Aera Energy LLC was formed in 1997 to be a low cost operator and producer in California. However, the low oil price in 1998-1999 forced an examination of all operations in the office and in the field. Cutting costs, better timekeeping, or reducing the scale of operations would not be sufficient without a step-change gain in efficiency. This step-change gain came from using principles and concepts developed in the automobile and construction industries. Toyota's twin pillars of just-intime production and the ability of anyone to stop production rather than pass-on defects, coupled with level-loading of work processes, and reducing waste were introduced. Toyota's principles were enhanced by the addition of Last Planner concepts developed for the construction industry. When both were implemented for reservoir characterization and reservoir development work, significant process improvements resulted. The resulting improvements are now being used throughout the company to improve quality by removing waste and reducing errors, to measure processes, and to improve cycle times.The unconventional diatomite reservoirs and oil sand reservoirs at the giant Belridge field produce 63,000 BOPD from 5,200 producing wells and 2,000 injection wells. The many drilling, completion, and workover rigs have a constant appetite for new wells. To maintain production and cost targets, everything in the office has to run reliably and efficiently at all times, plus support field operations.Different aspects of Toyota's principles and Lean manufacturing are illustrated using reservoir characterization project work, day-to-day reservoir surveillance, and the development work needed to plan and schedule new wells. The processes and projects typically have multiple customers and suppliers-internal and external. Everyone, including knowledge workers, needs to work as a single system with a manufacturing mentality and to strive for continuous improvement.

The Aera Energy LLC (Aera) Development Team has drilled and completed, each year since 2000, about 1,000 oil producers and water/steam injectors, and constructed the associated surface facilities. Such a high activity level, which involves some 800 contractors and hundreds of pieces of mobile oilfield equipment, leads to unsurpassed congestion and logistical complexity, requiring a different approach from traditional planning and execution methodologies. In 2001, Aera turned to the manufacturing industry for ideas. The company realized that drilling and constructing a well is not just a step in delivering a commodity; it is manufacturing a new well. The decision was made to implement Lean principles in the development process. Some of the Lean principles that were adopted were: moving from large batches of wells to near single-piece flow; just-in-time execution of planning and implementation activities; relentless focus on continuous improvement through mapping of work processes and eliminating the identified waste; designing and constructing oilfield equipment that is right-sized for the application needed; and creation of a very transparent system of visual tools that shows the status of key indicators at any point in time. The transition to Lean has paid off. The desired high release rate of wells has been maintained despite significant oil price volatility. The safety performance of the Aera Development Team and its contractors improved continuously and the injury frequency was reduced by a factor of 10. The drilling and completion cost (on a per-foot basis) for the most common well type was held flat in nominal terms between 1997 and 2011, while industry costs more than doubled over the same period. In 2011, Aera was the first oil company to receive the Manufacturing Excellence Award from the Association for Manufacturing Excellence. The award recognizes "demonstrated excellence in their operations" and has a primary focus "to acknowledge continuous improvement, best practices, creativity, and innovation." This paper describes the Lean journey including the culture change that was needed, the obstacles that had to be overcome, examples of Lean implementation (e.g., tools, processes, results), and the critical success factors to successfully implement Lean in new well construction.

