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S T O R I E S F R O M T H E E D G E

Managing Knowledge through New Ways of Working

within Shell's Exploration and Production Business

November 2001




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Shell International Exploration and Production

Organisational Performance and Learning

Published November 2001

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WHO WROTE THIS BOOKLET?

This booklet has been compiled by Shell International Exploration andProduction’s Organisational Performance and Learning (OPAL) team inRijswijk, The Netherlands.

However its contributors come from Shell EP’s network of operating unitsaround the world – the people who make our business work.

Engineering professionals, scientists and managers working for Shell EP inmany countries have written their own highly personal stories aboutmanaging knowledge in the oil and gas industry.

They speak about how they have been able to use information systems andorganisational structures created by the company to capture and shareknowledge and expertise.

Their stories deal with the practical implications of new ways of working,thinking and teaming across organisational, language and culturalboundaries in the Information Age.

WHY USE STORY-TELLING TO HELP MANAGE KNOWLEDGE?

Story-telling is gaining increasing acceptance as a means ofcommunicating about business. The tradition of an oral narrative historythat records and hands down learning, insight or collective revelation stillthrives in social communities and Shell has found it particularly effectivein helping change our business mindset and improve our knowledgepractice.

The power of a good story well told can inspire innovation, personalchallenge and professional breakthrough. Stories can encourage us tochange, to think ‘out of our boxes’, to seek the aid of others in leveragingour own efforts.

For these reasons we have embraced story-telling within Shell Explorationand Production as a means of helping shape our knowledge-sharingculture.

F O R E W O R D

STORY-TELLING ANDS ITS ROLE IN MANAGING SHELL’S KNOWLEDGE

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WHAT‘S IN THIS BOOKLET?

This is a booklet about one company’s efforts to make knowledge and thepeople who possess it flow more easily around a global enterprise.

You can read about Shell EP’s efforts to establish widespread computer-enabled global knowledge networks among its professional disciplines.

You can find out about how we have created an internal marketplace forwhat we call global consultancy, recognising the importance of people-based knowledge.

You can hear our centres of excellence describe their purpose, practices andsuccesses in exploiting technical competences or regional specialities.

You can share Shell EP’s journey as it seeks the prize of distributedteamworking by linking people with technology – to help eradicate thedistance and time barriers inherent within a global company.

WHO IS THIS BOOKLET INTENDED FOR?

The Organisational Performance and Learning team prepared this bookletbecause we have found the story-telling approach increasingly useful andinfluential in helping us solve problems. We want to help others benefitfrom our experience with the technique.

The booklet has many possible audiences and it is hoped each can getsomething from it. We want graduates to view Shell as an exciting,vibrant and forward-thinking company for which to work. We want newrecruits to learn about our efforts to keep them on the leading edge ofexploration and production knowledge. We hope that stakeholders willvalue our efforts in maintaining our competitive edge through thedeployment and distribution of our expertise.

Most of all we want our own staff to become aware of and grasp themeans available to them for solving problems or realising opportunitieswithin their company.

Shell believes that knowing who can be as good as knowing how.

From Cameroon, the UK, Gabon and Oman to Brunei, the USA, Braziland the Netherlands, our staff are rapidly learning how to tap into theenormous knowledgebase Shell fosters, as it reaches for performanceimprovement in a fiercely competitive global business.

In their own words, these are some of their stories...

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The Shell International Exploration and Production Organisational

Performance and Learning team is grateful for the use of quotations taken

from a 1999 paper prepared by Dave Snowden*, Director of the Institute of

Knowledge Management (Europe, Middle East and Africa), reproduced in

this booklet with the author’s kind permission.

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C O N T E N T S

1. Global Networks 5

2. Global Consultancy 29

3. Centres of Excellence 45

4. Distributed Teams 73

Acknowledgements 82

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1Story n., pl. –riesA narration of a chain of events told or written in prose or verse

Story telling is not an optional extra but an old skill in a new context. The new

context is the emerging discipline of Knowledge Management that has arisen in

response to the growing understanding that Intellectual Capital is the core asset

of organisations and of society itself.

The old skill is the human capability to tell stories. Story telling has many

purposes, entertainment, teaching, understanding and cultural bonding to

name a few. Stories can also convey complex meanings across culture and

language barriers, in a way that linguistic statements cannot.

It is early days in understanding the use of stories in a modern business;

however the results are sufficiently good that we now know that there are major

benefits to be achieved from the use of stories, and the development of story

telling skills.

Moreover, organisations are beginning to understand that story telling is not an

optional extra. It is something that already exists as an integral part of defining

what that organisation is….. *


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G L O B A L N E T W O R K S

During the late 1990s, Shell’s global exploration and production business saw a spontaneousexplosion of computer-based knowledge networks, made possible by improving informationtechnology and communications infrastructure.

But walking the fine line between exponential knowledge growth and the chaos of informationoverload requires some experienced people, a robust process and enabling technology that trulydelivers. Working closely with facilitators and local network co-ordinators, the OrganisationalPerformance and Learning team has been helping restructure, reinvigorate and expand ourcomputer-based global networks.

Spawned by the Well Delivery Value Creation team with its highly successful network, ourexploration and production professional communities are rapidly joining facilitated globalnetworks covering the wells, surface and subsurface areas of our business.

In addition to these core technical networks more communities have sprung up in the past twoyears, such as commercial practice, procurement, benchmarking, competitive intelligence andknowledge-sharing.

The stories from our now-indispensable value-multiplying global networks are many and varied....


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S Pecten Cameroon’s research revealed that otheroperators had achieved production gains byinjecting demulsifier downhole in gas liftedwells, reducing viscosity in the productionstring and thereby increasing production. Aftera trial evaluation of their own, the companyobtained a gain of 500 barrels per day or $5 million per annum. The approach is beingextended to 17 other wells with prospectivegains of $9 million per year.

Part of this success is due to global workingthrough the Production Engineering ChemistryNetwork. A question was posed by PectenCameroon about the additional benefit ofadding demulsifier to the gas lift gas manifold.Colin Davidson, a production chemist withShell Malaysia at the time, shared his experiencefrom Shell Gabon where the distributedapproach had not been optimal. Herecommended the use of individual injectionpoints on the relevant wells. Further screeningwork has found that the technique is mosteffective in the 20-70% water cut range.

� David MasonPecten Cameroon Company, Doula

Shell Brasil sought assistance regarding fishingchallenges (retrieving stuck or broken toolsfrom a borehole) through the Wells GlobalNetwork. Best practices from Shell, notablyBrunei Shell Petroleum and Petroleum

Development Oman, were presented toPetrobas as a potential partner. The informationgained substantial credibility that will save inthe order of $1 million per well or $7 million in total.

� Peter CarsonShell Brasil, Rio de Janeiro

Brunei Shell Petroleum chose aluminium-sheathed 316L tubing over duplex or incoloy825 for air cooler service, leading to savings of$500,000 through shared knowledge from theexperiences of NAM, WEL and Shell Expro.


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Major repairs worth $1.5 million, on wellcasings and electrical submersible pumps, wereavoided by Petroleum Development Omanthrough knowledge-sharing from Shell Oilwhich confirmed that stray current corrosioncan occur if the cathodic protection system was used.

� Anton Sluijterman Petroleum Development Oman, Muscat

In the electrical engineering field, one Shelloperating unit shared methods and results oftheir electrical cost savings efforts, worth$400,000 per year, with the local utilitycompany in negotiating rates for electrical peakavoidance. This practice was taken up at severallocations with similar savings expected. Anelectrical systems idea from the same operatingunit has reaped benefits of over $30,000 peryear at several other field units. Another idea forlightening protection is saving approximately$100,000 per year by reducing lost productioncaused by electrical damage from storms.

