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Managing the Drilling Function

John Willis, Richard Jackson, and Harris Swartz, Occidental Oil & Gas Corporation

Copyright 2018, Society of Petroleum Engineers

This paper was prepared for presentation at the 2018 SPE Annual Technical Conference and Exhibition held in Dallas, Texas, 24-26 September 2018.

This paper was selected for presentation by an SPE program committee following review of information contained in an abstract submitted by the author(s). Contents
of the paper have not been reviewed by the Society of Petroleum Engineers and are subject to correction by the author(s). The material does not necessarily reflect
any position of the Society of Petroleum Engineers, its officers, or members. Electronic reproduction, distribution, or storage of any part of this paper without the written
consent of the Society of Petroleum Engineers is prohibited. Permission to reproduce in print is restricted to an abstract of not more than 300 words; illustrations may
not be copied. The abstract must contain conspicuous acknowledgment of SPE copyright.

An international company with multiple drilling groups in separate business units on three continents created
a global drilling function that increased organizational capabilities and minimized overhead costs. The
organization has encompassed up to 13 separate drilling groups and a headquarters staff organization. The
new structure, primarily involving land operations, has demonstrated success for more than 5 years.
The processes and systems described herein have some special design feature for drilling, or are unique
among the functional organizations of the company. These include identification of important areas, the role
of the headquarters group, drilling group structure, systems, and systems components. The processes used
in the drilling function that are common to all large organizations are not covered.
Several important conclusions have been demonstrated. Standards and guidelines must provide balance
between risk management, innovation, and allowance for unusual situations. Consistency of positions,
responsibilities, and processes across all business units enables efficient, standardized global processes.
An organized system to create communication between business units can stimulate exchange of ideas,
experiences, and technology that otherwise would not be communicated, not for lack of desire, but simply
due to the demands of the day-to-day business.
Technically complex systems managed globally justify greater investment and support, and deliver
superior results to specialized local systems. Non-complex systems that require low-level customization
for separate units may be more effective and economical when managed locally. Management of staff
movements and career development across business units provides more consistent opportunities and global
optimization of staff capabilities.
Given the number of large oil companies, it is safe to presume that many approaches to managing the
drilling and other functions have been used. However, few approaches are published. This paper presents a
comprehensive overview that can aid in the development or refinement of functional organizations.

Drilling operations are complex. They get a lot of attention due to the cost, the impact on profitability
from delays, the uncertainty of the subsurface, and the availability of a daily report. Our drilling
organization focuses on predictable performance, which is essential to enable business planning. We also
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consistently work on improving performance. Due to the inherent complexities in drilling, a lack of push
for improvement has commonly resulted in reduced performance.
Drilling operations involve risks, including the risk of injury to people, damage to the environment, and
the financial impact of drilling problems. The extreme case of the Macondo blowout proves the point. In
their analysis of the Macondo well, Boebert and Blossom (2016) state, "Oil companies that avoid such
disasters do so by adopting … strong and pervasive engineering discipline." (See Deepwater Horizon, pages
18 to 20, for a discussion of different organizational practices and "…the fundamental difference between
finding oil and constructing wells….") For an additional perspective on the value of a drilling organization
and the role of drilling professionals, see Boykin (1998, 1999).
To manage risks effectively, we leverage the global size of the organization to support global technical
experts and standardized systems, resulting in both increased functional capability and substantially reduced
cost of implementation. This leverage has enabled a strong headquarters group that can economically
support disparate business units.
The worldwide drilling function is led by an executive supported by a headquarters staff. The operations
drilling groups are a part of the business units, and the drilling managers report directly to the business
unit management. These drilling managers have a secondary ("dotted line") reporting relationship to the
worldwide drilling executive. Boykin (1999) describes a drilling function with drilling managers reporting
directly within the function. There are likely other variations. Our intent is not to compare organization
structures, only to report how our function works.
A fundamental principle in the design and operation of the function is that it aligns with company culture,
systems, and initiatives. A strong function can develop an identity and sense of independence, but to be
successful, it must always be a supportive part of the full organization.
This drilling function structure has been in use for more than 10 years in substantially the same form.
The fundamental structure has remained unchanged through three executives, but there have been numerous
refinements. Its endurance is testimony to its validity. It has performed, too, as exemplified in SPE-189597
(Willis et al. 2018).

