Make a quick list in your head of all the individual disciplines that contribute to an upstream oil and gas firm. Geology, geophysics, Reservoir engineering, – there are plenty of deep, technical roles that spring to mind. But how far down the list is asset management? Is it even there at all?
For many firms, the answer would be no. We all know how important asset management is in the upstream oil and gas industry, but often it’s seen as a task on someone’s plate rather than an independent discipline in its own right.
As a result, those responsible for teasing the most value out of an Asset or setting long-term asset strategy are left to develop their own practices and define their own role.
That can work. But it also might take them years to refine what they know, and their progress may be undermined by wider organisational factors.
To develop what asset managers do best – chart the most valuable course for an Asset or a project – it’s better to think of their role as a specific discipline. And that means leaders need to understand what their asset managers need to do each day, the data they use to shape their strategies, and the support they need to grow in their role.
The art and science of understanding upstream value
In the broadest terms, an asset manager’s role is to improve the value of a field. But “value” doesn’t have the same meaning in every firm.
To a larger organisation, the value of a field might be measured in its profit, in which case your asset manager’s focus will be on reducing costs and maximising reserves.
But for a smaller firm’s field, immediate cash flow might be the name of the game. And for the asset manager in charge of that project, acceleration of production may be the primary focus.
Understanding exactly what measure of value they need to improve is a crucial first step, but it is only a first step
From there, the asset manager’s role unfolds into infinitely more complex territory – economic analysis of the asset’s current value and what levers they can pull to improve that, prioritising potential new projects by size, cost and impact, and coordinating with other departments to pin down exactly what each project needs to get in motion.
By the time they’re ready to sit down with senior leaders and define what the asset’s strategy will be for the foreseeable future, your asset manager will have been working across all manner of technical and commercial factors.
What asset managers need from senior leaders
Treating asset management as its own separate discipline isn’t just a matter of understanding the multifaceted nature of the role itself. It’s also about making sure your firm has the same level of technical training and support in place for your asset managers as it does for your engineers and geologists.
At the leadership level, that support usually comes at two key moments in the asset strategy process.
The first is early on, when the asset manager is analysing their options for improving the value of a field. As we’ve said, the levers they can pull will be dictated by what measure of value is most important to your firm, and they will need to work closely with the C-suite during this phase to understand exactly which metrics matter most to your overall strategy.
The second point of interaction comes later. Once the asset manager has analysed the field’s current value and prioritised which projects could move the needle, they’ll need to work closely with senior leaders to set the strategy going forward for each stage in the asset’s lifecycle.
These are both collaborative steps. If the asset manager isn’t given proper time to sit down with senior figures, you run the risk of developing an asset strategy that chases the wrong goals and doesn’t deliver what the firm really needs.
What asset managers need from your technical teams
As your asset manager goes through the process of evaluating potential projects, they’ll have to work with multiple other disciplines to figure out what each project will cost in time, people and resources.
Making sure that goes as smoothly as possible might mean taking a cultural look at communication in your firm and how siloed different units are. Or it might need a new approach to data sharing and quality, to ensure asset managers are always being fed consistent, accurate data to support their analyses.
It takes specialist guidance to build a discipline
There’s one more area where asset managers need more support – training.
Recognised technical disciplines are usually well-served in this regard, but because asset management is often overlooked, it’s hard to come by training that’s specific to the asset manager role.
They might not have complex software and technical formulae to learn, but they still have much to learn that general management training won’t cover. For example, do your asset managers have the confidence to take charge of asset strategy and engage the right people in strategy renewal? Are they an expert in the art of navigating disagreements with joint venture partners? Are they fully aware of the fatal pitfalls that can trip up project plans?
At Rockflow, we can expand the capabilities of your asset management team through specialised training, as well as offer advice on defining asset strategy, structuring the management process and factoring in the influence of budgets and reserves.
Take a look at our management advisory expertise to learn more about how Rockflow can help.
