Overview - Amazon S3...Overview Hess Global Overview Bakken and Utica Asset Overview Leveraging...
Transcript of Overview - Amazon S3...Overview Hess Global Overview Bakken and Utica Asset Overview Leveraging...
Overview
Hess Global Overview
Bakken and Utica Asset Overview
Leveraging Lean: Practical Lean Principles
The Journey Continues: Waste Elimination
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Unconventionals Strategy Using Lean to drive competitive advantage…
Maximize Bakken
Value Delivery
• Execute ‘Lean’ manufacturing strategy
• Deliver first quartile performance
• Expand & infill acreage position
• Exploit infrastructure advantage
Leverage Capability
• Leverage Bakken capability to Utica and other plays
• Strengthen technical advantage
• Build relationships with preferred partners
Grow Portfolio
• Capture new growth opportunities
• Consolidate as opportunities arise
4 Continual improvement unlocks additional opportunities
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Hess in Ohio Material Position in the Utica Wet Gas Window
• Encouraging 2014 appraisal, transitioning to early
development at measured pace
• Material position in the wet gas window, acreage in play sweet
spot
• Leveraging Bakken capability and experience to maximize efficiency and reduce costs
• Encouraging 2014 appraisal, transitioning to early
development at measured pace
• Material position in the wet gas window, acreage in play sweet
spot
• Leveraging Bakken capability and experience to maximize efficiency and reduce costs
Program Highlights
• 45,000 net acres
• Hess 50% WI, 95% gross NRI
• 2015 net prod. ~20 Mboe/d
• 2 rig program, reduced to 1 rig from June 2015
• 2015 capex $240 MM
• Net production goal of ~40 mboepd 2020+
Core position in emerging Utica Shale play
81 64
53 43 34 30 26
NAC 4H 20
Oxford 3H 8
Smithfield A 1H 27
Cadiz B 1H 14
Kirkwood 3H 33
Athens B 1H 5
Athens B 2H 5
45 36 33 32 29 27 25 24 22
Q1 2011 Q2 2011 2H 2011 1H 2012 2H 2012 1H 2013 2H 2013 1H 2014 2H 2014
$5.4 $5.6 $5.2 $5.0 $4.8 $4.6 $4.1
$8.0 $6.0
$4.1 $3.6 $2.9 $2.9 $3.1
$13.4
$11.6
$9.3 $8.6
$7.7 $7.5 $7.2
1Q 2012 2Q 2012 2H 2012 1H 2013 2H 2013 1H 2014 2H 2014
Bakken Well Delivery Drilling Performance: Spud-to-Spud Days
51% Improvement
Drilling and Completions Cost ($MM)
47% Improvement
Lean Delivering Significant Improvements The drive to first quartile performance…
Bakken Lean practices accelerate Utica learning curve
$605 $466 $421 $362
1H 2013 2H 2013 1H 2014 2H 2014
Utica Well Delivery Drilling Performance: Spud-to-Spud Days
68% Improvement
Drilling Cost ($M/foot)
40% Improvement
2012
2014
$240 $230 $193 $176
1H 2013 2H 2013 1H 2014 2H 2014
Completions Cost ($M/stage)
27% Improvement Completion Costs
Drilling Costs
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Lean Manufacturing Proven methodology to drive cost and efficiency improvements…
Lean Principles • Eliminate waste
• Customer-Supplier Relationships
• Structured Problem Solving
• Operating Rhythm with Visual Controls
• Defect Elimination/CI through Standard work
Repeatable Scalable Standardized
Well Scoping
Well Planning
Site Construction Drilling
Hydraulic Fracturing Flowback
Handover to Operations
Leveraging Lean to drive improvement 8
Structured Problem Solving Robust, shared problem solving method, aligned to business objectives…
• Disciplined approach ü Team-Based Contributions
ü Incorporate Customers
ü Avoid “Solutions”
ü Follow Process
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• Concise and accurate definition of the problem ü What is the current condition? Need data.
ü What problem are we trying to solve? Views vary.
• What is the Future State, Goal or Target?
• What are proposed Countermeasures? Who? When? ü Is a root cause identified? Not to be confused with “solutioning.”
ü Serves as a record in the future and more efficient problem solving ü What problem are we trying to solve – Views vary widely
Operating Rhythm with Visual Controls Scheduled meetings to drive and manage efficiency… • Open visual meeting space ü Recurring time dedicated to coordination
ü Expectations are clearly understood
ü Consistent visual “Scoreboard”
• Manage by exception ü Focus on Highlights and Hot Spots
ü Typically “Stand-Up” meetings facilitate focus
ü Do not cover activities that are on target
ü Increases efficiency – Can cover a lot of ground in a short meeting
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• Allocate resources quickly and enact countermeasures ü Action appropriately with accountability and deadlines
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Q1 Q2 Q3 Q4 YTD 2015
Faci
litie
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ost/w
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ycle
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(Days) ($MM) à 30+% reduction in cycle time
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Increased build rate from 10% to 15% enables higher EUR at 20% lower cost
Improved mud motor and MWD reliability has reduced lateral times by 20%
Implementing best practices has improved vertical section times by 15%
Best Practices Deliver Improvements
Refining standard processes, a Lean approach to deliver further improvement
Further Standardization Distinctive Lean manufacturing approach…
Image Source: Halliburton
2014 Drilling Cycle Time (Spud-to-Spud)
Improving Standards to Deliver Better Performance
P90 P50
P10
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Facilities Delivered Faster at a Lower Cost Implementing a standard design and construction process
2014
12
(Days)
Rig Fleet
Summary
• Successfully leveraging skillset to other assets
• Lean manufacturing key enabler
• Positioned well for low price environment
• What is the possibility for North America?
17 “People Make the Difference at Hess”