The starting point for managing the drilling function is its mission. In our company, the mission for drilling
groups within the business units is:

Meet all business unit well count and well objective goals, while delivering top drilling performance
in terms of safety, quality, cost, and efficiency.

We also have a global vision that provides aspirational direction for the people in the drilling function:

We will continuously work to be regarded as a differentiating strength - an enabler to our company's

success. We will strive to be recognized in the industry as a premier drilling organization.

Our mission and vision led directly to the design of our global drilling function. The mission is
accomplished in the business unit drilling groups that drill the wells. The purpose of the function is to
improve the performance of the drilling groups in accomplishing the mission while working toward the

Focus Areas
Management of the function starts with identification of the most important areas ("Focus Areas"), derived
from the mission and vision. The Focus Areas guide the organization in determining work scope and
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priorities, and they communicate to the organization the principles that are important to us. The Focus Areas

• People

• Functional capability

• Teamwork

• Performance

• Well objectives

• Cost management

• HES and risk management

Each Focus Area is described below. Some items listed represent extensive global systems. Some items
simply state a principle. The collection of Focus Areas and the topics within each provide a high-level
summary of all of the things that managers and supervisors in the function are expected to know about and

The People Focus Area covers all aspects of the organization structure and the career management of the
people in the drilling function. Topics included under People are:

• Global manpower planning

• Global organization model

• Recruiting

• Succession planning

• Performance management

• Compensation

• Career development

Managing people is certainly a key activity across the entire company, so the drilling function aligns
with and leverages all company-wide processes, which has proved to be successful. The role of the function
is to help fulfill the objectives and add value to the company processes, most of which work through
the business unit structure. The drilling function adds a layer of cross-business unit coordination. At the
functional headquarters level, work force planning and staffing are viewed globally to ensure that the
increases and decreases in individual business units are coordinated. Through succession planning and
functional performance management reviews, functional leaders become aware of the skills of the global
staff and can facilitate cross-business unit moves to optimize the organization globally.
A key enabler for global systems is the standard drilling organization model, as shown in Fig. 1.
Prior to creating the drilling function, each business unit's drilling group was structured differently. The
names of positions were different, and the responsibilities were different. The drilling groups functioned
well as individual groups, but global systems were simply not possible because of the variations in
titles and responsibilities. These variations inhibited creation of cross-business unit groups for enhanced
communication. Implementing a standard group structure greatly facilitated fulfillment of other Focus Areas
due to the consistent position names and responsibilities. It is not so much the standard organization itself
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was superior to the other models, but the value of a standard group design provided far more value than
the customizations across the business units.

Figure 1—Standard business unit drilling group organization

The Drilling Manager, Drilling Engineering Supervisors, Drilling Superintendents, and HES Lead
comprise the Drilling Leadership Team within each business unit's drilling group. The Operations Group
and Drilling Superintendent positions provide a career ladder for drill site managers. The Engineering and
Operations groups have nominally equal authority of wells. The Engineering Group takes the lead pre-well
and post-well. Operations leads during the field operations, but with close connection to and strong support
from Engineering.

