October 20, 2014

Accenture Reports Unconventional Oil and Gas Operators Can Reduce Costs through Better Managing Above-Ground Operations

Large independents are best placed to succeed and help extend the U.S. shale boom

HOUSTON; Oct 20, 2014 – Oil and gas operators can reduce the costs of constructing, drilling and completing unconventional wells, as well as the overall time it takes to complete them, by up to 40 percent through better planning and management of logistics, contractors and materials, according to a new Accenture report.

For the higher performers, this could mean a reduction in costs of $1.3 million to $2.6 million, on a $6.5 million well, and much more for the low performers. Operators can achieve these savings by adopting a more integrated planning process, better management of service contractors, and improved logistics and materials management for fresh and reused water, proppant and installed equipment.

This approach can also reduce the time to deliver an average unconventional well by up to 40 percent. In one example that Accenture analyzed, this meant an estimated reduction of up to 170 days, taking the overall cycle-time down from 464 days to 254 days.

Accenture’s new report, Achieving high performance in unconventional operations: Integrated planning, services, logistics and materials management, is based on a survey of leading operators across multiple basins and in-depth interviews with operators in the Eagle Ford Shale in southern Texas, one of the largest-producing oil and gas fields in North America.

“Using Eagle Ford Shale as a model we found that while operators in the top quartile spend about $6 million per well, some still struggle to deliver wells for twice that amount,” said Melissa Stark, global managing director for new energy at Accenture. “To generate the maximum savings and efficiencies, operators need to carefully balance their investments in technology, continuous improvement and people, and in the low-margin environment of unconventionals, trade-offs will need to be made. For example: Is investment in new rig technology a better choice than offering incentives to your service provider to ensure consistency of crew?”

The report covers several planning and management issues and ways operators can improve performance, including:

“Our research suggests that large independent operators are best positioned to implement these improvements, as they tend to have a trade-off mind-set when it comes to investments in technology, continuous improvement and people,” Stark said. “They know that you cannot invest in all three all of the time as that would be too expensive.”

Accenture surveyed leading operators in multiple shale basins in North America to determine leading practices in the development of unconventionals. Based on these findings, it conducted half-day interviews with a variety of operators in the Eagle Ford basin to compare how leading operators address similar challenges and to identify areas of differentiation. This information was refined and validated by subject matter advisors at Accenture and oil and gas teams from basins all over the world.

About Accenture
Accenture is a global management consulting, technology services and outsourcing company, with more than 305,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$30.0 billion for the fiscal year ended Aug. 31, 2014. Its home page is www.accenture.com.

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Guy Cantwell
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Justyna Devraj
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