How to Transform E&p Companies From Being Risk-vulnerable to Risk-empowered and Being Able to Conduct Operations and Production Optimally

<h1>How to Transform E&p Companies From Being Risk-vulnerable to Risk-empowered and Being Able to Conduct Operations and Production Optimally</h1>Author: <a title="Stig Kristoffersen" href="http://www.articlesbase.com/authors/stig-kristoffersen/34356.htm">Stig Kristoffersen</a> 
How to transform E&P companies from being risk-vulnerable to risk-empowered and being able to conduct operations and production optimally and more efficiently?

Stakeholders within the oil and gas industry understand the importance of proper planning and action needed to avoid nonproductive time (NPT) and cost overruns associated with today’s increasingly complex wells and their exploration activities.

You make difficult decisions every day – decisions based on a thorough analysis of the alternatives and the available data. When the alternatives gets uncertain and could be ill-defined you are in trouble. What if the data is partly non existent? In the ervery day analysis, the engineers, scientists and managers would have to rely on some sort of risk analysis tools or a decision maker toolbox.

The industry is flooded with Software tools to assist them in solving their risk assessment ant to perform risk analysis in an as effective way as possible. Software tools like; UnRiskIT, @Risk 5.0, Decision Suite Tools Suite, Crystal Ball 7.1, Solver software, GoldSim simulation software and in the end the famous MS Excel 2003. The latter one plays an important part in some of the softwares mentioned above of course.

Traditional risk analysis are using methods of retrofitting MS Excel spreadsheets and using software add-on tools. These methods can prove to be cumbersome, inaccurate and inefficient which again will result in poor decisions and wasted time. Furthermore, these traditional methods are generic and often require costly experts for probabilistic model development and interpretation.

The industry will need a more powerful software solution for quickly and properly generating critical information needed for effective risk mitigation. And another aspect the industry needs to do knowledge capture in a different way than they do to day. I have mentioned in other articles I have written about utilization of mashup technology to perform a more productive and effective knowledge capture of the data existing and still continue to flow into the company. I think it would be time for the risk analysts to visit this arena as well, in order to clean their floors properly in this area.

What creates the leading edge and breakthrough software solution for project risk analysis? It is no easy answer to this question, as various software are designed for their specific areas, refinery, wells, software development and so on. There is a need to define what areas you need to risk, and hunt down the solution accordingly.

Making a Quick risk analysis by logically entering and modifying project data in an easy-to-use, straightforward interface is a must of course. However, again you meet stumbling blocks. Every company listed up front here will claim that their solution is just what you need.

Specifying the methods, procedures and features that allow the you to gain control and maintain consistency across multiple projects using the common industry knowledge, may be the way to go for you.

You want to enable your company to thoroughly analyze and better manage risk, to deliver more accurate cost estimates, reduce NPT, and avoid costly strategic planning errors and in the end operational cost overruns.

We need to be able to shed some light to the E&P managers by providing them with a quick and clear insight into the statistical parameters that compile each estimate we provide them with.

In oil and gas projects we face challenges within areas such as Six Sigma and quality analysis, exploration and production, oil reserves estimation, capital project estimation , pricing and regulation compliance. All these areas need extensive risk analysis and making the right decision at the right time.

However, doing the risk analysis alone is only part of the challenge and solution. Performing a proper data analysis is the major step which in most companies are neglected or in best case underestimated. Capture the knowledge about the parameters you risk would be imperative for your understanding of the underlying risk associated with those parameters.

I would therefore suggest the phrase; “ Unless you know what you risk, do not do it!”

By this I mean to say that, unless you have gotten all basic information you have and been able to create your knowledge database ahead of risking, you would have such a high risk on knowledge content, which supersedes the uncertainties in the parameters you want to analyze.

The use of Monte Carlo simulation is the most common method in order to show you the many possible outcomes in the Microsoft Excel spreadsheet. It also enables you to tell you how likely they are to occur. This is the most common approach in any risking software apart from some few ones which have their own developed way of handling these actions.

The choice of software you make will make it possible for you to judge which risks to take and which ones to avoid in an easy fashion and share results with the majority within your company and provide input various software.

What type of software to choose, is again up to you and what challenges you struggle with. No software can handle all types of risks and perform all types of analysis of your data. However my experience with @ risk product from Palisade is positive and it has solved the issues we have been struggling with.

Best of luck on your risky path towards success, and may all the forces be with you in solving the critical elements enabling you to see the uncertainties and to reach your goals set for your projects.

