SPE Moscow section
April 14, 2009
Best practices inhydrocarbon accounting
Best practices in hydrocarbon accounting2 © 2009 Deloitte & Touche Regional Consulting Services Limited
Business needs for Upstream
© 2008 ZAO “Deloitte & © 2009 Deloitte & Touche Regional Consulting Services Limited 3 Best practices in hydrocarbon accounting
Business needs – Production
Management and
elimination of losses
(downtime)
bbld
Government and
internal control
requirements
Reliability in production data
for reservoir analysis
There are three basic business needs covered by the
hydrocarbon accounting system in Upstream:
3
© 2008 ZAO “Deloitte & © 2009 Deloitte & Touche Regional Consulting Services Limited 4 Best practices in hydrocarbon accounting
Losses (downtime)
A key component of the hydrocarbon accounting
system is the design, implementation and automation of
the management and the elimination of operational
losses (downtime), which includes:
• Definition of a corporate library of operational losses
(with a multi-dimensional hierarchy)
• Design of the data capturing process, root cause
analysis and reporting of losses
• Implementation of actions aimed at eliminating major
types of losses
bbld
© 2008 ZAO “Deloitte & © 2009 Deloitte & Touche Regional Consulting Services Limited 5 Best practices in hydrocarbon accounting
Losses (downtime)
Russian average International benchmark
We believe that the difference between Russian and international results
can be explained by two main types of reasons: a) historical, b) current.
The historical reasons have to do with the huge number of low quality wells
that were drilled in the 80’s and earlier. The current reasons have to do
with the lack of a strong management approach to losses elimination,
compared to international peers.
According to our experience in both Russia and other
geographies with mature on-shore fields:bbld
5 – 7 % 2 – 4 %
© 2008 ZAO “Deloitte & © 2009 Deloitte & Touche Regional Consulting Services Limited 6 Best practices in hydrocarbon accounting
Production data for reservoir analysis
Another key component of the hydrocarbon accounting
system is the detailed definition (and automation) of all
the algorithms and mechanisms used to allocate
production to wells and layers, which includes:
• Detailed configuration of the layout of each field (from
wells and layers to facilities and plants, including each
intermediate field facility like manifolds, etc.)
• Detailed design of the mechanisms for capturing
product flow data (fluid, oil, gas, water) at each stage
of the layout
• Design and automation of the allocation algorithms for
fiscal production to wells and layers
© 2008 ZAO “Deloitte & © 2009 Deloitte & Touche Regional Consulting Services Limited 7 Best practices in hydrocarbon accounting
Government and internal controls
Lastly, it is critical to design the solution in a way that all
reports to both external bodies and internal
departments be made automatically from the
hydrocarbon accounting system. This must be under
auditable conditions and with all necessary tracking
mechanisms, including:
• Customization of the hydrocarbon accounting system
to the requirements of each jurisdiction (country,
region, etc.)
• Compliance with Sarbanes-Oxley or other internal
controls requirements
• Total automation of reports without manual
adjustments
• Auditability for each report (who, when, how, where)
© 2008 ZAO “Deloitte & © 2009 Deloitte & Touche Regional Consulting Services Limited 8 Best practices in hydrocarbon accounting
Other common Upstream issues with the hydrocarbon
accounting system
• Dependancy on Excel or systems that are not licensed
• Duplication in manual entries
• Poor historical data
• Inconsistency of master data files
• Poor integration between oil, water, gas solutions
• Focus on data input, rather than analysis
• Lack of tools or mechanisms to identify opportunities for
improvements
© 2008 ZAO “Deloitte & © 2009 Deloitte & Touche Regional Consulting Services Limited 9 Best practices in hydrocarbon accounting
Associated gas
Oil producing
well
Gas producing
well
Compressor
Official
metering point
Treatment
plants
Gas lift
injection well
Separator
Thirs party
Gas balance items:
+ Production
+ Purchase of gas from third parties
– Internal consumption:
– Electric power generation
– Heaters, boilers, etc
– Volume losses during processing /
compression:
– Tons produced
– Losses
– Technological losses
– Flaring
– Gas delivery to third parties
± Gas lift
o Difference (should tend to zero)
Flaring
Flaring
Flaring
Best practices in hydrocarbon accounting10 © 2009 Deloitte & Touche Regional Consulting Services Limited
The solution
© 2008 ZAO “Deloitte & © 2009 Deloitte & Touche Regional Consulting Services Limited 11 Best practices in hydrocarbon accounting
What is the solution?
