In the upstream oil and gas industry, asset managers can often feel like the odd one out. They’re regularly interacting with subsurface, project and commercial teams, but while those roles are quite rightly seen as independent technical disciplines, the same can’t be said of asset management.
All too often, asset managers are left to develop their own way of defining their role. There isn’t specialised training available to help them develop best practices or understand the best way to approach the asset strategy process.
At Rockflow, we’ve found these struggles can be partly addressed by equipping asset managers to answer two fundamental questions at every stage of their role:
- What do I need to do?
- What do I need to know?
Leadership of the asset – what needs to be done
Asset managers might be managers by name, but they need to be both managers and leaders in equal measure. These are very distinct roles – a leader will decide what to do and a manager will decide how to do it. But depending on the stage of your asset strategy, you’ll need to be able to embody both and switch between them.
For example, the first task for any asset manager must be to decide what needs to be done with an asset, based on the economic metrics that matter most for your company – what levers must be pulled to tempt more value out of the field, what projects must be put into motion.
This brings the second question into play: what do I need to know?
The “how to” of upstream asset management
As you explore which levers can be pulled on an asset, you’ll inevitably find many projects that could be set in motion. But with all the constraints of financial capital and physical resource capacity limitations (e.g. offshore bedspace), there’s only a certain number that can be executed at any one time.
The only way to decide which to prioritise and which to put on the back burner for now is to analyse the economic potential and resource requirements for each project.
Formalise each project – no matter how big or small – in an opportunity register, and the high level execution and planning in an asset management plan. Keep the latter short and to-the-point – where we are today, where we’re trying to get to, and how we’re going to get there.
Your strategy should recognise what stage of life the asset is in – one asset that’s pre-development and another that’s nearing end of life shouldn’t have the same focus areas, after all.
Indeed, it’s best to work on a multi-strand strategy that looks ahead to the asset’s various different phases and makes use of decision analysis.
Project Management
The success of most projects will typically be measured by schedule and cost. As an asset manager, part of your role is to supervise the projects that are being executed and make sure that each one – no matter now big or small – is tracked regularly.
You need to be aware of any delays or overruns immediately so that you can put measures in place to mitigate their impact. It’s good practice to use a stage gate system for this. This system should be scaled to the size of the project, so it’s entirely possible for a stage gate for a small project to take up no more than a single PowerPoint slide.
Subsurface
The question ‘what do I need to know’ will help you to answer a counterpart question: what can I afford not to know?
Typically development projects will be driven or at least influenced by the subsurface. This can be daunting if you don’t happen to have a background as a subsurface specialist prior to becoming an asset manager. But by keeping to the mantra of “what do I need to do and what do I need to know”, you can start asking the key questions to break that barrier down.
Start by thinking of subsurface as a combination of four key areas: understanding, modelling, improving and forecasting. If you take understanding as an example, you might hear the subsurface team say “We need to execute a project with this many people for this amount of time, in order to understand the reservoir better”.
Your role as the asset manager is to ask what the subsurface team is hoping to achieve with that better understanding, and how it will benefit the asset in relation to the strategy you’ve set out. If you can’t define how that understanding will lead to improved cash flow or increased profit, then the project shouldn’t go ahead.
Commercial
Another key pillar of asset management is the commercial side. Every great asset manager should understand the “rules of the game” – the agreements written down between the members of the operating joint venture, and between the joint venture and the government.
It’s not enough just to know these agreements inside and out. You’ll also need to abide by them constantly, and make sure that the other parties to the agreements are following the rules as well.
From an asset manager’s perspective, that can often feel like you’re fighting people all the time.
As an operator you have a dual role – you have to do the best for the asset on behalf of the joint venture partners, but you also have to do the best for your company. This is fine if all parties are aligned and agree, but we all know that misalignment and disagreement can be par for the course in the upstream O&G industry.
If your company’s drivers differ too much from those of the joint venture’s, you might end up giving too much of your time to non-value adding tasks in the commercial domain. And when that happens, it’s often best to change the underlying commercial structure of the asset.
Looking for asset management support?
As can be seen, there are many different strands to being an asset manager – some technical, some commercial, even some psychological. At Rockflow, our team of consultants have experience in each strand.
We can help asset managers tackle the challenges they face – from providing specialised training for developing asset managers, to offering advice on specific issues like reviewing your asset strategy or restructuring the overall management of the asset.
Take a look at our management advisory expertise to learn more about how Rockflow can help.