In maintenance, the use of V-belt tensiongauges and sheave guidelines was implementedat over 10 locations. A cost saving of $140,000per year resulted from sharing this maintenancepractice.

An estimated total of $35 million was savedby question and answer focus alone in 1999across the three major technical networks.


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What is a Story?

It is important to remember that, like many aspects of our growing

understanding of the role of knowledge in an organisation, the use of stories is

a rediscovery of an important natural skill that has bound societies for

centuries. Some cultures have never lost the skill. Teaching masters of the

Dervishes use the stories of Mulla Nasrudin as a means for their pupils to gain

wisdom. These Mulla Nasrudin stories can be traced throughout the Middle

East from the early Middle Ages to the present day. *


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WELLS GLOBAL NETWORK

Shell Offshore Inc’s Deep Bo High PressureHigh Temperature (HPHT) drilling teamsought assistance when faced with a significantlost circulation challenge related to low pressuremargins and higher pressures due to penetrationof a high energy fault zone. A search of theWells Global Network and LiveLink for bestpractices amongst Shell communities produceda potential solution. By applying a DiaSseal-Mand Cement Squeeze technology which hadpreviously proven to be successful in SouthTexas HPHT wells, a tremendous cost saving of$1.5 million was made whilst still meeting wellobjectives.

� Kazem JavanmardiShell Exploration and Production Co., New Orleans

Question

Answer 1 Answer 2

from the Philippines

Any suggestion how to properly remove swarf and fines from our (Shell Philippines) well (we are milling up one 6-1/4"DC which was/is stuck at liner hanger). The well will be completed using horizontal Cameron tree in the first half of 2001. Any suggestion what to do with regards to clean up:- NOW, before we take the Blow Out Preventer off.(Wednesday 6/9/2000...)- or LATER when tree is installed (danger of scoring seal areas when pulling tree bore protection sleeve

Joan Horbeek, Shell Philippines

Wellbore Clean Up Option

We have had a lot of success in the last few months with the SPS well patroller system (inverted cup below screen section) in the subsea well engineering section in Expro. They also provide a number of other tools i.e. scrapers, magnets etc. which may or may not also be of use. Baker also have a ’super downhole’ magnet which has also been used successfully here.

Neil Robertson, Shell Expro, UK

Cased hole cleaning

In addition to the SPS well patroller mentioned by Neil, we also had good success using Weatherford’s venturi junk baskets, retrieving larger pieces of metallic junk (up to 6" long x 1" wide) following packer milling and liner cutting jobs.

Allan Garden, Shell Expro, UK


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SUCCESS STORIES ABOUT USING THE WELLS GLOBAL NETWORK

Identifying and sharing success stories emergedwhile networking outside workshop sessions,therefore a specific session was run to capture someof them at a recent Shell EP event.

• Money saved by running a whipstock ratherthan section milling. Rohöl-AufsuchungAktien Gesellschaft (RAG) was planning toperform a section mill operation when aquery with many replies on section millingvs. setting a whipstock was noticed in theWells Global Network (WGN). Most of theanswers recommended setting a whipstock.RAG didn’t run whipstocks to sidetrackbecause of a bad experience with this fiveyears ago. Armed with the WGNinformation, the plan was changed and notonly was the paradigm broken, but itproduced an estimated saving of 5% of thewell cost.

• Ran two shorter logging strings instead of onelong one to prevent becoming stuck. We hadalways run the platform express and sonic asa dual 30 metre long logging tool. Thesekept getting stuck in hole. Thanks to adetailed Brunei Shell Petroleum example inthe WGN showing how it was preferable torun them as two separate strings, RAG hassince changed their practice to running themseparately and have not had a stuck tool forthe last 12months.

• Facilitated fishing job. Having got twopackers stuck in hole, the best practice andreference material was downloaded from theWGN. The packers were successfullyremoved from the hole.

� Adrian ChestersRohoel-Aufsuchung AG, GampernG

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Contributed to a successful jarring operation toremove a pipe conveyed logging tool stuck nearsurface. The cable parted while pulling out ofhole in a $3 million horizontal well. The cablewas snaked around the top of the tool string,thus blocking the string so it could not bemoved up or down. Over the Christmas holidayafter receiving an urgent e-mail, Wells GlobalNetwork resources contacted Kees Wijsman -now in Bangladesh - who was the jarring focalpoint at Rijswijk. By running jarringsimulations and advising on the use of theequipment available, Kees was a key componentin the successful operation to free the string.This was an example where the necessaryresources were not available in the operatingunit or even the country. Involving the WellsGlobal Network to make the link betweentechnology and field operations helped salvage awell that was being considered forabandonment.

� Paul DumontAl Furat Petroleum Company, Damascus

Drilling in Depleted Reservoirs - LateralLearning From Shell Oil. For Shell Expro todate, the challenge of drilling High PressureHigh Temperature wells in depleted reservoirshas been considered a bridge too far.However, Expro recognise the huge potentialvalue (estimated at over £100 million in nextfive years) that could be realised if such wellsare made technically achievable.

The crux of the problem of drilling depletedreservoirs is that the producing formations areoverlain by, and inter-bedded with, layers ofshale. Shale, by definition has a very lowporosity and permeability. In a virginreservoir, the pressure in the shale layersramps up to the same pressure as the sandsthat they are located within. However, in adepleted reservoir the pressure in the sand hasdropped yet the shale retains its pressure dueto its very low permeability.

As part of Shell Expro’s investigation intoways of solving the depleted reservoirproblem, a query was posted on the WellsGlobal Network. Later, a lateral learning‘scouting’ mission was sent from Shell Exproto Houston. This trip was very successful,tapping in to the expertise and experience thatdecades of drilling depleted reservoirs inSouth Texas has generated. As a result oflateral learning from the operations guys inHouston as well as Shell Exploration andProduction Technology Applications and

Research, Shell Expro has kicked off somestudies that could potentially unlock the drillingin depleted reservoir problem and realise someof the huge savings that are to be made.

� Christian George Shell Expro, UK


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KSUBSURFACE GLOBALNETWORK

The Subsurface Knowledge Sharing GlobalNetwork (SKS) was formed to facilitate opendiscussions between subsurface people working inthe different Shell locations. It provides an opendiscussion area where questions and answers canbe posted. The SKS facilitates the exchange ofknowledge including geophysics, geology,petrophysics, reservoir engineering and integration.


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In 1999 the DnA team began to notice a drop inthe number of Landmark licences maintained byoperating units under the World Wide MasterAgreement. The agreement included a clausewhich allowed for the transfer of the softwarebetween Shell Affiliates, incurring only a smalladministration fee. It was clear that operatingunits were unaware of this clause or did not seethe possible benefits. In response, a software‘swap shop’ was set up on the Subsurface GlobalNetwork to put people in touch with each otherand stimulate interest through the existingnetwork of users.

The software swap shop continues to provehighly successful. Operating units have swappedlicences for Landmark and Schlumbergersoftware resulting in savings of almost $3 millionsince inception. The process is making Shell’s useof existing licences much more effective whilstmaking additional licences available to operatingunits at a reasonable cost.

During 2001 the team plans to take advantage ofthe Global Contracting initiative and make useof the eSurplus website for software swaps. Inaddition, the formation of a Software PortfolioManagement group within DnA, responsible forhandling global exploration and production soft-ware contracts, means the team can ensure con-tinued savings from their contracting strategy.

