In any business, oil and gas operations included, stakeholders and contributors alike are impacted by the flow of information. Visual access to information needs to be readily available for the planning, execution, and success of all projects and endeavors.
Often, in order to gain a clear picture of the business, disproportionate amounts of time and effort are spent merging information together to measure performance, track activity, and understand the financial impact. Without a solid strategy to keep information properly connected, getting one’s company to work with a proper focus on the assets can be a difficult task.
Having spent the better part of my career building integrated oil and gas software solutions for operations (more than 20 years!), I’ve compiled some key points of oil and gas data integration that enable a harmonious flow of information through the entirety an operations activity cycle.
1. An Asset Master (Well Master / Facility Master) Solution
This is important to keep all critical information elements tied to the same source (a single source of truth for all aspects of a well header). The Asset Master should be the starting point for all facilities and wells being tracked throughout the operational cycle. This should include all attributes critical for report writing in every segment of the operation.
2. An AFE system should have the same chart of accounts as the financial system
It should also should have the ability to tie AFE numbers to the financial system and collect daily project cost information from drilling and well work systems against that same baseline chart of accounts. The AFE system should be able to differentiate between drilling costs, completion costs, LOE Costs, facility costs, tangibles and intangibles.
3. The rig schedule should always tie to the Well Master and AFE system
This is so that the schedule always reflects appropriately scheduled costs to be incurred against that same schedule. This integration point will give greater insight to anticipated costs than simply using the forecast. A schedule tends to track the realities of executing on a plan closer than the plan itself.
4. Your equipment management system should tie to a single Asset Master and financial system
Every asset requires equipment to produce oil and gas, such as compressors, pumping units, separators, tanks, meters, etc. Those same equipment items are often transferred from an inventory yard to an asset (and vice versa) and have financial implications in their management. Often, equipment is managed in spreadsheets that have no tie to either financial systems or the well master, resulting in many lost opportunities in both time and resource. By ensuring that your equipment system of management always ties to a single Asset Master and your equipment catalog ties appropriately to financial accounting, many bottlenecks involved with inventory will be removed.
5. Daily drilling, completion, and facility activity should tie to the Well Master
And the cost capture on those activities should always tie to the financial system via the AFEs set forth for each project.
6. Production daily and monthly data should always tie to the Well Master
It should also be capable of allocations that can be sent to accounting for processing on a monthly basis. All daily data capture should support the monthly data capture, which in turn should support the accounting and regulatory reporting processes.
7. Profit/Loss Reporting should be easily distributed
Your reports need to be readily available and easy to send to the decision-makers that have influence on the profitability of the company. Sometimes, even distributing to the pumper level of the company is desirable, so that the assets a person or group is responsible for can have easily view-able financial scorecards.
8. Producing assets should tie to land records
A cross-reference to land records for every producing asset can result in significant savings from a lease management perspective . (Shut-in reports, etc.)
There is no doubt that the companies that pay attention to these integration points reap the benefits of timely accessibility to key information. By acting upon these strategies, they also enjoy greater insights that lead to profitability.