Man, do we like to talk about productivity.
What’s the newest software? What’s the latest horizontal drilling technique? What’s the best way to manage my field staff? How should I manage my oil and gas production data? What should I do about delegating? OMG, i need a admin assistant!
However if we take a step back and we’re honest with ourselves, how many of these things have positively influenced our business in the past month? In the last year? In the last 5 years?
Do we ever just search for the latest app, the latest tactic, the latest tool without ever asking ourselves what the real fundamental challenges are with productivity?
A Good ‘ol Boy (from Italy)
Born in the late 19th century, Vilfredo Pareto was an an engineer by training, and controversial economist-cum-sociologist. Vilfredo began his career overseeing coal mines, and was later named chair of political economy at the University of Lausanne in Switzerland. His seminal work, Cours d’economie politique, explored a then unexplored “law” of income distribution… it later became to be known as “Pareto’s Law” or the “80/20 Principle”.
The 80/20 rule is powerful because it’s a law of nature – much like the Golden Ratio, the Butterfly Effect and chaos theory are laws of nature. In fact, it’s driven by the same underlying causes…
How in the world does this apply to the oilfield?
Basically, Pareto’s Law can be summarized as “80% of the outputs result from 20% of the inputs.” Other ways of phrasing this might be:
- 80% of your company’s production comes from 20% of your production assets
- 80% of your engineer’s headaches come from 20% of your wells
- 80% of your administrator’s headaches come from 20% of your pumpers
- 80% of your skimmed (ie ‘unaccounted for’) oil comes from 20% of your purchasers & service companies
We could come up with an exhaustive list to apply this principle to in the oilfield. Heck, you may have even encountered this principle as being skewed even more severely: 90/10, 95/5, or even 99/1 aren’t unheard of.
So, as an operator we must make a choice: we can continue to shovel more coal, or begin the dissection of our operations and workflow through the lens of Pareto.
Elimination before Delegation
Scotty: She’s all yours, sir. All systems automated and ready. A chimpanzee and two trainees could run her!
Captain Kirk: Thank you, Mr. Scott. I’ll try not to take that personally.
— Star Trek
Delegation from the office to the field is to be used as a further step in reduction, not as an excuse to create more work and add to the unnecessary. Remember, unless a task is well-defined and important, no one in your operations should be doing it (you can also check out our post on Why Your Oil and Gas Asset Management Strategy Sucks (and what to do about it…)).
We must eliminate before we delegate.
Remember: never automate something that can be eliminated, and never delegate something that can be automated or streamlined. Otherwise, we’ll waste your employee’s time as opposed to our own.
Before attempting to automate the field (not just workover reports, well history files but production reporting, run ticket reconciliation — the whole enchilada), principle number one must be to refine rules and processes before adding people. Adding people to a refined process multiplies output, however using people as a fix to a poor process multiplies your problems…
While working toward increased efficiency and effectiveness, let’s keep two truisms in mind:
- Doing something unimportant well does not make it important.
- Requiring a lot of time does not make a task important.
If you’re an independent operator and you take the long view on oil, understand one thing: What you do is infinitely more important than how you do it. Efficiency is still important, however it’s useless unless applied to the right activities.
And, the ‘right activities’ when managing the oilfield isn’t the collection or organization of production data. It’s enabling your admin and ops supervisor to conduct revenue-generating activities by presenting them information about your production in the right kind of way (check out this post on eliminating human error in the oilfield…)
Folks, there is a far better option than a ‘results-by-volume’ approach, and it will do more than simply increase your productivity, it’ll increase your profits, too. Believe it or not, it is not only possible to accomplish more by doing less, it’s mandatory.
The time is never right
Focusing on the 20% of your workflow that delivers 80% of the results is the name of the game. You, your administration, and your operations supervisors must put aside everything seemingly urgent and undergo the most truth-baring analysis possible — you must apply this principle to everything, from how you organize your people to how you manage your production assets.
Don’t expect to find you’re doing everything correctly (or that everyone is operating honestly). The truth often hurts. The goal is to find our inefficiencies (problem pumpers or a skimming vacuum truck operator) and eliminate them. Then, find our strengths so that we can multiply them.
These simple changes can be difficult, even emotionally challenging for the independent producer. But no doubt it’ll effectively change the way you operate forever. After all, the idea is to enable your company to run more efficiently or grow exponentially, depending on your goals.