� Bryn HirdShell International E&P, Rijswijk

With the development of horizontal drilling,the next challenge to face was to installhorizontal sand control completion whereneeded. Encouraged by the success ofopenhole horizontal gravel packs by ShellOffshore in the Gulf of Mexico, Brunei ShellPetroleum (BSP) has worked with ShellExploration and Production TechnologyApplications and Research since (SEPTAR)early 1998 to refine this Shell-in-housetechnology for application in BSP’s reservoirs.

Horizontal gravel packing requires thedeposition of several alpha sand waves fromthe heel to the toe of the horizontal openholeto fill the annulus between the wire-wrappedscreen and the openhole. This is followed by abeta sand wave which propagates from the toeto the heel of the openhole. Crucial to thedesign is the prediction of the alpha waveheight and increase in fluid pressure as afunction of the gravel size, gravel density, brinedensity, pump-in and return rates.

BSP contracted SEPTAR to run BSP-specificlaboratory experiments to determine theserelationships. As a result, a mathematicalsimulator was developed for the design andonline monitoring of horizontal gravel packs.To date BSP holds the record of having thelongest horizontal gravel pack in the Group.Due to their shallowness and low fracgradients, BSP horizontal gravel packs areespecially challenging.

The benefits of this transfer of knowledgeexceeded all expectations. To date, BSP hasinstalled 17 horizontal gravel packs, themajority of which are in the very shallow south-east area of the Champion field. Of these, 12had 100% hole coverage, four had partialcoverage (30-60%) and one had placementfailure due to a tool problem. All the horizontalgravel packs have produced at or aboveexpectations, almost sand-free. By comparison,one horizontal openhole with screen-onlycompletion and without gravel pack has alreadysanded up and shut in.

With the wide application of horizontal wellsand the need for sand control, horizontal gravelpacking will be a key technology for BSP. Theimplementation of this Gulf of Mexicotechnology is an example of the power of globalnetworks in promoting best practices across theShell Group, as several other operating units arenow also evaluating the BSP results forapplication in similar environments.

� Oddbjorn SkilbreiBrunei Shell Petroleum Co, Seriaor

� Lau Hon ChungBrunei Shell Petroleum Co, Seria


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KAs a key part of the Subsurface Global Network,the Opportunity Evaluation Consistency (OEC)network celebrated its first birthday at the end of2000 with a review meeting of hub co-ordinatorsin Houston. One of Shell’s first non-technical on-line communities, the OEC was created toprovide a level playing field for judging risky anduncertain investment decisions, a pre-requisite forallocating exploration capital objectively that wasfelt to be missing.

Here is the story of one network’s progress inleveraging others’ efforts …

A YEAR IN THE LIFE OF ….

A desire by a group of disgruntled explorers to‘deliver’ might well sum up the key motivationbehind the Opportunity Evaluation Consistencynetwork’s establishment in October 1999. Anumber of reviews and workshops confirmedfor many that a better, more consistentdecision-making process, coupled with anappreciation of the need to change globalbehaviours, was required with some urgency.Debate ensued among a small group ofinterested exploration and productionprofessionals.

The sub-surface bias gave rise to the OEC teamin the Subsurface Knowledge Sharing (SKS)

global network and the beginning of a busy yearfor all concerned. Virtual meetings involvinghub-coordinators in the eastern and westernhemispheres (usually teleconferences) are heldevery two-three weeks. These focal points havebeen instrumental in rallying their local peers towholehearted participation.

No ‘people’ network can be effective withoutface-to-face contact on occasion, notwith-standing the technology interventions we haveavailable to us. In April 2000 in New Orleanswe reviewed the OEC progress thus far. Peerreviewers – the most respected knowledgeablemembers – had been accredited in advance andthey were tasked with critically reviewing theways in which subsurface risks and uncertaintieswere quantified ahead of the exploration capitalallocation workshop. They also had the brief tojudge how volume estimates were translatedinto value promises.

The consensus was that up to 70% ofaspirations had been achieved by the OEC: theplaying field was created and levelled to adegree but more work is needed in the field ofestimating project value and the relatedcommercial metrics. Also, drawing on the ShellExploration and Production Co., an OEC‘cookbook’ framework was created for capturingall the good peer review practices and learningin this community of practice.


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In October in Houston at our first anniversarygathering, we reviewed our progress inpenetrating organisational culture and practicewith the consistent opportunity evaluationapproach. Specific cross-learning examplesinclude:

• Petroleum Development Oman’s prospectrisking matrix which was used in thePhilippines

• Petroleum Development Oman built onExpro’s experiences with the quantification ofthe undefined exploration potential

• Australia’s confidence index is now routinelyused by most and will in fact be a pre-requisite in the next exploration capitalallocation round

What has made the OEC special is the people,relentlessly pushing for the need to shareknowledge and nurturing an environmentwhere it is acceptable to abandon local beliefs,ask questions and provoke debate. There is alsoa clear connection between pride in technicalexcellence and an ability to secure capital fromthe global allocation process.

The establishment of the OEC network is a‘bottom-up’ initiative that has now beencomplemented with the implementation of the‘Exploration in the Millennium’ FocusedResults Delivery (FRD) recommendations. Infact, the OEC community provided the FRDteam with key data and continuous support.

Our true community spirit is primarily built onpersonal friendships and a genuine desire tohelp each other, sharing a sense of pride in ourwork and having fun! This community senseshould lead to a situation where we always havethe right people working on the right projects atthe right time for the right reasons.

� Laurens GaarenstroomShell E&P Int. Ventures, The Hague


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KSURFACE GLOBAL NETWORK

The Surface Global Network (SGN) providesmembers with an opportunity to tap into theenormous resources of the Shell "Surface"community both within the exploration andproduction sector and from Shell Global Solutionsworldwide perspective. Currently over 2,800 Shellstaff are registered. The SGN provides access to awide range of common interest networks coveringengineering, production and areas of specialinterest as well as the latest information on thetechnology development programme.

Wong Chee Yong of Shell Malaysia foundinformation he had picked up on the SGNinvaluable when confronted with a rotor lock-up during an M3 turbine change out. CheeYong had previously read a number of entrieson the SGN about lock-ups occurring duringstart-up attempts when the engine is still hot.Teams in Australia and the States who hadexperienced the same problems had postedpossible solutions on the Network. When facedwith the same situation during the M3 job,Chee Yong was fully prepared and knew how toreact to resolve the problem.

"If I hadn’t seen the previous entries on theSGN I would have taken a lot longer to resolvethe problems and we might have needed tocarry out a full inspection of the rotor system –a time consuming task requiring at least fourtechnicians. Instead, I just kept calm and let theengine cool down further before restarting it."

� Wong Chee YongSarawak Shell Berhad, Lutong

"You need to take a more active interest in theworld around you…not just sit there withblinkers!"

"Mainly I log on to learn and get exposure towhat other people are doing and how they solvetheir problems. It’s also a good way of workingout who’s who in the global community."


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The development would be $1 million more expensive.

Source of Information Obtained through SGN

Impact this info had on PDO business

What would have happened without this form of knowledge sharing

Saudi Arabia (via NAM).

The development costs of the local water injection schemewere reduced by $1 million.

Question 1

The Al Huwaisah production facilities export all the grossliquids. With the increase in water cut and depletion of thereservoir, local water injection is probably required. Thecosts of a local injection scheme would be minimal if theexisting surge tanks could be converted to free water knock-out service. No experience exists in PDO with three-phaseseparation, without a gasboot or concentric tank design.Experience in Saudi Arabia (via Nederlandse AardolieMaatschappij (NAM)) indicated that such conversions werecarried out successfully.

The approval process would have been longer and costswould have increased.