Functional Capability
To add value, the drilling function must make the performance of the drilling groups better than could be
achieved without a central function. Thus, a core purpose and Focus Area is Functional Capability. The
People Focus Area addresses the processes of acquiring, evaluating, and moving people. The Functional
Capability Focus Area addresses the processes of maximizing those people's effectiveness. This area
includes the topics:

• Drilling engineering, operations, leadership and other major global systems

• Competency

• Training (technical, management, leadership)

• Procedures, standards, and guidelines

• Data analysis tools

• Information access

• Technical specialists

Developing Functional Capability is the core responsibility of the drilling function headquarters staff
group discussed below. Global systems are discussed in the Systems section below. Other components of
the Functional Capability Focus Area are discussed under the Headquarters Staff Group section. For an
example of an initiative to increase Functional Capability, see SPE-191736 (Willis et al. 2018).
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Virtually all work in our company requires multiple people working together. Thus, to perform effectively,
Teamwork is required. This Focus Area includes:

• Networks of drilling group leaders

– Drilling Managers
– Drilling Engineering Supervisors
– Drilling Superintendents

• Communities of practice of business unit technical staff

– Drilling fluids
– Performance and directional drilling
– Cementing
– Data analysis

• Headquarters staff group

• Behaviors:
– Support for company processes and systems
– Cross-functional teamwork
– Lead by example - team contributors become team leaders
– Team alignment and accountability
– Professional courtesy and respect
– Commitment to shared success

The key systems for Teamwork are the networks and communities of practice. Both are groups composed
of members from business units and the headquarters staff group. Network members are defined by position.
Community of practice members are selected from the technical staffs. Networks have specific managerial
roles. Communities of practice have general technical roles. Both networks and communities of practice
communicate through monthly conference calls and annual meetings as a team, as well as through individual
communication stimulated by the team interaction. Both are used as venues to obtain input from business
units to guide the headquarters staff group on support requirements, and to communicate new systems and
components to the business units. For more on communities of practice and similar groups, see van Unnik
(2004) and DiLiddo et al. (2013). The headquarters staff group is discussed below.

Performance Management
Since the mission statement refers to "…top drilling performance," it is appropriate to have a Performance
Focus Area. This area includes:

• Performance measures and key performance indicators (KPIs)

• Contractor performance management

• Rigorous contract specifications

• Data analysis

• Peer assists and reviews

• Performance assessments
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All of the areas covered under Performance relate to measuring and improving performance. Since
contractors perform virtually all drilling work, the selection and management of contractors is critical to
drilling performance. Contractor expectations are defined in rigorous contract specifications and are tracked
by performance measures and regular service quality reviews. Measuring drilling performance is covered
in detail in SPE-189683 (Willis and Jackson 2018).

Well Objectives
Another component of the Mission, "…meet well objectives," leads to the Well Objectives Focus Area,
which does not include extensive systems and processes. Its purpose is to keep the drilling organization
focused on why we are drilling wells. As a function, we recognize and emphasize the importance of
delivering wells that meet the reservoir and life-of-well design requirements, as the wells will operate for
years, if not decades. It includes:

• Geologic target

• Well trajectory

• Formation evaluation

• Life-of-well integrity

• Completion design

• Economic criteria

Cost Management
Commensurate with Performance and Well Objectives, the Cost Management Focus Area keeps our
attention on the business side of drilling. All of our drilling groups are part of "business units," and as a
business, the cost of a well is the bottom line (provided the well meets the objectives). Cost Management

• Annual budgeting and monthly updates

• Cost reconciliation of actual against budget and benchmark, accounting for:

– Performance
– Change in scope of work
– Market pricing changes

• Aligned reporting between field cost estimates and the financial system

• Tools and systems to track and access cost details easily

HES and Risk Management

We include an HES and Risk Management Focus Area to address the important HES and operational risks.
This Focus Area covers:

• World-class safety goals

• Reducing severity of incidents

• HES competency in staff

• Management of contractor HES

• Cross-functional HES
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• Management of change procedures

• Drilling operational risk management system

The Operations groups are responsible for safety in the field, supported by the HES staff in the drilling
function. Although different from the HES focus, management of operational risks is included here. The
risk assessment process is described further below.