The diatomite reservoirs in the Belridge giant oil field in the southern San Joaquin Valley of California provide an ideal location for following the growth in understanding and application of horizontal wells through time. Details are presented that cover geology, drilling, completion, and production from four projects totaling 230 of the field's 246 hydraulically stimulated horizontal wells drilled transverse, longitudinal, and oblique to the azimuth of the preferred natural fracture plane. The diatomite reservoirs are layered biogenic silica deposited in the Miocene Monterey and Reef Ridge formations. They have continuous vertical oil columns ranging up to 1,300 ft (400 m) along the crest of the anticline. However, the permeability is 0.1 to 10 millidarcies which requires all producers to have multiple sand-propped hydraulic fractures to produce at economic rates. Tight spacing and accurate fracture placement are essential to recovering reserves in this massive reservoir. Normal field development is via closely-spaced vertical producers with vertical water injectors for pressure support. However, when pay zones thin-out on the flanks or become less vertically continuous, horizontal wells become the preferred method of development. Each of the four projects targeted different areas of the field, and had wells drilled in different geomechanical stress regimes. The largest project has 188 horizontal wells completed with multiple longitudinal hydraulic fractures: after an initial pilot study of four wells, Phase 1 consisted of 75 ft (23 m) spacing between the horizontal sections of the wellbores; Phase 2 evaluated and developed 50 ft (15 m) spacing in a less prospective area; and Phase 3 consisted of infill drilling at 37.5 ft (11.5 m) spacing in the Phase 1 area while at the same time converting every fourth horizontal producer to a water injector. The unconventional petrophysical properties of the diatomite and the variety of stress regimes allow an almost textbook-like look into knowledge capture plus the utilization of successes and learnings for subsequent projects. From first attempts in 1995 to the current ultra-tight spacing, the learnings from this case study are readily applicable to many other fields, especially to shale reservoirs in resource plays, where tight spacing of the hydraulic fractures and a manufacturing assembly-line approach to development may be needed to get hydrocarbons efficiently out of the matrix.

Summary Aera Energy LLC was formed in 1997 to be a low-cost operator and producer in California. However, the low oil prices from 1998 to 1999 forced an examination of all operations in the office and in the field. Cutting costs, improving timekeeping, or reducing the scale of operations would not be sufficient without a step-change gain in efficiency. This step-change gain came from the use of principles and concepts developed in the automobile and construction industries. Toyota's twin pillars of just-in-time production and the ability of anyone to stop production rather than pass on defects, coupled with level-loading of work processes and reducing waste, were introduced. Toyota's principles were enhanced by the addition of “Last Planner” concepts developed for the construction industry. When both were implemented for reservoir-characterization and reservoir-development work, significant process improvements resulted. The resulting improvements are now being used throughout the company to improve quality by removing waste and reducing errors, to measure processes, and to improve cycle times. The unconventional diatomite reservoirs and oil-sand reservoirs at the giant Belridge field produce 65,000 BOPD from 5,300 producing wells and 2,100 injection wells. The many drilling, completion, and workover rigs have a constant appetite for new wells. To maintain production and cost targets, everything in the office has to run reliably and efficiently at all times, as well as support field operations. Different aspects of Toyota's principles and “Lean Manufacturing” are illustrated by use of project work for reservoir characterization, day-to-day reservoir surveillance, and the development work needed to plan and schedule new wells. The processes and projects typically have multiple customers and suppliers—internal and external. All involved, including knowledge workers (those who think for a living), need to work as a single system with a manufacturing mentality and to strive for continuous improvement. Customers of the knowledge work supplied by the geoscientists and reservoir engineers have benefited greatly from the introduction of the lean processes and the resulting smoother and more-effective workflows. In 2011, the Development Team's lean activities were recognized by the Association for Manufacturing Excellence, and the team received the Manufacturing Excellence Award that recognizes “continuous improvement, best practices, creativity, and innovation.” The oil industry has a reputation of being slow to adopt new technologies and techniques. However, a Lean Manufacturing mentality introduces new ideas and ways of performing knowledge work that may change this paradigm while contributing to the bottom line with reduced cycle time and improved quality. A significant additional benefit is that geoscience and engineering professionals can spend more time doing creative work and less time fixing problems or reacting to system upsets—as they simultaneously reduce waste. However, to realize all these benefits and the step changes they provide, a thorough understanding of Toyota's principles and a Lean Manufacturing mentality are essential.

TX 75083-3836, U.S.A., fax 01-972-952-9435. AbstractRecent advances in computer hardware, software, and network speed have increased the ability of engineers and operators to more effectively perform surveillance on an increasing number of wells. This paper details the implementation and benefits of a new supervisory pumpoff control (SPOC) system with expert diagnostics at S. Belridge field, CA.