New Processes Needlessly Reduce Recovery from Onshore Gas Fields

Oil-and-gas-riskThe scope of normal activities has shrunk considerably since 2000. "Normal" activities are those things that we can reasonably expect to happen in in a typical month. These are the things that are within the work scope of operations workers and don't require any special reviews, equipment, or supplies. Once an activity has been declared "normal," an organization can expect it to be performed in the usual course of daily activities.

In the 20th century, "normal" for a lease operator in a gas field was a broad term. The operator had tools and supplies on his truck to perform most normal tasks. For the few that he couldn't immediately accomplish, he had easy access to community tools and supplies to accomplish them in a timely manner.

In the 21st century, the scope of "normal" work has shrunk to be nearly non-existent in many companies. Formerly simple maintenance steps have been made complex through new processes. For example, supply chain management processes typically require a work order for something as common as a valve repair kit from a vendor (no on-site or on-truck stores are allowed). Process safety management (PSM) procedures demand that operators apply management of change (MOC) protocols and hazardous operations review (HAZOp) before changing the type of plunger used for deliquification.

Procedures require a well to be taken out of service, locks and tags applied to block valves, and a buddy system to gauge the fluid level in a tank. We have shrunk normal to the point where a lease operator is generally limited to those activities he can do with his hands in his pockets. What can we do to restore performance and profitability?

Production suffers when you apply process control from high risk environments to low-risk activities. The oil and gas industry is designed to convert in situ hydrocarbons into a net profit. While this purpose is not obscure, subtle, or difficult to comprehend, it keeps getting lost in our processes. Every decision made, from drilling methods to the selection of wellbore tubulars, from wellsite surface facilities to processing configuration, has an impact on our ability to meet our basic purpose.

Every decision made in field development and production can be characterized as either looking from the reservoir-interface with the wellbore toward the facilities or looking from end-use back toward the reservoir. If you stand with your back to the reservoir, you will be asking the question "how will a decision affect installed facilities, processes, and procedures." If you stand at the burner-tip looking back toward the reservoir, you will be asking the question "how will a decision affect reservoir performance, ultimate recovery, and ultimate profitability?"

Our industry shifted focus from "reservoir-centric" to "facilities-centric" over the first 10 years of the current century. The first step in this transformation was that management became aware that very little engineering expertise was being applied to wellsites. The only pool of facilities engineers in most companies was associated with "deepwater, North Slope, or refinery" operations. In other words, oil and gas had concentrations of engineers within the broad industry who had experience in extremely risk-intense hydrocarbon operations who could "hit the ground running" in providing a "remedy" to the lack of engineering in upstream operations. These engineers brought with them the tools of risk-intense environments.

Many of these individuals were shocked at the lack of rigor in upstream processes and went on a mission to bring wellsite risk management into line with "proper" processes. Since it has become unfashionable to admit that maybe there was nothing wrong with the old way, this movement caught fire in the industry. The "safety culture" has been formalized into a pervasive set of processes. Many decisions moved from "normal" to "require review."

Production suffers when you apply manufacturing administrative processes to onshore gas wells.

At the same time that engineers were adapting wellsites to the safety principles of refineries, a group of MBAs were questioning the concept of controlling unit costs instead of total costs.

Historically, field operations have been evaluated based on "cost per unit volume." Typically we used cost/bbl or cost/mscf (thousand standard cubic feet). A goal to "decrease cost/MSCF by 10 percent" leads operators to first look at low-cost ways to increase production, and it will often increase total costs by somewhat less than profits increase. This approach served the industry well for nearly a century.

Starting in the mid-1990s managing unit costs fell out of favor. The argument was that "the field does not control sales price, so they will not have knowledge of whether increasing production will increase profit or not," and that "there are many fields that have production constraints and it isn't fair to them to encourage increased production." The validity of these two ludicrous statements was never questioned, and companies started moving toward controlling absolute costs instead of unit costs. Careers were made based on implementing formal cost-management processes.

Why does introducing process safety management (PSM) to the wellsite lead to disappointing outcomes? We are currently in the midst of a worldwide reduction in risk tolerance. This drive for ultimate "safety" has infected every facet of our lives from playground equipment design, to automobile design and operation, to offices, to factories, to wellsites. Risk of injury to employees, risk of harm to the public, and/or risk of damage to the environment are unacceptable concepts. In oil annd gas, we try to mitigate the risks on wellsites by ignoring "risk density."

I define "risk density" as "the intersection of the likelihood of an injury and the consequences of an injury." Within a refinery there are many processes that operate very close to real physical limits on equipment that can fail catastrophically, putting a large number of workers in peril. Those refineries are often located in close proximity to population centers so a catastrophic process failure can have significant impact on the public. This would be a very high risk density.

PSM was developed to allow effective management of this risk environment. An onshore wellsite is manned 1 to 2 percent of the time, typically by a single person. Historically, wellsite equipment has been operated with huge equipment safety margins to real physical limits. Wells also tend to be located far from population centers. The risk density is very low.

When we ignore risk density, it seems perfectly reasonable to apply the processes and procedures that were developed in refineries to wellsites.

David Simpson, P.E., is the owner and principal engineer at Muleshoe Engineering. David is an MVP in the professional forums at and is a member of the Engineering Writers Guild.

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