Source of Information Obtained through SGN

Impact this info had on PDO business

What would have happened without this form of knowledge sharing

Shell US. Advised of coating specialist who had recentlyvisited coating plant.

Enabled verification of satisfactory condition of the plantthus supporting PDO approval.

Question 2

PDO has been asked to pre-qualify PPSC, Kuantan for theapplication of three-layer polyethylene and an internal flowcoat for a potential 24 inch gas transmission pipeline inOman.PPSC claims it is familiar with Shell requirements for bothof the above coating types and that it is in a position toprovide them without any major qualifications.Prior to discussing the issue with PPSC I'd be grateful forfeedback on any actual experience with this yard for thesecoating types during the past three years.

SOME QUESTIONS POSTED BY PETROLEUM DEVELOPMENT OMAN IN 2000

"In our discipline, we are exposed to many newproducts and technologies, where our operatingunit does not have experience. Other operatingunits do, and feedback and experience can beshared rapidly."

"SGN has opened up a whole new circle ofcontacts in the Shell network which I can nowuse to help solve my problems and also help withmy suggestions and information."

"Used effectively with active participation andhigh level of interest, it becomes a very powerful tool."


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KEXPLORATION & PRODUCTIONCOMMERCIAL NETWORK

The Exploration and Production CommercialNetwork (ECN) was set up in February 2000 forthe ‘commercial’ communities within theexploration and production companies and ShellGas and Power.

The key areas covered by the Network includefinance, planning and economics, tax, treasuryand strategic cost leadership. With a steadyincrease in its membership, the ECN is proving ahighly successful medium for allowing members toconnect globally, profit locally and developpersonally.

A few active ECN members share some of thebenefits that have resulted from their use of theNetwork in recent months...

"When I was a member of the exploration andproduction Capital Allocation and Planningteam I used the ECN as an integral communica-tions medium. All guidelines, spreadsheet toolsand macros were published and version-managedin the ECN. Our website also linked to thosesame documents in the ECN as the single pointreference to the latest official version. This savedus answering a lot of individual support questionsand resulted in reduced e-mail charges as wedidn’t need to e-mail large files around the world.I hope that more staff will pose their questionsvia the ECN rather than via e-mail so that thewhole community can learn from the answers.

The ECN is a very powerful medium to reach aglobal audience. I consistently use it to managekey reference documents and disseminate these toa global audience, often in combination withtraditional websites.

Recently the EP Planning, Portfolio andEconomics team upgraded the EconomicsWorkbench (EWB) software and manual andmade them available via the ECN. In less thanthree months more than 150 staff have visited thewebpage and many of them have downloaded theupgrades. It is no longer necessary to produceCD-ROMs or diskettes and distribute them to allthe EWB users in the world."

Sven Kramer, EP Planning, Portfolio and Economics


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For the Shell Group as a whole, the Explorationand Production Commercial Network• Allows more optimum allocation of resources

without physical relocation• Supports a learning organisation by

practically developing staff competencies

For the operating units, the ECN• Permits quicker resolution of operating unit

problems by preventing "re-invention of the wheel"

• Provides access to expertise beyond currentestablishment

For the finance and business development unitsin The Hague, the ECN• Enables access to know-how and experience

in the operating units• Allows better focusing of systems

development

For the individuals, the ECN• Enables personal development• Provides an enhanced network• Gains recognition from peers

"Last year when I was Finance Manager of Shell Egypt, I posted a query on the ECNregarding Recovery of Evolutionary Technologyfrom a competitor. The responses through theECN were very quick and it was certainly a veryefficient way of finding out what other operatingunits were doing."

Simon Smith,Shell International Finance and Resourcing

"Being relatively new to the Shell economists’community I find the exploration andproduction Commercial Network very useful,mainly for orientation purposes. I believe thatthe value of networking is always a long terminvestment – one day the story you read or theperson you have heard about via a networkmight save you a lot of time, trouble andmoney."

Monika Hausenblas, Shell InternationalExploration and Production

"I think it is a useful tool to keep abreast ofdevelopments in the centre. I regularly distributeinformation from ECN to my staff and othershere in the company. I find that very useful."

Peter Verschuren, Shell Venezuela

"Thanks to the knowledge sharing networks(mainly Competitive Intelligence, but also ECNand Subsurface Network) we have been able toconclude Shell International Exploration andProduction-wide corporate deals for WoodMackenzie and IHSE Energy data at prices thatproperly reflect the value to Shell. Being able tocommunicate directly with the relevantcommunity has prevented us from having to payprices primarily reflecting the vendors’aspirations.”

Con Goedman, CIAD &head EPB Data Management


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KShell recently increased its shareholding inSakhalin Energy Investment Company Ltd.(SEIC) from 25% to 55% and Shell nowprovides most of the seconded staff. As part ofthe process, the separate contracts andprocurement groups were combined. In aneffort not to re-invent the wheel, advice wassought from the Procurement Global Networkon a range of subjects: setting up remotelocation tender boards, balancing local content,availability of 30 inch casing and buildingcontracts control courses for contract holders.

In each case the responses received from aroundthe Shell Group were quick, informative andcontained clear practical advice and experiencegleaned by individuals who had faced similarissues around the world. Whilst it is hard toquantify the benefits in financial terms, theadvice prevented re-invention, offered somediffering solutions and enabled a much quickerturnaround and production of guidelines andadvice to SEIC.

One additional spin-off of asking the questionswas to prompt other contracting andprocurement staff in the Group to consider theissues and we have opened a dialogue withother close-by operating units in the areas ofpossible shared training provision.

� Nick BinksSakhalin Energy

PROCUREMENT GLOBALNETWORK

The Procurement Global Network (PGN) is thefirst stop for all procurement professionals andthose interested in procurement issues. It enablesmembers to ask questions, find answers, shareinformation and save time and money throughleveraging the combined procurement experience in Shell EP.


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Question

Answer 1

Answer 2

from Rijswijk

We have a Russian content requirement in our Production Sharing Agreement (PSA). Does anyone have a similar requirement to capture local content (contracts awarded to local companies, locally procured materials, locals employed etc) and if so how is it done?

Nick Binks, Sakhalin Energy

SPDC experience from Houston

SPDC (Shell Nigeria) have a system for capturing local content that requires mandatory completion of a section on the tender board submission. SPDC also have a detailed policy and department which deals with Community issues including local content.

Campbell Wyper,Shell Deepwater Services, Houston

from the Hague

Try the system called Omnicom. I recently reviewed this package in Norway. Whilst it is not quite finished, it looked like a very polished package and extremely flexible. Fields such as local content could be added to the base set-up in less than a minute.

Geoff Bird, Shell Int. E&P, The Hague


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BENCHMARKING GLOBALNETWORK

The Benchmarking Global Network (BGN)was formally launched in July 2000. In January2001, approximately six months later, some 170members representing 30 operating units hadjoined the Network. Benchmarking is not adiscipline as such and, as a result, the size of itscommunity is not expected to reach into thethousands as seen in other discipline networks.However, practitioners and focal points inoperating units have become aware thatbenchmarking is one of the key enablers ofStrategic Cost Leadership (SCL) and, inresponse to this, the BGN offers a platform onwhich benchmarking approaches, planning,experience and results can be shared.

One of the key outcomes of the BGN is theassembling of the global exploration andproduction benchmarking activity inventory for1999 and 2000. The created matrix providesanswers to questions on benchmarking such as:• who does what, where and how?• which benchmark partners do we compare

ourselves with and which consultancy firmsare used?

• what are the results, opportunity gaps infinancial terms, learnings and successfulpractices?

