Managers seek understanding of drilling performance, and visibility of how groups contribute to drilling results. The process described improves executive's understanding of drilling cost and performance. The principles are applicable to any drilling program (and even other, non-drilling operations), but are best suited to land drilling programs with many wells of common types.
In this method, a baseline budget is established for each type of well. As the program changes, a revised budget is created based on the wells actually drilled, plus those currently planned. The monthly revised budget measures performance against a consistent benchmark. The definition of well types, tracking of costs, adjusting for unusual situations, and calculations to apply the technique are discussed. The revised-budget process is used with traditional operational metrics to provide a complete spectrum of performance metrics for all levels of the organization.
The revised-budget method provides a clear perspective of performance, more insightful than standard "actual vs budget" comparisons. Additionally, deviations from benchmarks are quantified by performance, pricing, and scope changes. These categories correspond to organization groups that contribute to performance. The use of the revised-budget technique focuses discussion on the correct issues (performance, pricing, and scope) for each group. Historically, discussion of cost deviations often bogged in debate over which group was responsible. With this system, the contribution of each group to results is identified.
The revised-budget technique does not replace, but enhances traditional drilling metrics such as cost-per-foot, feet-per-day, flat time, non-productive time, and others. Traditional analysis methods are of most value to drilling groups in seeking specific actions to improve.
The system is the result of 10 years of evolution of measures to manage drilling more than 16,000 wells globally. The system has delivered best-in-class performance.
The novel aspect is that it is a complete system encompassing a workable benchmark, it adapts to the constant changes in the drilling program, it identifies how groups contribute to results, and it connects to traditional drilling metrics. The revised-budget technique using granular benchmarks is applicable to many types of operations and solves a chronic budget review problem.