Headquarters Staff Group

The headquarters staff group in the drilling function is the Central Drilling Group (CDG). "Central" is not a
geographical term, but rather refers to being in the center, surrounded by the business unit drilling groups.
It is a "drilling group" because it is there to support the drilling groups in the business units. It is, in effect,
a part of each drilling group, shared between them to provide more capability for less cost.
The mission of the CDG is to enhance the capability of the business unit drilling groups, and thus improve
drilling performance, for lower cost than could be attained by the business units working independently.
The CDG enhances drilling group capability by supplementing the business units through advanced
technical support from shared staff on day-to-day operational problems, as well as in-depth problem solving
on long-term operational problems.
The CDG enhances each drilling group's capability, knowledge, skill, and resources through:

• Training of drilling staff, from basic to advanced

• Sharing of knowledge and successes between business units

• Knowledge from outside sources (other business units and industry)

• Systems and tools that individual business units could not develop or manage

• Staff coordination

• Hiring

The CDG also coordinates global people movements, supports corporate initiatives and executive
requirements, and supports the functional executive's governance role.
Responsibilities are divided between the business units and the headquarters group on the basis of work
cycle frequency. Business units deal with short-term issues, with time cycles of days to months. The CDG
deals with long-term issues, with time cycles of months to years. Business units are focused on their own
requirements. The central group focuses on issues affecting multiple business units.

Central Group Principles

Since the mission is accomplished in the business units, the headquarters group can make a positive impact
only if its work creates a good result in a business unit. The business unit drilling groups report to the
business unit management. The functional executive has review authority over personnel movements, but
no direct operational authority. Thus, impact on business units must be primarily through influence. Certain
principles have proven to be effective to guide the behavior of headquarters staff to maintain a strong and
influential relationship with business units:

• Wells are drilled by the business units. The central group's work is positive only if it influences
business units.
• "First, do no harm." Do not create upsets with business units.
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• The central group's performance standard is high. It is a headquarters group of highly competent
and experienced people, so it must perform as expert professionals.
• It must help business units to achieve practical solutions to problems.

• It is here on the same terms as the business units. It follows the same rules; it works with the same
• Its job is to proactively improve the capability of the organization. It does not wait for business
units to call for help.
• Its job is to gather and analyze data and offer helpful insights. It does not develop work for business
units to do.

Technical Specialists
A key advantage of the central group is shared technical experts. Our individual drilling groups cannot
justify the cost of maintaining a group of subject matter experts, and in most cases, they cannot provide
a work environment with enough challenge to attract world-class experts. In the central group, however,
experts can leverage their skills globally working across all the business units. Sharing the experts across
business units dramatically increases their value. With global scope, experts can contribute widely, can learn
lessons from multiple areas, and can transfer knowledge between business units.
To enhance the value of the central experts, the performance drilling, cementing, and drilling fluids
experts each lead a community of practice and maintain an intranet portal site for their area of expertise. The
experts are frequently consulted by the business units. They constantly contribute to day-to-day operational
problems as well as longer-term advancement of technology.
The shared experts are charged with training, competencies, contract specifications, data management,
risk assessment, and other areas. Through their interactions, the systems are tied to the business units through
multiple lines of communication. Technical specialists in CDG include:

• Performance and directional drilling

• Drilling fluids

• Cementing

• Downhole tool quality

• Drilling rigs

• Reporting and data system

Drilling engineering and drilling operations expertise is provided through leadership positions in
CDG. The Chief of Drilling leads the drilling managers network, the Drilling Engineering Manager
leads the drilling engineering supervisor network, and the Drilling Operations Manager leads the drilling
superintendent network.

