Lean Six Sigma In Oil & Gas Industry

Overview

Increasing demand for petroleum products has triggered the oil and gas industry to embrace more efficient means of operations. Lean Six Sigma has been applied by companies in oil and gas industry to improve production, increase reliability and reduce costs while running safe operations.

Too much waste, too much redundancy and lengthy turnaround times result in even the most efficient oil and gas companies failing to meet customer expectations 25-50% of the time. Lean Six Sigma can help in ensuring that customer expectations are met and potential savings of $100millions are realised.

As per the industry classification benchmark, this industry sector includes the following subsectors –

Exploration & Production – Companies engaged in the exploration for and drilling, production, refining and supply of oil and gas products.

Integrated Oil & Gas – Integrated oil and gas companies engaged in the exploration for and drilling, production, refining, distribution and retail sales of oil and gas products. Increasing demand for petroleum products has triggered the Oil and Gas industry to embrace more efficient means of Operations.

Decision making approaches have been applied by companies in Oil and Gas Industry to improve production, increase reliability and reduce costs while running safe operations.

Some of the leading companies in this sector that have been benefiting from Six Sigma approach are Chevron, Aramco, Texaco, Aera Energy, BakerPetroilite and Halliburton. Amongst Indian companies Reliance Petroleum, ONGC and Indian Oil have adopted Six Sigma in some of their core processes.

Some of the challenging projects carried out in Oil and Gas sector are:

1. Improving Oil Production

2. Improving drilling equipment effectiveness and reliability

3. Improving fluid measurement systems

4. Cycle time reduction in core processes

5. Effective implementation of new technologies

6. Improvement in yield from existing technologies

7. Improving safety in offshore oil and gas operations

Lean Six Sigma can be applied to the overall process (lifecycle) of oil and gas industry :

• Upstream process
• Midstream process
• Downstream
• Management processes
• Enabling processes

Case Study

• If fluid is not detected in a drill well, the well downtime affects the production volumes directly. A team tackled this challenge as a lean six sigma project. The total well downtime was reduced by more than half of the original value.
• Injection water used in drilling process needs to contain oil content. A structured experiments approach was taken by a team to find out if lesser oil content can be used in injection water without affecting the efficiency of the process. 35% reduction in oil content was found to be feasible and successful in the improved process. This increased the oil production.
• Test results of drill wells are sometimes not accurate. Also, number of well tests carried out per year is key driver of success probability year on year. A Lean Six Sigma team carried out a successful assignment of increasing the number of well tests and enhancing accuracy of test results in a single complex project. This led to substantial business impact for the organization.

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