About the Author: Stig-Arne Kristoffersen 
An explorer 
<a href="http://www.lulu.com/stig" target="_blank">www.lulu.com/stig</a>Article Source: <a href="http://www.articlesbase.com/">ArticlesBase.com</a> - <a href="http://www.articlesbase.com/business-articles/how-to-transform-ep-companies-from-being-riskvulnerable-to-riskempowered-and-being-able-to-conduct-operations-and-production-optimally-337519.html" title="How to Transform E&p Companies From Being Risk-vulnerable to Risk-empowered and Being Able to Conduct Operations and Production Optimally">How to Transform E&p Companies From Being Risk-vulnerable to Risk-empowered and Being Able to Conduct Operations and Production Optimally</a>

How to transform E&P companies from being risk-vulnerable to risk-empowered and being able to conduct operations and production optimally and more efficiently?

Stakeholders within the oil and gas industry understand the importance of proper planning and action needed to avoid nonproductive time (NPT) and cost overruns associated with today’s increasingly complex wells and their exploration activities.

You make difficult decisions every day – decisions based on a thorough analysis of the alternatives and the available data. When the alternatives gets uncertain and could be ill-defined you are in trouble. What if the data is partly non existent? In the ervery day analysis, the engineers, scientists and managers would have to rely on some sort of risk analysis tools or a decision maker toolbox.

The industry is flooded with Software tools to assist them in solving their risk assessment ant to perform risk analysis in an as effective way as possible. Software tools like; UnRiskIT, @Risk 5.0, Decision Suite Tools Suite, Crystal Ball 7.1, Solver software, GoldSim simulation software and in the end the famous MS Excel 2003. The latter one plays an important part in some of the softwares mentioned above of course.

Traditional risk analysis are using methods of retrofitting MS Excel spreadsheets and using software add-on tools. These methods can prove to be cumbersome, inaccurate and inefficient which again will result in poor decisions and wasted time. Furthermore, these traditional methods are generic and often require costly experts for probabilistic model development and interpretation.

The industry will need a more powerful software solution for quickly and properly generating critical information needed for effective risk mitigation. And another aspect the industry needs to do knowledge capture in a different way than they do to day. I have mentioned in other articles I have written about utilization of mashup technology to perform a more productive and effective knowledge capture of the data existing and still continue to flow into the company. I think it would be time for the risk analysts to visit this arena as well, in order to clean their floors properly in this area.

What creates the leading edge and breakthrough software solution for project risk analysis? It is no easy answer to this question, as various software are designed for their specific areas, refinery, wells, software development and so on. There is a need to define what areas you need to risk, and hunt down the solution accordingly.

Making a Quick risk analysis by logically entering and modifying project data in an easy-to-use, straightforward interface is a must of course. However, again you meet stumbling blocks. Every company listed up front here will claim that their solution is just what you need.

Specifying the methods, procedures and features that allow the you to gain control and maintain consistency across multiple projects using the common industry knowledge, may be the way to go for you.

You want to enable your company to thoroughly analyze and better manage risk, to deliver more accurate cost estimates, reduce NPT, and avoid costly strategic planning errors and in the end operational cost overruns.

We need to be able to shed some light to the E&P managers by providing them with a quick and clear insight into the statistical parameters that compile each estimate we provide them with.

In oil and gas projects we face challenges within areas such as Six Sigma and quality analysis, exploration and production, oil reserves estimation, capital project estimation , pricing and regulation compliance. All these areas need extensive risk analysis and making the right decision at the right time.

However, doing the risk analysis alone is only part of the challenge and solution. Performing a proper data analysis is the major step which in most companies are neglected or in best case underestimated. Capture the knowledge about the parameters you risk would be imperative for your understanding of the underlying risk associated with those parameters.
I would therefore suggest the phrase; “ Unless you know what you risk, do not do it!”

By this I mean to say that, unless you have gotten all basic information you have and been able to create your knowledge database ahead of risking, you would have such a high risk on knowledge content, which supersedes the uncertainties in the parameters you want to analyze.

The use of Monte Carlo simulation is the most common method in order to show you the many possible outcomes in the Microsoft Excel spreadsheet. It also enables you to tell you how likely they are to occur. This is the most common approach in any risking software apart from some few ones which have their own developed way of handling these actions.

The choice of software you make will make it possible for you to judge which risks to take and which ones to avoid in an easy fashion and share results with the majority within your company and provide input various software.

What type of software to choose, is again up to you and what challenges you struggle with. No software can handle all types of risks and perform all types of analysis of your data. However my experience with @ risk product from Palisade is positive and it has solved the issues we have been struggling with.
Best of luck on your risky path towards success, and may all the forces be with you in solving the critical elements enabling you to see the uncertainties and to reach your goals set for your projects.

Stig-Arne Kristoffersen
An explorer
www.lulu.com/stig

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