• who can I contact to find out more about aparticular benchmark study, etc?

The Benchmarking Global Network assists inthe transfer of experience from advanced toother less advanced operating units. The resultsof the recent Business Plan indicate that apotential performance gap of some $340 million has been identified from our EPglobal benchmark studies completed in 2000;some $200 million of the 340 are reported asbeing closed with the implementation of somereported 60 better business practices. The storydoes not stop here: the remaining $140 millionprovide the additional challenge and also astrong focus for additional and realisableperformance improvement.

� Jacques OrtetEP Global Benchmarking Coordinator

Some operating unit representatives offer feedbackon how their use of the Benchmarking Networkhas benefited their performance...

"The participation of operating units in theAndersen Benchmark General andAdministration (G&A) study (overhead costbenchmark that highlighted sizeable opportunitygaps) was greatly facilitated by the presence of theBGN - not the electronic network, but the peoplenetwork built up around it."

Steve Kaiser, Shell E&P Co.


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"The BGN gets me connected withfellow Shell staff in the samediscipline doing similar jobs. Itfacilitates the sharing of lessonslearnt, and helps avoid repeatingthe same mistakes or re-inventingthe wheel. Having said that, Iwould like to see more completedbenchmarking projects with theimplementation of follow-up planswhich yield tangible gains to beshared on the BGN."

Yu Teck Chuong, Shell DeepwaterServices

"Whilst still at embryonic stage, theglobal benchmarking initiative wehave been working on, would nothave come this far without theBGN and the networks I have beenable to build as a result. It is aprime example of the potentialpower of the BGN."

Peter Orbell, Shell Expro

Post

Answer 5

Answer 3

Answer 6

Answer 4

Answer 2

Answer 8

Answer 7Answer 1

from New Orleans

We have just completed a benchmarking study on deepwater projects.The analysis compares the key parameters of Shell deepwater projects with that of over companies in IPA database.

The key projects metrics are:- total project cost vs sanctioning year- cost per recoverable reserves- cost per design throughput

Please email me if you are interested in the results.Yu Teck Chuong, Shell E&P Co., USA

from Perth

Received copy of your IPA report in the mail today. Consider information very pertinent to some of our projects in assess and select phases now.Information on schedule durations most useful. Thanks for the opportunity to share in your work.

Gary Keenan, Woodside Energy Limited

from Calgary

I have just started in the benchmarking role and and would appreciate a copy of your results

Noreen Conway, Shell Canada Limited

from Lutong

Since we are going to deep water, yes we are interested in the results.

Mohd Shah Rahani, Sarawak Shell Berhad

from Perth

Yes we would be interested in sharing your results given our potential expansion into deepwater facilities. Please refer to my separate response via the email address option.

Gary Keenan, Woodside Energy Limited

from Warri

Can I have a copy of your deepwater benchmarking results (the subject of discussion item no. 108 of the BGN). I’d like to use it to leverage project level benchmarking for SPDC’s projects. I’m aware that the results per se are relevant for deepwater projects only but I’d like to use the results to illustrate the power of benchmarking process.

Gopal Papchan,Shell Petroleum Development, Nigeria

from Rijswijk

Just got it in the email today, many thanks for that. The format used by IPA is clear, quite simple to follow and above all the results of SDS are of most interest.I would like to suggest that all those involved or about to get involved in deep water, producing yet or not, have a look at this report...Hope the other parties who ask for this report received it too.

Jacques Ortet, Shell E&P, The Netherlands

from Muscat

We will be very much interested in the results, as we have got a deep water concession.

Mahmoud El Khamissy,Petroleum Development Oman

from Aberdeen

Yes, we would be interested in sharing your results into our subsea facilities.

Guus Driessen, Shell Expro, UK

- schedule durations- schedule vs design throughput


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COMPETITIVE INTELLIGENCEGLOBAL NETWORK

Industry experience indicates that 80% of theinformation needed to create intelligence is alreadypresent somewhere in an organisation. If theinformation is out there then it only needs theformation of a well-disciplined network to gatherit in.

In order to share competitive intelligence effectivelyacross the Group and exchange best practices, aCompetitive Intelligence Global Network (CIGN)was set up early last year. The Network now hasover 1,100 members throughout Shell.

The vision of an active CI community in ShellTechnology Exploration and Production and EPconsists of CI professionals and other interestedparties actively seeking out and creating actionableintelligence. The CIGN supports this process byproviding a forum where information can beexchanged and discussed. Over time, sub-networkshave developed and become a forum forcompetitive technical intelligence. These sub-networks help us deal with specific intelligencetopics.


25

Some of the members of the CIGN share theirexperiences of the Network since its inception. "I was looking for information about a

particular Gas Journal and decided to post aquery on the CIGN. The responses I receivedhelped me tremendously with phone calls andemails coming from various sources. I wouldestimate that the additional information Igained through the responses saved me at leastthree working days."

Rosemary Cooper-Clark, Shell Financial Services

"The benefit of using the CIGN in this case wasspotting people who know something about thesubject that you wouldn’t have asked normally.It adds another channel to the ‘normal’ way ofasking regional business advisors about what ishappening in their country. To be honest, I wasquite surprised by the multitude and diversity ofreplies. Very insightful and useful for makingconnections."

Elke Meuller, Shell Int. E&P

"I am a business analyst working for ShellHydrogen. Today’s industrial gas companiesconsidered to have the best capabilities inmanufacturing, transporting, and deliveringmerchant hydrogen are Air Products, L'AirLiquide, Praxair, Linde. I was assigned aresearch project where I needed to find out quitequickly what the Group's strategic relationshipswith these companies were. I posted the questionon the CIGN and got a number of leads. Thequestion was further posted by the forummoderator on the Global Procurement Networkwhich again generated a huge response whichhelped a lot in building the complete picture andassessing the potential implications of partneringwith one company as opposed to the others."

Ioana Chiru, Shell Oil Products Company LLC

"When I used the CIGN to source informationabout the potential Amerada Hess - Lasmo takeover, a response from Ceri Powell, ShellInternational Exploration and Production, savedtwo days of my working time. This time wouldotherwise have been spent on gatheringinformation and the related analysis."

Shaun McCarthy, Shell Corporate Centre

"I posted a question about a competitordevelopment in Egypt in CIGN. Receivinginformation from other CIGN members savedme a great deal of time: an initial investment of15 minutes turned into time savings of at leastfive hours. I also established valuable contactsthrough the query and hope to be able to explorethese in the future."

Hans Nijkamp, Shell Expro

"I put a question into the network to find outwho in Shell was negotiating deals withTotalFinaElf. I received approx. 30 replies ofwhich seven were filed in CIGN (the rest byemail and phone). 30% of the replies helped meanswer the task at hand and the other answershelped me build up a better understanding of thecontacts between the two companies. The CIGNproved to be an extremely efficient way to gethold of the information needed."

Jan Manohoran, Shell Int. E&P


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"From a personal perspective I have found the Knowledge Sharing Network to be very helpful with lotsof relevant and timely material and some good contacts. It would be difficult to put a savings value onthis information but I can confidently say it has saved me a significant amount of work and provided alot of very useful and relevant background information."

Paul O’Neill, Business Analyst, Shell Todd Oil Services

KNOWLEDGE SHARINGNETWORK

The Knowledge-Sharing Network (KSN) is abouthow we globally network and its growth serves thecall for sharing our best practices. Like our otherglobal networks it serves many people outside theexploration and production sector, keen to learnhow EP has become so highly regarded in theoutside world for the quality and value generationof its knowledge sharing. Using the KSN we aimto share our improvements with each other togenerate more value and cement our reputation inthis area.