A process and a tool that manages the flow of
production data from wells and layers to plants
and headquarters, allowing operational staff to
be more efficient and top management to better
control the value added by Upstream
© 2008 ZAO “Deloitte & © 2009 Deloitte & Touche Regional Consulting Services Limited 12 Best practices in hydrocarbon accounting
Functional scope
• Well schemes and files
• Well tests and production controls
• Well works
• Losses control
• Production accounting and back allocation
• Multi product control (including associated gas)
• Water injection and chemical treatment
• Plant operations (including gasoline, GLP)
• Product deliveries
• Multi-dimensional analysis of the operation
• Statutory, governmental reports
© 2008 ZAO “Deloitte & © 2009 Deloitte & Touche Regional Consulting Services Limited 13 Best practices in hydrocarbon accounting
Data capturing options
Internet
Local applications
Fax, email
Hand-helds
Telemetry
Stocks
Losses
Daily reports
Well output
Plant deliveries
Field activities
Third party products
Pressures
Injection
Chemicals
Compression
Well catalog
Well engineering
Well status
Extraction systems
Well works
Management reports
Operational analysis
© 2008 ZAO “Deloitte & © 2009 Deloitte & Touche Regional Consulting Services Limited 14 Best practices in hydrocarbon accounting
Physical scope (example of a complex field)
Oil producing
well
• Controls
• Losses
• Tests
• Dynamometry
• Well works
• Well file
Interventions
• Pullings
• Workovers
• Equipment
• Hot-oil
• ...
Gas producing
well
• Controls
• Preassures
• Downtimes
• Well file
Satellite station (with
gas separation)
• Stocks
• Flows
• Flaring
Water injection plant
• Flows
• Downtime
Water injector
well
• Flows
• Pressures
• Downtimes
• Chemicals
Oil treatment plant• Stocks
• Flows
• Salinity
• ° API
• ConsumptionCompressor
• Group stops
• Flows
• Consumptions
LACT Unit
• Specs
• Flows
• Stocks
Plant products
(GLP, gasoline, ...)
• Stocks
• Outputs
• Consumption
• Deliveries
Official metering
point
• Chromatogr.
• Flows
• Injection
• Adjustments
Gas treatment plant
(cryo, dew-point, ...)
• Nomination
• Delivery
• Specs
• Consumptions
Field offices
• Daily report
• Other reports:
• Downtime
• Injection
• Outputs
• Stocks
Corporate
headquarters
• Month-end processes
• Various reports
• Data transfer to technical
centers and high-tech
software solutions
Best practices in hydrocarbon accounting15 © 2009 Deloitte & Touche Regional Consulting Services Limited
Our preferred software solution
© 2008 ZAO “Deloitte & © 2009 Deloitte & Touche Regional Consulting Services Limited 16 Best practices in hydrocarbon accounting
Energy Components from Tieto
Best practices in hydrocarbon accounting17 © 2009 Deloitte & Touche Regional Consulting Services Limited
Energy Components product suite
Production Transport Sales Revenue
Production
downtime
Production
operations
Production test
Well and
reservoir
Gas
stream
Oil
stream
Well fluid Data from:
•Other company operations
•JVs
•Partners, etc.