"Systems" refers to broad but clearly defined technical or organizational areas in the function. Each system
can be composed of other systems, sub-systems, and components. Each system is managed with design,
performance monitoring, improvements, and other aspects of systems management, and each one has an
owner who monitors the performance of the system.
The central group manages areas of common responsibilities and technology as systems. Each system is
managed through an improvement cycle. Business units use a process improvement cycle to improve drilling
performance, and the central group uses the same process to improve the business unit process (Fig. 2).
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Figure 2—The functional improvement process

The systems are areas with common characteristics that have a significant impact on our performance.
The first four are aligned to core drilling leadership positions and include:

• Leadership and management

• Drilling engineering

• Drilling operations


In addition to the organizational systems, there are systems for key drilling technical areas. These address
the most important and most costly services in drilling:

• Drilling rigs

• Directional and horizontal drilling

• Drilling fluids

• Cementing

• Downhole tool quality

Two other technical areas are important and complex enough to be managed as independent systems:

• Performance reporting and analysis

• Cost tracking and analysis

Reporting and Cost Tracking have internal processes and applications that are critical to managing drilling
performance. Each system is managed toward defined objectives and can be measured.

Core Systems
As previously discussed, the standard drilling group includes a drilling manager, drilling engineering
supervisors, and drilling superintendents. A complete system supports each of these core areas. Networks
for each area, each led by a headquarters group manager, guide the systems. The core networks include
competency, standards, performance management, training, web portal, and other components. For example,
the drilling engineering system includes the directional and horizontal drilling system, the drilling fluids
system, the cementing system, the downhole tool quality system, performance reporting and analysis, and
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cost tracking and analysis. The drilling operations system includes the drilling rigs system. Additional
components are incorporated into both Engineering and Operations through the sub-systems.
HES as a system is managed by the HES function, not drilling, but the drilling function works closely
with the HES function. HES field staff may report to either the HES group or the drilling group in the
business unit, depending on location.

Key Technical Systems

The technical systems each include a number of components and an expert in the headquarters group who
leads the system. Most technical systems include a community of practice, standards owned by the system,
training, a web portal, certain competencies, and other systems components discussed below.
A downhole tool quality program has been in place for more than 7 years. The program includes a
statement of requirements for downhole tool contracts, a program of supplier audits, and a root-cause failure
analysis process. This process is described in SPE-189597 (Willis et al. 2018).

Performance Reporting and Analysis

The data system is the foundation of our performance reporting system. All basic drilling performance
metrics are defined in standards to ensure consistency between business units.
Tracking drilling expenditures against the budget is one of the foundations of drilling performance
measurement. The key chart in the budget tracking system is shown in Fig. 3. The system to create this and
other charts is described in detail in SPE-189683 (Willis and Jackson 2018). Familiarity with budget and
cost tracking keeps the drilling staff connected to the business processes of the company.

Figure 3—Drilling budget cost tracking chart (Willis and Jackson 2018)

Cost Tracking and Analysis

Cost tracking and analysis became a global drilling function system after the company standardized the
financial system across all business units. With a single global system, it was feasible to develop tools and
systems for the function that could be used in all of the business units. Due to the improved cost tracking,
financial accruals - an area of past difficulties - became a strong point. The principles we implemented that
proved effective are:
SPE-191672-MS 11

1. Drilling Mangers are accountable for tracking drilling expenditures against the budget.
2. Budget Well Types are defined and used for performance tracking (Willis and Jackson 2018).
3. One well = one event in the operations data system = one project in the financial system.
4. Field operating cost estimate = actual cost (within tolerances).
5. Use an adjustment factor to make the field cost estimate close to actual cost (detailed invoice line-
item costs are not duplicated in the field cost system).
6. Drilling superintendents and rig supervisors record costs in the Operations data system.
7. Drilling engineers track field estimated and actual costs, guiding rig supervisors on services costs,
identifying questionable costs, and calibrating cost estimates with actual cost data.
8. Drilling engineers review the invoice scope.
9. Cost analysts identify process problems and resolve issues through the finance department.
10. Standard elements are used in both the financial system and the field cost system.
11. Drilling engineering supervisors are accountable for accurate estimates for accruals.
12. Accruals are applied to each operational component of a project (construction, drilling, completion,
hookup, and artificial lift).
Drilling engineers are trained on accruals and invoice processing so they fully understand the importance
of accurate field estimates. Near the end of each month, drilling engineers review and update the field cost
estimates on each well to ensure that field costs are accurate. We target an average ±2% variation between
field estimate and final invoiced well cost. This is an average over all the wells in a business unit.

