Preparing a Business Case for Technology Investment in Production Operations

Abstract

This paper describes the principles for preparing a convincing business case. The focus is on technology investments in production operations. There seems to be wide-spread support in most large organizations for the implementation of new technology. The challenge is in speaking to decision makers in a clear and convincing manner. A good business case describes clearly what the investment is, what the risks are, and what the expected benefits are. Introduction Getting acceptance of new computing, automation and communications technology (CACT) in the oil patch is always a challenge - one that begins and ends with a convincing business case. A good business case speaks to decision makers in a language they can understand. It outlines in clear terms the benefits of the investment, its costs and the risks involved. Each needs to be presented clearly, openly and honestly. This paper focuses on preparing a good business case for investments in CACT in oil and gas production. The applications in mind have to do with real-time operations, smart fields and fields of the future, areas of rapidly emerging technology. There seems to be broad support at the leadership levels in most large oil and gas companies for a version of the Digital Oilfield as a strategic direction, but difficulty at the implementation level in building a convincing case for investment. Implementation seems to be slow. Perhaps this is because generating convincing business cases for incremental investments is challenging. This paper is intended to provide practical how-to advice. Principles of a Good Business Case A good business case is based on five principles:Value is created only when good decisions are made and implemented. The value of an oil and gas asset derives from the decisions that were made and implemented in the past - to drill wells, to complete them, to implement recovery processes and to install facilities. Once the decisions and investments are made, the assets are operated in a fashion to capture the intended value. Oil fields don't exactly run themselves, of course, because numerous decisions are made every day to keep them running smoothly. Lift changes, new choke settings, changes in injection and production rates and set point adjustments all are designed to make sure that the value of the original investment is achieved. Added value is created when decisions are made and implemented to add new assets, modify existing ones, or to change operating practices or procedures. It is important that these decisions be the right decisions made at the right time. Whether they are, depends greatly on the quality of the information available at the time.CACT investments impact decisions. Computers don't really produce oil, at least not like wells, platforms and facilities do. What they do, is facilitate decisions, such as the ones described above to maintain or add assets. Thus the value of investments in CACT stuff derives from its ability to improve the decision making process or to improve the decisions that are made. By computing, automation and communications technology we include all aspects of their use. This includes data acquisition, storage, software applications, decision tools, automation, SCADA, and devices.