27

Brunei Shell Petroleum was exploring thefeasibility of implementing a corporate widestorage solution for data. After having donesome initial work in house, they requestedfurther information and confirmation of theirapproach by posting a query on the KSN(entitled “Urgent request for Info – Corporatestorage options”). This resulted amongst othersin a reply from Petroleum Development Oman,containing a report with the outcome of thework they had done in the same field.

“The technical direction taken by BSP wasconfirmed by the several responses received and ofcourse, it greatly helped to reassure andstrengthen the decision made. The additionalperspective it added was the global operatingunit’s experience and this completes the totalanalysis picture.

If we had to do a comprehensive analysis likesome operating units have done, we would haveto spend at least one manmonth of effort. We areextremely glad that we can save this effort.”


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2


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G L O B A L C O N S U LTA N C Y

While much can be done in the field of knowledge management through the systematic capture ofcorporate wisdom in online systems, expertise is often inherently resident in the individual.Recognising this, Shell EP has set about creating an internal market place for its best practitionersin the disciplines required for day-to-day operations.

Over the past two years many individuals from our 220-strong pool of Global Consultants haveprovided expertise beyond their operating units, delivering their professional time on an as-neededbasis. They are sourced by a prospective customer through a specially-created knowledge ‘portal’called the Expertise Directory.

Originally devised as a means of providing specialist inter-operating unit services of shortduration by individuals or teams, global consultancy has proved an effective, personal andtherefore highly tangible area of Shell’s new ways of working.

The immense wealth of expertise resident in our best people, coupled with the means of sharing,has opened up a world of opportunities to raise standards and operational performance of thebusinesses.

As the following stories demonstrate, Shell EP global consultants can get as much from theexperience as they give...


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"Over the past six months I have madecontributions to the Iran project, undertakenwork for Argentina and carried out emailcorrespondence with Pakistan, Gabon and NewZealand. I cannot claim that it all originatedfrom the Global Consultants’ forum. It does,however, demonstrate the requirement (especiallyfor the New Business Development projects) forspecific expertise.

The global networking approach through e-mailhas, in my case, been successful - although it isthrough personal contacts. Previously I haveassisted with problems in China, Australia,Russia and in the Caspian Sea and was heavilyinvolved in the drilling planning for the Peruproject

Here in Petroleum Development Oman wepresently have a centre of expertise in drillingfluids, cementing, and stimulation that could beexploited more effectively under a differentorganisational structure. The Shell Group isdeficient in this expertise - hence the involvementin the projects listed above."

Eddie StevensonPetroleum Development Oman


31

I joined the global consultancy network during early '99. Since late '97 I had been working in the New Opportunity Evaluation team, where we evaluated new business opportunities from around the globe. These evaluations were done either in Rijswijk, where our group resides, or off-site on location.Forming part of the global consultancy network was a natural way to continue providing technical services within the context of EPT-AGI.Some of my key off-site assignments during 2000 included:Venezuela LNG evaluation, where, together with other EPT-AGI colleagues, I was involved in the optimisation of FDPs for a set of old gas discoveries off the northern coast of Venezuela. Our work led to the start of negotiations with previous partners, including Petróleos de Venezuela SA, and the undertaking of a more detailed evaluation with a view to formalising a new Joint Venture.China New Business Opportunities where I was part of a number of teams charged with the evaluation and valuation of Sinopec and CNOOC assets. I was working alongside excellent colleagues, many of whom were also Global Consultants. Based in Beijing, the work we undertook resulted in a number of strategic alliances with these companies, providing Shell China with a strong foundation on which to build.Australia Vincent Appraisal where, together with Bob Hite (RE) I participated in a Woodside organised workshop in Perth and contributed to the formulation of the Vincent field's appraisal strategy and best practices.As a Global Consultant you are recognised and given merit for the skills and knowledge you build up in your own area of expertise - to be given opportunities such as these not only increases your knowledge further, it also enables you to share your skills and strengths with fellow colleagues.I have every belief that the work of global consultants will continue to grow, and I am looking forward to undertaking further assignments to which I feel I could make a valuable contribution. I would also recommend the role to others who may have considered registering.

José A. López-López, Shell Int. E&P

Lopez-Lopez, Jos

Global Consultancy - Message

EPT-AGI Group

Global Consultancy


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"I think global consulting is a great concept. Itadds a new dimension to the job. It is worthnoting though that with the temporary drop inexperience levels in a number of operating units,the remaining experts get more and morestretched if they want to support other operatingunits as well. Although a commitment is beingmade by the line to set aside time for globalconsulting, this work is often done in the globalconsultant’s private time. This aspect should beconsidered in the development of an otherwisevery good concept."

Klaus K MuellerPetroleum Development Oman

"I have been contacted on several occasions sincebeing listed in the Expertise Directory. Requestscame from far afield including; Turkmenistan,where I was involved in a well performance andintegrity review; Oman where I participated inan electrical submersible pump implementationaudit and Argentina, where I took part in a peerreview of a non-operated asset. I also received arequest from Iran for general productionengineering advice. The directory is clearly agood way of formalising what was previously anold boys’ network."

John RuszShell Exploration (China) Ltd


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A chance for changeIn April 2000, in my role as a global consultant, I led a team to Brunei Shell Petroleum (BSP) for five days to review proposals for the upgrade and modification of two compression facilities as part of the Ampa Fairley Phase II Project. The review team was pulled in to make a recommendation on the compression modules on Ampa 9 and Fairley 4.

Our initial review recommended the installation of new compression modules on Ampa 9 (which is 10 years older than Fairley 4) and an upgrade of the units on Fairley 4. This was also the BSP project team’s recommendation but required more capex than had been requested from BSP management. This option would have met the basic project objectives but BSP management also asked us whether the existing compressor packages could be operated for a further 20 or so years. We concluded that this was possible but would have significant penalties to the operational objectives of the project - expected reductions in Opex and manning levels would not be met, availability could not be maintained or improved and Health, Safety and Environment risks could not be reduced to the desired extent.

Time to rethinkFollowing the review, the BSP Project team approached BSP management and advised a re-evaluation of the project scope and parameters. The advantages of installing new compressors, including long-term flexibility and the ability to meet operational objectives, were realised and as a result of this rethink two new larger compression modules were specified for Ampa 9.

Without the efforts of the review team, BSP management may not have approved this change to the project which, despite increasing the capital budget for the new equipment, will most likely reduce the life-cycle cost over the next 20 years.The review took approximately 15 man days of my time, including preparation, the time in Brunei and reporting. Three other Woodside staff engineers were involved in the review, each spending about 10 man days.

Peter Fowler, Woodside Energy Ltd (Australia)

Fowler, Peter


EPT-HO

Global Consultancy


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"Since being listed in the Expertise Directory Ihave acted as an intermediate for identifyingproduction chemical specialists to Brunei ShellPetroleum and the Iran offshore team. Icontributed to the formulation of ITT documentsand was invited to the subsequent tenderevaluation in Dubai in May 2000. I contributed to the Nigeria offshore teamhelping out on a drilling fluid tendering exerciseand also contributed to Producing the Limit(PtL) and Drilling the Limit (DtL) exercises inPetroleum Development Oman.”

"Members of the Shell Productivity ImprovementNetwork team, Bart van der Linden and Hansvan den Berg, spent several weeks in BruneiShell Petroleum to resolve the continuingdehydration problem with the export crude.Their input focused mainly on implementingrecommendations made by several specialist teamsfrom Shell Global Solutions. Their contributionwas greatly valued as they provided productionchemistry skills which do not reside within ShellGlobal Solutions.”

