The Drilling Business Model: Driver or Inhibitor of Performance and Innovation

Abstract

The drilling business model has recently become the "elephant in the room" as drilling systems automation advances seek an integrator and technology / performance enhancements seek rewards. The day rate model has been adapted many times over the life of the industry but none of these adaptions has prevailed.The business model entails a number of key aspects that drive business behaviors in the supply chain; control, liability, risk, revenue. Some companies have the approach that the operations team drives the contracting of suppliers while others draw the whole process under supply chain for process control and pricing leaving the delivery of value often in significant doubt. This paper describes many of the business model adaptions created over the past 70 years from footage and turnkey through Integrated Project Management and Production Enhancement Contracts. Recently, actions and intentions have surfaced to transpose roles within the drilling supply chain to overcome resistance to change and improve financial performance (vertical integration by operators). This paper makes observations on the various forms of contract and various roles in the supply chain. The conclusions outline a blueprint for developing a business model that can drive performance and innovation throughout the supply chain.Discussing the current business models and opening the industry to development of more appropriate models has extremely high value and impact. It is a topic often raised and often left un-debated. If a new business model is broadly adopted it will change roles, performance, technology application and revenues throughout the supply chain. Awareness of this potential change will be extremely important to managers and engineers in the drilling business.

True Lies: Measuring Drilling and Completion Efficiency

“…This provides the team with an identified opportunity well beyond the traditional deficiency rectification through NPT reduction. The methodologies that enable drilling teams to improve performance through focusing on an aggressive target and collectively developing / implementing solutions to cross the gap from current performance to that target have been publicized (Bond et al 1996, de Wardt et al 2000, de Wardt 2004, de Wardt 2014. They include a rigorous process, extensive engineering of solutions, establishment of a strong team, an ЉenablingЉ team environment, supportive contract management and courage to trust the approach.…”

Proceedings of The American Modelica Conference 2018, October 9-10, Somberg Conference Center, Cambridge MA, USA

“…The opportunities from new technologies may require small modifications in the contribution of several parties and is difficult to achieve considering commercially and timewise detachment players. The larger changes that major players can realize may require significant changes to roles and responsibilities (de Wardt, 2014). However, once benefit is shown, changes are more achievable.…”