System Components
Components (sub-subsystems) have common characteristics but do not have their own specific objectives
and performance metrics. Each component is typically a part of multiple systems. The various components
can be adjusted to correct deficiencies or added to provide new capabilities.
The main components are:

• Networks

• Communities of practice

• Standards, procedures, and guidelines

• Training programs

• Web portals

• Data system and analysis tools

• Risk assessments

• Competency

• Recruiting

• Tender and contract specifications

• Joint industry projects

Networks and communities of practice are discussed above under Teamwork. The other components are
discussed below.
Some of these system components are complex and extensive, such as the data system. Others involve
interfaces to other parts of the company, such as web portals, recruiting, and contract specifications. In cases
of complexity or complex interfaces, standardization across business units has proven valuable. For drilling
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system components that are not complex, there is no advantage to global consistency, so business units are
free to develop their own. Our experience is similar to the value of standardization reported by Sawaryn
(2011). A few of the many examples of non-standardized systems are drilling programs, DSM scheduling,
morning rig call meeting formats, and contractor selection.

Standards, Procedures, and Guidelines

Collecting, compiling, and managing the knowledge that is accumulated in the organization is essential to
enable communication of knowledge. Knowledge that is documented in emails and in documents stored in
various directories on shared drives (or worse, on individuals' hard drives) tends to disappear over time.
Knowledge that is documented and organized in a system is preserved and used. The key characteristics of
our knowledge documentation system are:
1. Defined location on the intranet web portal
2. Specific format for documents that can contain requirements
3. Numbering system to identify each document
Anyone in the company can readily find global drilling standards, procedures, and guidelines at their
prominent location on the internal web portal. Staff can tell at a glance if a document might contain
requirements because of the consistent formatting. Documents that do not contain requirements have a
different header format. This convention has proven to be valuable for users.
All managed documents are numbered. While documents can be tagged with metadata on a web page to
track subject, technical area, date, and so on, none of that metadata is transferred to standard computer file
systems. It is a very common practice to copy standards, procedures, and guidelines to personal computers. A
well-structured numbering system will organize the documents coherently with the number as the beginning
of each file name. This simple process of file organization is one of the main values of numbering documents.
The other primary value is to show that the document is part of a system. The number indicates that the
document is stored in a defined location, updated versions will be in that same place, it will be reviewed
periodically, and it has been reviewed and approved internally.
In our scheme of definitions, "policies" are reserved for corporate purposes. Technical functions can
issue "standards" and "procedures" with requirements that must be followed. All other documents are
"guidelines," and must not contain requirements (guidelines include manuals, handbooks, best practices,
etc.). There are specific requirements associated with the approval of standards and procedures. Guidelines
are left to the discretion of each technical function.
Considering the risks associated with drilling, there are certain engineering and operational practices
that have proven to be critical to safety. These include, for example, casing design safety factors and well
control equipment requirements. Some requirements are implemented as laws or regulations. Other practices
are known to be effective, but deviation does not result in safety or catastrophic risk. Deviations from
the requirements in standards and procedures are allowed through a "Management of Change" process.
Some alternatives are defined within the documents, but otherwise, deviations require functional executive
approval. Requirements are written to cover most situations, but it is not possible to write clear and
understandable requirements to cover every conceivable situation. Consequently, we encourage the business
units to review the requirements in unusual situations, and to request approval to deviate when there is a
good case. In reviewing the requests for deviations, we become aware of the need to revise the documents
to cover common situations.
We currently have 17 standards and procedures, listed in Table 1. Some years ago, we had more than 40
standards and procedures. At the peak, many of the drilling staff felt there were too many requirements,
and that the number of minor requirements obscured the fewer very important requirements. A partial list
of our guidelines is shown in Table 2.
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Table 1—List of Standards and Procedures

