Many independent companies in the oil and gas industry are between a rock and a hard place when it comes to assurance.
They’re often listed, they have to show progress, and their agility is their competitive advantage. At the same time, a wrong decision on a major project can be big enough to break the company. There’s enormous pressure on decision makers to get everything right, and it’s natural they can feel exposed as a result.
Traditional assurance processes might help if the company was larger and could afford to slow down. But independent companies don’t necessarily have the capacity to complete their own assurance in-house. And bringing external reviewers in for a final review at the last hurdle can seem bureaucratic and impractical – can we really afford to stop now? Wouldn’t it be better simply to press ahead?
There’s no easy answer, and this was evident in the conversations at our technical assurance workshop. We spoke to a number of companies, and they often don’t get an opportunity to learn whether their processes are usual practice or not. Even if they come from a supermajor background, their industry practices are rarely translatable to a company that needs to be as nimble as possible when making decisions and pressing ahead.
While we don’t claim to have a foolproof cure to this Catch-22 situation at Rockflow, we think it’s worth laying out the case for an assurance process that isn’t expensive, bureaucratic or slow – and which might be the answer for agile oil companies. There is no reason why independent companies can’t function without a formal safety net.
1. Risk taking should be conscious, not unconscious
The extractive energy industry often carries a large amount of business risk driven by subsurface uncertainty. Accepting this risk (for example, by putting in a risk management plan) can be practical when it’s a conscious choice. The only issue is that it’s often an unconscious decision.
Subsurface teams can be unaware of the level of uncertainty they’re facing. In general we’re more confident of our knowledge than we should be. For example, they may feel under pressure to look for optimisations on a base case to demonstrate a project is viable, and then do not have time to investigate the range of other outcomes that might occur.
When assurance is supporting the subsurface team, it can enable them to think through the full range of potential outcomes. This, in turn, can help businesses make conscious choices about managing or accepting the business risks associated with subsurface uncertainty.
2. The middle ground isn’t as stable as we think it is
In an attempt to find a middle ground between agility and assurance, a company might check in with everyone at all levels of the project, asking whether anyone can identify any issues with pressing ahead. And sometimes, this communal check might be enough to catch a stray miscalculation or oversight, or to slow down just enough to explore an alternative.
However, if you are using people’s level of comfort as your assurance model, you can just as easily be exposed. As is always the case with the subsurface, your team might be happy with the uncertainties they have identified and quantified, but it’s quite possible to misjudge the level of uncertainty due to factors out of view. In short, we don’t know what we don’t know.
Assurance, by contrast, is designed to probe at these dark corners of a project. It doesn’t only check your decisions against the information you know, it’s also a process of discovering and weighing the risks and options you haven’t considered.
That’s why great assurance begins with the question ‘are we considering the right things?’ It might involve further investigation, but when it’s introduced early in a project-cycle, it doesn’t have to hit the brakes on a company’s exploration, and it can prevent us from going fast in the wrong direction.
3. Assurance can support a more nimble approach
There’s a legitimate perception that assurance is bureaucratic, resource-intensive, and slows you down. And this idea might come from people who have worked in larger companies and haven’t found a way to scale down the assurance process to make it practical for their smaller organisation.
The truth is, assurance doesn’t have to be costly, slow or cumbersome.
Why it doesn’t have to be slow: When assurance is continuous throughout a project cycle,<link to previous blog on this topic, when published> you’re actually able to adapt sooner and act more nimbly.
Why it doesn’t have to be costly: When assurance is involved at the start, and is involved in coaching your team through the workflows and skills they need, and the questions they need to answer, it mitigates the chances of an expensive surprise at the final review stage.
Why it doesn’t have to be bureaucratic: Assurance should be a process that gives your teams a voice. It’s not about reviewers second guessing the subsurface team. Done right, assurance is primarily asking questions that gives them room to speak on topics they might not have had confidence to address in conversations to date. Usually teams will know when there are gaps, but they might not have had the opportunity to speak.
Admittedly, it’s still not an easy solution
While we’d love to claim that the solution to reconciling agility and assurance is to use Rockflow’s services, we can only ever be a part of the answer.
Sometimes, we know, it takes a cultural change for subsurface teams and decision makers to see the need to do things differently. But this can start by thinking deeply about how you make decisions as an organisation and talking through some of the barriers to speaking up or stopping a project when it’s the right thing to do.
Whether you do this through external technical assurance, or by building a culture of peer-to-peer challenging among your engineers, or through your own series of internal processes, it is vital for smaller companies to find a way to not only feel confident when they greenlight a project, but to see the results they expect too.
For more on technical assurance, see our articles on how assurance can aid businesses to deliver greater value, and how you can make quality assurance more consistent, reliable and effective.
