As oil prices plunge to concerning lows, efficiency has taken on greater significance for the oil and gas industry.
Organisations need to act fast to put an end to high production costs and tighten the market once again – something that will prove a challenge thanks to the large stockpile of oil currently being held by OPEC countries that is dragging prices down.
For offshore production, the pressure to improve efficiency is even greater. The sub-sector is known to be particularly expensive due to the environment in which professionals must operate. Often harsh conditions and health and safety risks means those working offshore must be high calibre, which comes at a price.
The natural reaction when the call comes to improve efficiency is to turn to process and technology. These things are integral but what can often get forgotten is the thing that holds everything together: people.
People are important for driving efficiencies. Not only are they often the ones physically doing the work, they are also the idea generators; the ones who come up with the innovation to improve operations.
In Carlsonwagonlit’s (CWT) ‘2015 Energy, Resources and Marine Forecast‘, Monisa Cline, senior vice president of CWT Energy, Resources & Marine, declared that to deal with demand for efficiencies, “proactive change management communication will be key”. The inclusion of ‘communication’ in Monisa’s statement demonstrates a growing recognition of the role people play in bringing about efficiencies. However, the key is approaching this communication in the right way: from a perspective that recognises the interplay between purpose, values, structure, people, results and success.
Prioritising people offshore: crucial but challenging
People are the lifeblood of any organisation. They touch on every part of operations and a company that neglects their talent will soon find they are unable to deliver results.
When it comes to offshore production, the interplay between the professionals working on a plant and the organisation itself is an interesting and delicate one. Clive Wilson, a director at Primeast, explained: “On any plant there is the company that owns it and various groups of contractors who are working together to achieve something. Consequently, organisations need to develop the skill of understanding the collective purpose of all those entities that are working together in partnership.”
A company that fails to understand the perspective of all stakeholders and instead thrusts their own purpose or agenda on those involved will experience a lack of alignment that will hinder efficiency and productivity, as individual entities go off in pursuit of their own purpose.
“Only by creating a purpose that is a reflection of all stakeholders will offshore production be able to benefit from collaboration, ideas sharing and teams that support each other, rather than being purely transactional,” Clive said. “After all, a transactional way of working doesn’t really inspire high performance.”
However, managing multiple contractors isn’t the only challenge. There is also shift work and the ageing of the rig to contend with. “You can begin working efficiently with one shift but what happens when you have changes of personnel?,” Clive questioned. Offshore teams change on a regular basis and this can be hard to manage. What’s more, it’s never a static situation, as rigs have a lifespan, going from construction, to operation and finally decommission. “You have different parties at work during these phases and consequently, the vision of what offshore life will look like at different time horizons is changing,” Clive explained.
Moving from the periphery to the heart of efficiency
The challenges of putting people at the heart of efficiency strategies can be overcome if approached in the right way. The PrimeFocus model acts as a framework for improving operations and by closely following its structure, it’s possible to implement a relevant change management programme and achieve success offshore. This is further explained in Clive’s new book, ‘Designing the Purposeful Organization – how to inspire business performance beyond boundaries‘, published this year by Kogan Page.
The first and most crucial step is creating a compelling purpose, that builds on the perspectives of all stakeholders. This needs to be regularly revisited, especially as a rig passes through the phases of its lifespan.
From the purpose it’s possible to create a shared vision of what the organisation should look like when it’s working right at a particular time horizon. This helps everyone to push in the same direction and understand how their role will play into this.
Once these foundations are in place it is possible to create the values that will help a company deliver on it’s purpose and goals. This is something our clients are doing and one of our offshore companies has created a trio of brand values, including intelligence, in order to encourage the conditions needed to deliver success through innovation. “By using their creative, innovative ways of doing a job, they can make the work more efficient and minimise the downtime. It’s worth remembering that when you’ve got plant that is expensive, if you take it out of commission for a long period of time for maintenance, then that costs a lot of money,” Clive explained. “If you can be creative in the way you do work then you can be more efficient.”
The third element is putting in place the conditions for engagement. This might including considering things like ‘what sort of team meetings do we have?’, ‘how often do people get appraised of their work?’, and ‘how do they get managed?’. This is about everything that secures engagement with the purpose and vision for the people actually doing the work.
From here, it’s crucial to get the right structures in place, such as policies and procedures, to deliver effectively and efficiently. It can be tempting for organisations to jump straight into structure transformation when trying to improve efficiency but in order for these changes to be effective, they have to be consciously aligned to the right purpose and vision. It’s also important that the processes in place are understandable and old processes are abolished. “Redundancy is a real problem in some industries,” Clive explained. “People often introduce a new way of doing things without getting rid of the old way, so what you’re left with is complications and confusion. This only harms efficiency.”
Linked to this is character and having the right behaviours and culture in order to support structure changes. Clive claims that offshore, this is about empowering people and ensuring they can operate safely. It means focusing on things like effective teamwork and coaching and giving managers the skills they need to do these things.
“A lot of the work that we do here at Primeast is helping organisations diagnose the culture that they need in order to achieve a particular purpose,” Clive said. “We use tools like those offered by Barrett Values Centre andHuman Synergistics to actually diagnose a particular culture that is needed for a particular purpose. There’s quite a lot of science to that.”
To ensure people stay at the heart of efficiency strategies, it’s important to measure all of the above. This is about results and helping people to understand what success means in the context of the work in question. Sharing what success means to individuals is really crucial for motivation. If you can get a team to listen to each other’s conceptions of success and affirm what inspires, then it’s possible to grow a shared sense of success for the entire team and wider organisation.
The final – and crucial piece – is playing on the strengths of the people within an organisation. One of the common themes we’ve encountered at Primeast is that organisations don’t actually take the time to understand the strengths of their people in a particular team. Because of the multi-party teams you get on an oil rig and the amount of time they spend together, it’s often hard to understand the dynamic and get them working together as a team. Nonetheless, it’s important to put the time in to understand what talents are in play if the best efficiencies are to be achieved.
Creating a leaner industry
While falling oil prices have created an impetus for improving efficiency, companies that are able to rise to the challenge and survive the current crisis will, by necessity, emerge leaner and better configured.
This new efficient way of operating must become an industry standard to create a leaner, more effective industry that has minimal waste and low costs, which can then be passed down to the customer.
For more information, read ‘Oil and gas must align activities with skills and purpose‘.