Manfred EignerShell Int. E&P


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Once registered as a global consultant, my first contact was with the new gas developments in Abu Dhabi. We had a fairly extensive telephone conference and arranged for the two teams (Petroleum Development Oman and Abu Dhabi National Oil Company) to meet in April, based on the established areas of common interest and the desire to learn from each others' experiences in gas recycling, condensate dropout and welltype selection.

I actively participate in the subsurface forum and helped to launch a six-month trial of a gas condensate forum.

Appearing in the Expertise Directory, our ‘Yellow Pages’, is the confirmation of an individual's credentials to perform the service which has been brokered by a more personal contact. I believe that people should learn to help themselves and actively seek out a global consultant if they need one but in reality, a little recommendation from the Organisational Performance and Learning team along the lines of "I know someone who could help you with that" gets consultancy projects rolling.Belinda Perriman, Shell Capital

Perriman, Belinda


EPT-HO

Global Consultancy


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In 1999 the internal subsurface provid

er Reservoir Characterisation Team fro

m

Petroleum Development Oman’s GeoSoluti

on assets organised the company’s firs

t Seismic

to Reservoir Model Away Day. The main

purpose was to present Petroleum Devel

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Oman’s production and exploration asse

ts with methods for constructing subsu

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models for reservoir simulation throug

h seismic inversion techniques. I was

invited

as guest speaker to discuss my experie

nces in Shell Expro, establishing a se

ismic

inversion centre comprising Shell and

Jason Geosystems staff.

I outlined the workflows and best prac

tices which had been developed to link

seismic

with reservoir simulation. In particul

ar, I highlighted a method, generally

known as

stochastic inversion, which uses seism

ic, well, horizon and geological data

to

produce multiple, detailed reservoir p

roperty models, capturing the reservoi

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heterogeneity at high resolution for i

nput into dynamic flow simulation.

The generation of m

ultiple reservoir models allows the qu

antifying of subsurface

uncertainties related to reservoir qua

lity and distribution. This method was

of

particular interest to Petroleum Devel

opment Oman, since a ‘virtual’ study g

roup

consisting of several members from eng

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d been

set up to support the planned gas rese

rves booking in the Makarem Field of N

orthern

Oman.

The main reservoir objective in Makare

m consists of the tight, gas bearing P

re-

Cambrian Buah dolomite. Three wells on

the structure have been drilled and t

ested to

date. Two wells have indicated high fl

ow rates, while one well tested a tigh

t zone

within the reservoir interval. An earl

y review based on the seismic impedanc

e data

suggested a link between well test res

ults and zones of higher dolomite impe

dance

related to lower matrix porosity. The

porosity within the reservoir varies t

ypically

between 0-5 % at a depth of around 450

0 m tvdss.

continued on next page...

Buiting, Jan


EPT-HO

Seismically constrained reservoir characterisation — PDO


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...continued from previous page

On my way back to Shell Petroleum Development Company, I visited Dubai to commission a free stochastic inversion pilot project for Petroleum Development Oman. The successful pilot used data initially provided by PDO from one of its Shuaiba carbonate fields. Subsequently, it was decided to use Jason in Dubai to provide the matrix porosity models for the Buah and a secondary shallower clastic reservoir level for the Makarem reserves booking.

The project was carried out in Petroleum Development Oman/Dubai and was completed by the end of 1999. During 2000 other members of the study team acquired further crucial data from well testing and cap curve measurements. All data was then integrated together with a fracture model into the dynamic reservoir simulator leading to a successful booking of 1 Tcf of gas at the end of 2000. Meanwhile, the Reservoir Characterisation Team has adapted an inversion-centre model similar to Expro, albeit modified for Petroleum Development Oman’s need. Special emphasis has been put on the fact that the team should consist mainly of Petroleum Development Oman staff assisted by Shell and third party service providers as required to build up its own experience base over time. The team has since then successfully applied the workflows which I outlined to other production and exploration objectives.

Jan Buiting, Shell Nigeria E&P Co. Ltd

"Jan’s input as a global consultant has not only contributed to a one-off substantial gas reserves booking,but has also helped to formulate the identity of Petroleum Development Oman’s ReservoirCharacterisation Team"

Roland Muggli, Petroleum Development Oman


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Early in 2000, Ali Al-Saidi and Abdullah Al-Kindi from Petroleum Development Omanwere contacted by Shell Exploration andProduction Technology Applications andResearch and were asked to travel toTurkmenistan to carry out gas, glycol and wateranalysis at the Malay gas field.

Their account of the journey and the conditionsthey encountered whilst there prove that globalconsultants need to be prepared to face all sortsof challenges!


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To get to the gas field and back took a total of ten days and involved travelling

through Dubai, Tehran and Baku. Once we arrived at the Turkmenistan Oil & Gas

Institute in Ashhgabat, the capital of Turkmenistan, we instantly noticed the

standard of the facilities and equipment - the state of the art equipment we had been

used to using in Oman was nowhere to be seen and at one point we even noticed people

using old vodka bottles to collect gas samples!! From the Institute we faced a

further 600 km mini-bus ride to reach the field so finally, after six days of

travelling, we reached our destination!We succeeded in taking a number of samples for testing both on-site and back in Oman

and, whilst there, we shared stories of how Oman has benefited from oil and gas and

how the partnership between Shell and the Government in Oman has brought great gains

to the country. Our experiences greatly interested the team in Turkmenistan who

seemed very keen to visit Oman and see the projects and developments underway there.The trip was long and tiring but our assistance was greatly valued and enabled Shell

Exploration and Production Technology Applications and Research to reach Shell's

critical new field developments with supported expertise and best practices from

elsewhere in the Operating Unit network.Abdullah Salim Al-Kindy, Petroleum Development Oman

Al-Kindy, Abdullah


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Global Consultancy


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One aspect of the growth of virtual communities, both internally to companies and aspart of the growth of e-business, is the re-emergence of many of the characteristics ofthe oral cultures that preceded the birth of scientific rationalism, itself enabled by theinvention of a printing press. Electronic communication is more conversational, moreimmediate and more direct. In this context it is not surprising that the story tellingskills of previous oral traditions are coming into their own in the new age ofuncertainty that we are now entering. The capability of an organisation to create itsown stories, and through that creation to define its culture and place within itschosen environment is key. *


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To the Organisational Performance and Learning TeamThe pace of things took me by surprise, to be honest. Since October 1999 when I was

registered and began to function in this capacity, the roles have been many and

varied.

- I've provided specialist expertise on well engineering contracts and strategies to

SSI during their Contract Strategy Review in Petroleum Development Oman from 6-12

November 1999. I've also assisted with workshops for the Yibal 500K Well project and

the Integrated Completions contract.- I provided contract article interpretation advice to AFPC on 24 November 1999.

- I participated in a workshop with BP Amoco from 1-3 November 1999 on the

redevelopment of their Web-based learning system (BPA and Shell are considering

co-operation in the learning field).- I have also become certified as an SDI © (Strength Deployment Inventory) teamwork

skills trainer to allow me to provide additional services to customers in team

facilitation and conflict resolution.I've found the opportunity to work 'out-of-the-box' a tremendous learning opportunity.

I have been able to use learning from these events and activities both in my day-to-

day work and also in my consultant's role. I also hope I have delivered added value to

my customers.