Sales and
purchases
Inventory
Tariffs
Quantities
Gas delivery
Gas dispatching
Oil delivery
Cargo Admin’n
Gas sales
Price
determination
Oil sales
Operator Company
Energy Components
Calculation and Allocation Framework
Best practices in hydrocarbon accounting18 © 2009 Deloitte & Touche Regional Consulting Services Limited
Some features ― field layout configuration
Best practices in hydrocarbon accounting19 © 2009 Deloitte & Touche Regional Consulting Services Limited
Some features ― fiscal allocation
YACIMIENTO 2
YACIMIENTO 1
100
ET-1
200
80
ET-2
ET-3
ET-4
<
ET-5
BATERIA 1
BATERIA 2
PTC 1
380
100
70
50500
450
YACIMIENTO 3 BATERIA 3 PTC 2
ULACT
PLANTA DE
ENTREGA
60
ET-6
60
50
441.18
Producción Teórica
Referencias
Producción Real
CoeficienteCoef
58.82
Coef 0.980392
500 / 510
Coef 0.919125
441.18 / 480
Coef 1.1764
58.82 / 50
349.27
91.91
58.82
Coef 0.919132
349.27 / 38091.91
73.53
183.83
57.19 Coef 0.817
91.91 / 120
40.85
Coef 0.98033
58.82 / 6058.82
POZO BATERÍA PLANTA PLANTA DE ENTREGA
Best practices in hydrocarbon accounting20 © 2009 Deloitte & Touche Regional Consulting Services Limited
Some features ― allocation engine
© 2008 ZAO “Deloitte & © 2009 Deloitte & Touche Regional Consulting Services Limited 21 Best practices in hydrocarbon accounting
Some features ― user-friendly interface
Best practices in hydrocarbon accounting22 © 2009 Deloitte & Touche Regional Consulting Services Limited
How to make this all work?
© 2008 ZAO “Deloitte & © 2009 Deloitte & Touche Regional Consulting Services Limited 23 Best practices in hydrocarbon accounting
Real sources of problems (and solutions!)
People’s mindset ~50%Business processes ~35%
Technology ~15%
© 2008 ZAO “Deloitte & © 2009 Deloitte & Touche Regional Consulting Services Limited 24 Best practices in hydrocarbon accounting
Some “mindset” issues…
• Stop the lying game
• Don’t set unrealistic targets
• Challenge but don’t be heavy
• Find solutions, not guilt
• Never accept inconsistencies
• Plans are just plans, not a life or death matter
• Understand the “stretch” concept (over target)
• Use more graphics, less tables
© 2008 ZAO “Deloitte & © 2009 Deloitte & Touche Regional Consulting Services Limited 25 Best practices in hydrocarbon accounting
The rest is just methodology
1) Field layout
2) Functional and
technical design
3) Customization
and testing
4) Training and
implementation
Project management and change enablement
© 2008 ZAO “Deloitte & © 2009 Deloitte & Touche Regional Consulting Services Limited 26 Best practices in hydrocarbon accounting
Key factors of success
Integrated project management
Design only once
Measure results
Train, train, train
Communicate, communicate
Final users involved
Top management drivesClear vision
Drive
Lead
Commit
Manage
Best practices in hydrocarbon accounting27 © 2009 Deloitte & Touche Regional Consulting Services Limited
Pilot approach – asset based
© 2008 ZAO “Deloitte & © 2009 Deloitte & Touche Regional Consulting Services Limited 28 Best practices in hydrocarbon accounting
Recommended features for a pilot asset
Production
• Daily net oil production 20.000 to 200.000 bbl
• Associated gas? Yes
• Water injection? Yes
• Number of final users 20 to 200 users
• Availability of telemetry Preferably, yes
Best practices in hydrocarbon accounting29 © 2009 Deloitte & Touche Regional Consulting Services Limited
The business case
© 2008 ZAO “Deloitte & © 2009 Deloitte & Touche Regional Consulting Services Limited 30 Best practices in hydrocarbon accounting
Quantification – real case (not Russia / CIS)
Production
• Operational losses percentage in volume
• Lifting costs per barrel USD per barrel equivalent
• Efficiency in chemical consumption USD per barrel, dolars in stock
• Water injection uptime percentage in volume
• Workover efficiency frequency, incremental production
Example operational losses
• Annual losses about 35 mln bbl
• Annual production about 1, 000 mln bbl
• Operational losses about 3.5%
Considering our benchmark (2%) and setting a conservative target of 3% (0.5% reduction) we have:
• Incremental production about 5 mln bbl per year
• Estimated netback about USD 10 per bbl
• Business case (losses only) about USD 50 mln per year
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