Global Organization Model

Drilling Workforce
Networks and Communities of Practices
Management of Change
Contractor Performance Management
Data Management Systems
Drilling Metrics and Benchmarking
Well Planning
Well Abandonment
Peer Assist and Review
Wellbore Anti-Collision
Well Control
Wellhead & Tree Design
Completion Design
Tubular Design
HES Metrics Benchmarking
Fall Protection

Table 2—Partial List of Guidelines

Succession Planning
Drilling Rig Contracting
Non-Productive and Efficiency Reporting
Well Construction Process
Well Cost Estimate
Drilling Procedures and End of Well Reports
Risk Assessment
Global Risk Assessment
Drill the Well on Paper
Well Design Review Process
Kick Tolerance
Directional Drilling
Drilling Fluids
Jar Placement
Stuck Pipe Prevention
Rig Acceptance
Rig Stacking and Drill Pipe Storage
Rig Moves
Derrick Emergency Evacuation

Training Programs
Training is a key part of building competence in an organization. The determination of what training is
needed or desired is worked out through the networks, with the assistance of the central group. The central
group arranges the standard program of schools and workshops.
Training can be obtained from outside organizations or created and delivered internally. We use a
combination of external and internal training. Internal subject matter experts can deliver effective training
with the added benefit of building relationships with internal staff. Internal training can also be targeted
to our specific requirements. Questions during the training give insight to our specialists on the problems
our staff member's experience. A few external training programs have proven to be more effective and
economical than internal training.
We have an internally delivered, industry-certified well control school. For several years, we attempted
to meet all company well control training requirements with our internal school. In recent years, we have
maintained limited internal capability, using our own school primarily for employee drill site managers
and new hires. External providers provide well control certification for non-employee drill site managers.
Well control training needs to address both certification and locally applicable well control processes. By
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separating certification, we have flexibility to offer non-certified training that leverages operationally skilled
but non-certified instructors, and the flexibility to tailor the training to specific operational requirements.

Web Portals
Information technology provides many options to share information, but two basic systems are the most
heavily used: shared drives and web portals. Shared drives are most effective for use within a single business
unit for working files. For distributing files globally, web portals have been more effective. People in
multiple areas can more easily access the web portals. When using only the basic capabilities of the web
system, our staff is able to keep our sites current. Because custom programming makes updates complex,
difficult, and expensive, low-level web programming is avoided. Fig. 4 shows a simple page for accessing
standards, procedures, and guidelines.

