathered to challenge the original assumptions underpinning the project prior to the start of che next or new project or campaign. A PPR uses che AAR structured technique. Practice worth repli- A best practice is a process, technique or innovative use of tecanolo- cating (PWR) By, equipment or resources that has a proven track record of success in providing significant performance improvement (ie. in terms of cost, quality, safety etc.). A best practice should be globally applica- ble rather than just OU or situation applicable. Process Step ‘An element of the Well Delivery Process corresponding co one of che five phases of the Opportunity Realisation Process. Process Activity One of the elements that makes up a Process Step. Project Initiation Document chat records the decision to commit resources toa WD Note (PIN) Project. Te should include che value proposition for the opportunity together with the underlying assumptions. very proces ——,_—ragn 27Project Execution Plan Regret Value Risk Register Realising The Limit (RTL) Review Review Team Scaling Service the Limit (STL) Technical Limie (TL) The Project Execution Plan is the central reference document used ( by the Project Manager to carty out his job and is the principle vehi- cle by which others are commitced to meeting the Project delive~ ables. Identified value chat potentially could be secured from che WD Project but which is deliberately foregone. Reasons for accepting regret value include excessive risk, resourcing and logistical con- straints ‘The document that records all the identified risks borne by the proj- ect together with che agreed management measures (justification, risk reduction, contingency planning and mi mn parties, etc.). This is a live document to be updated and used as a reference throughout the life of the project igation, act Realising the Limit (RTL) is a performance improvement ethos based on the Limit methodology and underpinned by people. It involves the collection, validation and dissemination of best prac:ice to consistently improve performance chroughout Shell. A process activity that is either a Technical Review or a Learning Review. A team selected from functional specialists, external resources and/or other independent internal resources to carry out a Review. To p:0- mote stakeholder alignment, consideration should be given to engage Joint Venture Partners in the Feasibility Review. The selection of che appropriate manner in which co apply the Well Delivery Process to a specific WD Project in consideration of that project's scale and complexity. Service the Limit is a performance improvement ethos in the Well Servicing arena based on the Limit methodology and underpinned by people. It involves the collection, validation and dissemination of best practice to consistently improve performance chroughouc Shell. The definition of the Technical Limic is “a term given co a point of perfection or perfect performance, based on current levels of technol ogy”. Note that at no stage is time or cost mentioned in the defini- tion, The unic Technical Limic is expressed in depends on the velue drivers of the project. Examples of Technical Limits are: + A World Record in a competitive sport * Zero defects in a delivered car © No injuries * A recovery factor limited only by physics ‘Technical Limie is an aspirational target that identifies the coral opportunity gap. Where the technical limit is set depends on th: culture of the company. ‘The Technical Limit number itself is net so important as the process you go through by setting ic co identify che actions that need to be done to close the opportunity gap. Page 1/2/30 WOIP - The well delivery process v2.00‘Technical Limic ‘The 'perfece' well concept that if realised would maximise che value Concept drivers of the project. The Technical Limit Concept is determined in che Conceptual Design Workshop. ‘Technical Limit ‘The Technical Limic time for a well is the minimum amount of time Time (Cost) you could execute a well given perfect performance. Ic only makes sense to do this if time is your value driver. If cost is your value driver then you can set a technical limit cost for che well. Technical Review ‘The Feasibility Review, Technical Endorsement Review and Programme Endorsement Review are together considered Technical Reviews, reflecting their main objective of providing value assurance to the Decision Review Board, management and shareholders. ‘TECOP Technical, Economic, Commercial, Organisational, Political — used co describe the range of risk categories borne by a project Value Assurance Formal review carried out to provide assurance co management and Review (VAR) shareholders that opportunity realisation plans are robust in finan cial, environmental and societal terms. EP 2000-5305, Project and New Veuture Value Assurance Guide Value Challenge A workshop to determine 'HOW' to drill the well in order to max- imise the value of che WD Project. Uses the Technical Limit approach to identify the execution opportunity gap and the actions that should be done to reach perfection. The starting point of che Value Challenge workshop should be a fixed well concept that max- mises che value of the project. However if this is not the case time some time can be spent validating the chosen concept. Value Creation Event There are 3 value creation events in the Well Delivery Process. The Conceptual Design Workshop, Value Challenge workshop and che Dwop. Value The resule of changes, beneficial or detrimental respectively, © the Creation/Erosion project value drivers. Value Driver A project parameter, either cost or benefit, which has a direct and significant impact on the value that the project delivers. Vircual Peer Assisc A Peer Assis carried out without che Peer being physically presenc with the project team e.g. by video conference, teleconference or e- mail Volumes to Value V2V is one of che Group's four pillars “Realise che Limi” initiative. cvavy ‘The V2V Team assists in identifying and ranking opportunities and developing strategies for maximising the value of hydrocarbor. resources. Well Delivery Describes how “well” related activities must be managed to deliver Process (WDP) maximum value in a consistent and structured manner during all phases of the opportunity lifecycle. WOIP The well delivery process Page 1/2/31 v200Well Delivery Project (W/D Project) ‘Well Delivery Project Manager Well Delivery Project Sponsor Wells Minimum Seandards Work Process Any temporary endeavour undertaken to create a unique well related ( ourcome such as @ new well(s), a modification to an existing well(s), a well design etc. ‘The individual with single point responsibility for che WD Project. The “customer” of the WD Project, who first identifies the requ re- ment or opportunity to carry out the WD Project A set of policies for Well Engineering and Well Services, endorsed by che Wells Activity Leadership Team, defined co secure: * Technical and operational integrity in planning, design and exe cution * Integrity of decision making + Effective performance management ‘The activity of carrying out work to meet che requirements of the wor. Page 1/2/32 = The well delivery frocess. v2.00ele vy, ‘The following are che Wells Minimum Standards as at October 2004: 1 Each OU shall have a Well Engineering and Well Services management system in place, which as a minimum will define accountabilities and include a list of standards and key work processes against which they will perform, 2 Bach OU shall have an effective HSE management system in compliance with EP 950000 guidelines. All rigs will have a HSE Case or equivalent. 3. Design of wells, completions and respective operations shall be guided by the Wall Control Guide EP 2002-1500 and the Casing and Tubing Design Guide EP 2000-9073. Life cycle well maintenance shall be guided by the Well Integrity Management System (WIMS) or equivalent. 4_ Shell and contractor staff competence shall be assessed co confirm they are qualified for che role they have been assigned. The standard for competence levels is set by TROE Competence Framework. The standard for competence of safety critical supervision for Drilling and Well Services operations shall include a Round 2 and IWCF certificate. Exemptions require approval and additional concrols as defined in che OU Managemenc system. 5 For Wells Supply Chain Management (WSCM) “global categories", use of global ot regional contracts is the minimum standard and the WSCM shall be consulted pro-active- ly to align Contractor Performance Management and Supply Chain Management strace~ gies. a Bach OU shall measure performance using agreed KPIs. 7 Bach OU shall conduct a DIL Healehcheck at least once in two years. 8 For performance improvement in well delivery and Well Services, OUs shall use DTL Roseplots and associated best practices. Each OU shall have a Performance Improvement Plan and coneract with T&OE to close any performance gaps, which shall also inclnde actions related to HSE performance. WDIP - The well delivery process Page 1/2/33. v200Page 1/2/34 WOIP The well delivery process v2.00