Integrated Delivery of Supply Chain Solutions_5C Contracts_02-Nov-15

transcript

Integrated Delivery of Supply Chain SolutionsCanada’s oil & gas sector shares similar supply chain challenges;• Lack of replication in approach to similar scopes• Inconsistent communication among project teams• Inability to mobilize suppliers quickly• Duplication of activities resulting in unnecessary

costs and resources

Integrated Approach to Project Delivery Through the delivery of 5C Contracts’ integrated supply chain solution, oil and gas producers are enabled to: • Standardize and replicate process through the 5C

Contracts approach• Compress project timelines by enabling

interdependence among project teams• Streamline the development of long-term, strategic

partnerships and leverage schedule and cost advantages

5C Contracts Ltd.Ian Carr

(403) 813-5607

Driving Supply Chain Value

Strategic Vision for Supply Chain Management• Benchmarking Innovation

Contractual & commercial alignment to ensure continuous improvement

• Strategic Evergreen Partnerships among engineering, suppliers and construction firms to streamline schedule & reduce lead times

• Assess Existing Initiatives to validate baseline processes

• One-Team life cycle approach

• Predictable, Streamlined Deployment of resources to ensure a consistent outcome

3 Reasons to Contact 5C Contracts Ltd.1. 30+ years of international

supply chain expertise, 12+ within Canada’s oil & gas sector

2. Trusted advisor in helping clients achieve immediate and sustainable results

3. Tailored solutions to meet the expectations of large and small companies (one size does not fit all)

Contact 5C Contracts Ltd.Ian Carr, Principal(403) 813-5607 iancarr@5ccontracts.com www.5ccontracts.com

Understanding the ApproachReview current process among each stakeholder group. Key areas of discovery include:• Understanding decision points• Timing & sequence, durations• Interfaces with internal & external stakeholders• Risks and restrictions• Resources & budgets

CHReservoir Development Surface land Drilling &

Completions Engineering Supply Chain Construction C & SU O & M Reclamation ???????

Aboriginal County Local Provincial Environmental Federal Market ????

Lean ProcessIntroduced at the beginning to indicate the importance attached to streamlining every facet of a process to deliver anything; this occurs throughout the journey. Part 1• Reverse engineer current process to identify and remove

float, redundancy and duplication (apply Lean principles)

• Develop cost structure (BoQ/BoM)• Clarity around risks and decision points• Identify opportunities for process change• Develop list of known predictable variables• Output = optimum schedule with current process• Output = restrictors to change identified• Output = list of potential additional improvements• Output = Cost / schedule structure to measure all

improvements against

Lean ProcessPart 2• Review and counter restrictors• Develop potential improvements and build into

schedule• Establish in principle solutions to variables• Engage market on principles• Output = further optimized schedule• Output = list of restrictors requiring senior exec’ help• Output = variables reduced to options

Part 3• DESIGN IMPROVEMENT DECISION

Notes on Case Study• The following was

developed to highlight significant opportunities in the delivery of Well Pads for a 35kb/d SAGD client

• The approach is as relevant to SAGD as with any other replicable scope of work such as:• SAGD central processing

facilities (CPF)• Natural gas processing

facilities & infrastructure• Oil batteries & satellites• Compressor/pump

stations• Sub stations & others

• Cost details have been removed for reasons of confidentiality

• A facilitated approach maximising input from the market to assist engineering and other disciplines’ decisions, producing optimum design, streamlining fabrication and installation to maximize benefits to all across the board. It is not discipline centric

• Although produced for the oil & gas market, any product, service or facility required for any industry from fast food to communications would see major benefits in this approach

First Steam in Ten MonthsChanging how Well Pads are delivered & operated

Objective• Reduce time to first steam from current 20 – 30

months to 10 months.• Provide (company) with maximum flexibility in

their business decisions around when well pads are started

Key Assumptions• After Regulatory approval, Well Pads take 20 to 30

months to first steam• Life expectancy 7 to 10 years• Sustainment plans up to X per year….. for next 20

years +• Approx. 50 PO’s for materials & equipment per

pad, excluding Contracts and revisions (PO rev circa 90+)

• Some equipment has lead times of up to 60 weeks (pumps, some valves 50+ weeks)

• Predictable variables from one pad to another are; elevation, orientation, well pairs (# & spacing), distance from CPF

Well Pad Capital Costs

Common/average cost Well pair 7 pair 9 pair 10 pair

Surface Lands

(inc. flowline clearing)

Drilling

Completions

Commissioning

Facilities*

* Estimates with indirect (Construction) pro-rated values.

All cost excluding Facilities provided by Development.

Drilling Average of scoping estimates for OO/PP & G

No flowline costs incl' in Facilities Estimates, Flowline per Km approx. $M per Km.

Average $

Financial cost details removed to protect confidential information. Slide left in to show components needed to produce proxy costing. 10

Essential Elements• Innovation in design• Innovation in Supplier & Contractor relationships

and their inclusion in the design development• Change to budgets – Lifecycle not separating

Capex from Opex• Full SMM BoQ and BoM for each Well Pad pairing

configuration• Collect data on all aspects of the installation and

maintenance• Capital side and Operations to be one team• Inventory!

Supply Chain Perspective• Tactical activities are currently repeated every

time we build a new Well Pad • Too much focus on initial cost• Focus should be on lifecycle not initial cost• Evergreen Contractors and suppliers to be

developed & managed• Baseline performance data collection key to

stepped incremental improvements in safety, quality, schedule, labour productivity, maintenance, reliability and costs

• Environmental, local and aboriginal aspects included from the beginning

Advantages• 10 month delivery

affords Development the opportunity to be flexible and creative in their Well Pad scheduling

• Bitumen 10 to 20 months earlier, cash benefit substantial (ROI)

• Where applicable, cost of financing inventory offset by 10 to 20 months reduction in product delivery

• Lifecycle approach reduces production costs & downtime

• Innovation built in• Development, Surface

land, Drilling & Completions, Facilities, C&SU, Operations and Engineering/Contractors/Suppliers all part of the one team solution

• Environmental impact reduction designed in

• Constructability and execution excellence forced

• Reduction in personnel to construct = reduction in camp spaces

• With BoQ & BoM’s maintained, all innovations can be accurately forecasted. Permission rather than forgiveness

• Project resources not affected by Well Pad delivery

• One set of resources not two focused on delivery

• Community inclusion defined

Final Thoughts• Generally maintain two contractors for each

trade. Not having “all our eggs in one basket” supports Competitive Tension (schedule dependent) based on performance metric output sharing

• Lease Well Pads, splitting costs for capital recovery and production and freeing up cash.

• Include 5R’s in all decisions• Incentivize increase in nameplate production to

encourage continuous improvement• Once fully understood, go full EPFC or General

Contractor utilising novation/nomination and frameworks with evergreened suppliers and contractors

• Coordinate participation of competitors to further drive out waste, duplication and cost.

Contact 5C Contracts Ltd.Ian Carr, Principal(403) 813-5607 iancarr@5ccontracts.com www.5ccontracts.com

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Integrated Delivery of Supply Chain Solutions_5C Contracts_02-Nov-15

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