Figure 4—Web portal site for standards, procedures, and guidelines

Data System and Analysis Tools

Drilling operations are tracked with a morning reporting and database system that is globally managed. It
is an extensive and complex software system. Key principles and requirements are defined in standards to
ensure we maintain a globally consistent system, which is essential for tracking company-wide performance
and using standard data analysis tools. A single system implemented globally also greatly facilitates support,
maintenance, and upgrades. The data system is used for performance reporting and operational analysis.
It is a requirement that all performance metrics be created directly from the data system, not from offline
custom spreadsheets. This requirement ensures that the data in the system is used, reviewed, and corrected.
It is important for drilling engineers to be able to access both operational and financial data easily. Our
focus is to get data into a spreadsheet application. Engineers can easily use the data, add custom calculations,
make charts, and combine data in a spreadsheet application. Query systems that require engineers to copy
data manually to a spreadsheet for further analysis are not effective.
The data system is used in most other systems. Each technical system "owns" its corresponding portion
of the data system and manages the data collected and the corresponding data analysis.
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Risk Assessments
The drilling risk system is a practical process to identify specific areas on a well or type of well that need
additional attention. It uses estimated probability of occurrence and cost impact of various situations with
negative impacts. It does not use a risk-matrix system. The expected value of a risk is calculated from the
probability and cost. The sum of the expected values of the risks on a well should be in the range of the total
expected cost of non-productive time incidents. There is no effort to make a precise match between risks
and actual events, but it is a useful guide to see if the risk assessment is reasonable.
A globally applicable risk assessment is completed and updated annually by the central group. The risks
are grouped by categories, with each category of risks treated as a component of the related systems. Central
group specialists review the global risk assessment annually, taking into account NPT events the previous
year and expected changes in drilling activity.
Each business unit uses the global risk assessment as a base. Risks unique to the area are captured in
a business unit risk assessment, and risks specific to fields are captured in a well type risk assessment.
Breaking the risks into separate assessments helps to keep well type risk assessments focused on the things
that are important about those wells, rather than a long list of generic risks.
Our company has a risk assessment process for safety-related risks that uses a risk matrix. The drilling
operational risk process intentionally excludes safety-related risks to avoid confusion between the two

Competency maps are used for drilling engineers, drill site managers, drilling engineering supervisors, and
drilling superintendents. The main purpose and value is to assist supervisors and managers in performance
discussions. See Brett (2006, 2007) for more insights on competency.

The central group has historically coordinated campus and experienced new-hire recruiting. During periods
of peak activity and hiring, the central group assists business units with the time-consuming interview
process and helps to ensure consistency in qualifications across business units. This central group assistance
is optional; business units can do their own hiring using their own processes. They are ultimately responsible
for determining staffing levels and filling positions.

Tender and Contract Specifications

Virtually all work managed by the drilling function is performed by contractors. The core of the
interface between drilling and contractors is the contract document with terms, conditions, and technical
specifications. The terms and conditions are managed by the legal and procurement functions, whereas
the drilling function manages the technical specifications. Detailed, rigorous specifications have proven
to be key to strong contractor performance. The technical specialists develop and manage guideline
technical specifications for use by the business units, which the business units can refine for their specific

Joint Industry Projects

Participation in joint industry projects has been an efficient method to get access to current and new
technology. We have participated in projects related to lost circulation, pore pressure management, rig
automation, and others.

1. Drilling operations present serious risk of injury to people, damage to the environment, and
catastrophic cost, justifying required application of known good practices to minimize risk.
16 SPE-191672-MS

2. Standards, procedures, and guidelines must provide balance between risk management, innovation,
and allowance for unusual situations.
3. Compiling written documents in an organized system in a defined location both preserves knowledge
and makes it readily available for use.
4. A standard group structure and positions throughout the organization facilitates efficient standards,
training, interchange between groups, competency management, and other benefits.
5. Communication between groups in different business units is minimal without a system to bring
people together. An organized effort to create communication between business units can stimulate
exchange of ideas, experiences, and technologies that otherwise would not be communicated, not for
lack of desire, but simply due to the demands of the day-to-day business.
6. Technically complex systems managed globally justify greater investment and support, and they
deliver superior results compared with specialized local systems.
7. Non-complex system components that require low-level customization for separate units may be more
effective and economical when managed locally.
8. Coordinating people moves and job openings across all groups provides more consistent and fair
career advancement, and optimizes staff capabilities globally.
9. Sharing central technical experts across multiple business units is cost-effective and fosters the sharing
of best practices globally.
10. A robust data system requires global coordination to maintain consistency.
11. Just as a process improvement cycle can be applied to the drilling process, it can be applied to the
process of managing the organization.
12. To manage the natural tension between headquarters and operating groups, the headquarters group
should have a clearly defined standard of interaction, with a focus on support rather than directives.

We want to thank Occidental Oil & Gas Corporation for allowing us to present this paper. Many people
have contributed to the success of the drilling function.

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