Chevron in Alaska
The Quest for Oil and Natural Gas in America’s largest state.
With the help of Primavera P6, the organization is streamlining its business processes, and building a more collaborative environment across Alaska.
Chevron is one of the world’s largest integrated energy companies and the leading marketer of refined products in North America. Its interests range from exploring and producing oil and natural gas to manufacturing, marketing and transportation, chemicals manufacturing and sales, geothermal and power generation. The company is also committed to developing “green” alternative fuels to meet the rising global demand for clean energy.
The Challenge: Coordinating multiple projects across a vast region
Chevron’s U.S. upstream operations are concentrated in the San Joaquin Valley in California, the near shore and deepwater Gulf of Mexico, the MidContinent states of Alabama, Colorado, Kansas, New Mexico, Oklahoma, Texas and Wyoming, and onshore and offshore Alaska. Although Chevron has an interest on the Alaska North Slope, Chevron’s affiliate Union Oil Company of California has an extensive investment in the Cook Inlet Basin in the Southcentral area of the state, where it operates 10 oil rigs and five producing natural gas fields. Responsibility for maintaining and upgrading the organization’s current facilities, as well as developing new above ground infrastructure, lies with the Facilities Engineering Group. “We have multiple projects that are using the same crews and resources, and we’re trying to manage all of these as one big project,” says Bill Davidson, FE project planner for Chevron’s Facilities Engineering Group. Making that difficult was the fact that many of the Group’s projects were siloed.
“We’ve probably got 50 projects going at any given time and about $60 to $80 million dollars worth of projects that we’re working on,” explains Tom Gould, FE projects coordinator for Chevron’s Facilities Engineering Group. “We were using another scheduling tool, which meant an individual file for each schedule, and we couldn’t manipulate the data. We had poor integration of our projects and no one was sure who was doing what.”
The need for visibility
Without visibility into its projects across Alaska, the Group had no way of mitigating construction delays. “We don’t want to start construction on a particular project until another project finishes because they may share the same crew,” says Davidson. “If construction on the first project is delayed, it also pushes out the other project. We needed a way to coordinate that.” Chevron was also having difficulty monitoring the progress of its projects. The inability to integrate costs with schedules made it difficult for project managers to be sure of whether they were on time and on budget.
The Solutions: Oracle Primavera P6 for Portfolio Management
In early 2008, Chevron turned to Primavera P6 in order to manage its widespread projects as part of one portfolio. “The Number One reason we’re using Primavera is for portfolio management,” says Davidson. “Today, using one centralized database is allowing us to manipulate our data to get what we want from it.” “We now have the capacity to link projects and let the logic flow,” he adds. “It’s easy to filter for certain types of projects to look at how they play against each other. For example, we can request data for a particular platform project, or for all the projects being handled by one project manager.”
Efficiencies through better communication
One of the most critical areas for Chevron’s project coordination is offshore. An oil platform can accommodate only a certain number of people at a time, based on how many personnel can fit into an escape capsule in the event of an emergency. Further, the drilling deck — only 100 feet by 100 feet — may have people working on as many as six different projects, so the number of people on board and the amount of space required to perform the work must be addressed in advance.
“We’re using Primavera to determine whether or not we might be exceeding our capacity,” says Davidson. “We can look at all the projects underway on that platform and see how many people are likely to be on it at a certain time. We can move projects around or link them up to make sure we’re not courting danger because of too many people on that platform.”
The ability to predict simultaneous operations is also saving the organization money by eliminating the potential for unnecessary mobilization costs. In the past, it was possible for people to be transported to a platform only to be turned away for lack of space.
Integrated costs and schedules
With the help of Primavera P6, Chevron can now keep a closer eye on the money. The integration of costs and schedules allows the organization to look at performance across the portfolio and make decisions based on its projects collectively. “We’ve got planned value in Primavera. We can spread the cash flow out. We can look at what we plan to spend, and as committed value comes in, we can see where we are,” says Gould. In addition, Primavera’s Web-based dashboard will allow senior management in Houston to monitor how well the Alaska asset is doing overall — is the suite of projects ahead or behind, and is the money budgeted being spent properly?
“We’ll be able to report to Chevron management where we are with a much higher degree of accuracy in terms of the portfolio and overall project budget,” Gould explains.
Future plans include using the integrated schedules to forecast cash flow. For example, by comparing how much the organization planned to spend in January and February with how projects actually changed the forecast during that time, the Group will be able to get updates on whether their cost forecasts will be accurate going forward, and take the necessary steps to stay on track.
The Benefits: A streamlined, collaborative environment
One of the major benefits of Primavera P6 has been the creation of a collaborative and open office environment. “One of our biggest success stories is a new level of collaboration among departments,” says Davidson. “It facilitates Drilling talking to Facilities Engineering, and Facilities Engineering talking to Asset Development. We’re all looking at how our particular projects impact one another and taking a new level of ownership of the data in the schedules.” If it’s Alaska, it’s Primavera One unexpected benefit of implementing Primavera has been a boon to its hiring efforts. In the search for schedulers to work on its many projects, Chevron discovered that nearly all of those in the oil and natural gas industry in Alaska are experienced in Primavera. “So moving to Primavera gave us a much wider pool of people available to develop schedules,” says Gould.
Today, using one centralized database is helping Chevron to eliminate disparate information, once located in silos across the organization, and ensure that all project managers are working from the same real-time data. The Facilities Engineering Group is now developing project controls resources and hoping to add a cost expert to the team. The Drilling department also uses Primavera and plans are underway to add additional departments — Maintenance and Major Equipment, for example — and eventually provide access to outside contractors. “Slowly but surely, the majority of people working in Alaska will be using the Web-based Primavera solution to access information from the centralized database,” says Gould.
Building on the solution
The Group is looking forward to using P6 as it begins planning its 2010 budget, not only to plan and execute its projects, but also to choose which projects to do first and which ones to hold back. “We’ll be able to see how we’re doing against the budget, whether we have the right projects underway and whether our costs are accurate,” says Gould. There are also plans to integrate Primavera with the organization’s SAP financials system. For now, planned costs are managed in Primavera, while actual costs are captured in SAP. “We’d like to integrate that so we can report on both those things from one platform,” explains Gould. To date, most of the resourcing is focused on construction and project managers. However, going forward, Gould and Davidson say they want to extend that to manage construction crews as well. And finally, their mission is to set the stage for Primavera as the companywide standard in a few years. “Other areas of Chevron are watching us to see if, given our experience, the solution would work across the unit,” says Davidson. “Ultimately, it has the potential to be expanded across Chevron.”
On the path to success
“Chevron made a decision to invest additional money in the Cook Inlet region, and the visibility gained through Primavera is allowing us to better manage the asset development portion of the work,” says Gould. “There’s no question that we are going to continue building our success with Primavera,” Gould adds. “The benefit today is that we now have a portfolio-type schedule that’s linked with the schedules of other groups in the building. We can manage the big picture in terms of how they all interact with each other rather than as separate entities.
“And the ability to link those schedules with costs in one program? That’s Nirvana.”