I can already foresee another role for the Global Consultant developing in the future:

using the experience and knowledge to act as an independent arbiter or witness, where

balance is needed to make a difficult decision, such as on acceptable 'risk'. The

Consultant can provide an external viewpoint that is not clouded by local issues.Another likely development I feel is the use of the Consultant for facilitation and

team-building, where the experience and maturity can be deployed in conjunction with

technical expertise in sensitive and complex areas.Paul Wood, Shell International Exploration and Production

Wood, Paul


EPT-HO

Global Consultancy


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IN P

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FROM GABON TO BRUNEI…

Gerrit Aberson is one of the global consultantswithin production chemistry and on Wednesdayafternoon November 10th 1999 he got a requestto travel to Brunei as soon as possible to assist insolving a dehydration problem over there. ShellGabon management quickly agreed and within 24 hours of the first call Gerrit was on his way.He explains the nature of the problem:

GLOBAL CONSULTANCY IN PRODUCTION CHEMISTRY…

Over many years a group of twenty highlyspecialised production chemistry staff in Shell EPhave accumulated unique experience in criticalareas ranging from well engineering to productionoperations.

Available for the provision of consultancy andadvice since October 1999 and supported by theProduction Engineering Chemistry Network(PECNet), their active assignments have beenvaried and challenging…

Brunei Shell indeed had a very seriousproblem. They have recently doubled theproduction in one of their offshore fields butthey can not completely dehydrate this crude intheir normal production facilities. They dohave special emulsion treatment facilitiesdownstream of their production unit but thosehave a limited capacity.

Over the past six months they have producedtwice as much emulsion as they can treat and,due to a bacterial problem, their emulsions arenow nearly untreatable, even in the specialunits. They did nothing fundamentally wrongbut there were a lot of old habits and somecomplacency, which had grown with time andwhich under the new production levels were nolonger sustainable.

My first goal was to reduce the amount ofemulsion coming from offshore and toeliminate the bacterial problem. The latter hadnearly been solved by the local chemists when Iarrived so I could firstly concentrate onreducing the amount of emulsion which wasproduced in the field. A number of the recentimprovements we made in Rabi could beapplied in Brunei as well (group knowledgesharing through virtual teaming) and onemore technical change in their dehydration setup will certainly bring the emulsion levels backto well within the treatment capacity.


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MUD TENDER SPECIALIST FROM SHELL EXPRO….

A specialist on the mud & cement tenderingprocess for a Middle East offshore project wasrequired at short notice to help completetendering documents before the end of 1999.

Knowing that Shell Expro and NederlandseAardolie Maatschappij have been involved insetting up new ways of procurement of mudand cement chemicals under their Big LeverageClub initiative, an available mud tenderspecialist was identified within ProductionChemistry in Aberdeen and was releasedimmediately.

Since any delay in completing the tenderdocuments could have seriously impacted themeeting of deadlines for the start of projects inthe field, the value of this ProductionChemistry consultancy was significant.

� Manfred EignerShell International Exploration andProduction

� Gerrit AbersonShell Iran Offshore Ltd, Dubai

The emulsions which are currently stored inthe terminal are certainly quite difficult but astep wise approach and the use of somecentrifuges which are normally used on drillingrigs will also solve this.

None of my proposals was really spectacular oroutrageously difficult but at the time BruneiShell did not have the specialist know howwhich was required to go back to basics anddream up these solutions.

Brunei Shell Petroleum had already incurreddemurrage penalties due to tanker delays of up toBrunei $1 million. We received a lot of hands-onhelp to get to the root of the problems - one guyfor a somewhat longer period is better than twofor a short period. We really appreciated thedetailed knowledge and experience of thespecialists and the fast response to our calls. Ofcourse it cost us some money, but I would do itagain – absolutely !

Thomas Helmer


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3


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C E N T R E S O F E X C E L L E N C E

Shell EP’s Centres of Excellence (CoEs) are formally recognised communities of specialist EP expertise, drawn from one or more locations around the global organisation. Their function andpurpose is to consolidate, augment and make their unique services widely available throughoutour global business. The Organisational Performance and Learning team has worked with theCoEs to align their services with operating units, overcoming competitive dynamics and helping tomarket their consultancy services to any individual or team with a need.

Shell EP’s current CoEs include:• High Pressure/High Temperature Drilling • Pre-Stack Depth Migration • Maintenance Strategy and Reliability Engineering • Offshore Structures Engineering • Underwater Activity Services • Shell Hazard and Risk Exchange (SHARE) • Subsidence Compaction • Land Seismic Acquisition and Processing of Desert Areas • Petroleum Systems Modelling• Groupware IT• Geographical Information Systems

They also have stories to tell….


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roHIGH PRESSURE/HIGHTEMPERATURE DRILLING

Utilising the full set of knowledge-leveragingstructures available to its Expro location, the HighPressure High Temperature (HPHT) Centre ofExcellence combines ad-hoc consultancy withformal commissions to undertake work in aspecialised and unique area, for which the NorthSea has proved a hard taskmaster and ademanding teacher. Since its inception, the Centreof Excellence has contributed widely to regionaldevelopments and Group learning about deepdrilling under extreme conditions …

Knowledge management programmes… cannot be

imposed on an organisation - you cannot conscript tacit

knowledge… it can only be volunteered. *


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The HPHT Well Engineering Conference inNew Orleans delivered presentations andworkshops on design techniques and proceduresas well as HPHT new technology requirements.This led to Shell US follow-up requests aboutHPHT tubulars and connections, wellheadtemperatures, pressures and packer fluids. A linkhas now been established with the US HPHTwebsite. The cost to the team was around £7,000: the conference stimulated exchanges onHPHT practices in South Texas, shallow anddeepwater Gulf of Mexico and the North Sea.Future benefits with potential multi-milliondollars savings will result if a technology isidentified to enable drilling depleted reservoirs.

Nederlandse Aardolie Maatschappij requiredassistance with High Pressure High Temperatureoffshore development design and onshoreexploration design. For a £20,000 outlay,Nederlandse Aardolie Maatschappij hasbenefited from fit-for-purpose well design basedon HPHT expertise, standardisation and wellintegrity.

The China National Oil Company (CNOC)visited Expro to research Shell’s global capabilityon HPHT well design and mud operations. Forthree man days of efforts, Shell China was ableto demonstrate Group capability and localapplication to CNOC and, by association, theChinese Government.

Norske Shell and Expro established aprogramme of HPHT learning transfer, peerreviews and exchange visits between the UK andStavanger, estimated at £12,000 cost. Potentialsavings estimated at £1 million resulted fromstandardisation, sharing contingency materialsand equipment and a ‘Drilling the Limit’ projectmanagement approach to the HPHTexploration campaign.

� Pieter de BordesShell Expro, UK

Ad hoc requests were received through the WellsGlobal Network (WGN) to input into thedevelopment of a Casing Design Manual forHPHT Well Engineering. This was completedwith Shell International Exploration andProduction. This work was undertaken on anon-chargeable basis by Expro-based CoEmembers.

Shell Namibia requested an appraisal of the hightemperature Kudu field. The CoE developed aproject execution plan including well design, analternative (high temperature-rated MDT)testing method, logistics, organisation,procurement and contracting strategy with fullproject management documentation. A total of157 man-days was expended at a cost of a littleover £100,000. Some $8 million in well costsavings were made through improved design,drilling and evaluation procedures. ShellNamibia also commissioned consultancy ontheir oil-based mud disposal policy acceptableby Environmental Impact Assessment. Thiscomprised assessing a fit-for-purpose BMdisposal strategy and an investigation into OBMoptions. For an expenditure of four man-daysand some £3,000, Shell Namibia couldanticipate $2 million worth of drillingperformance improvements, if OBM is used onKudu 6.


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DEEP WELL EXPLORATION – EXPRO AND SHELL BANGLADESH

In a joint venture with Halliburton EnergyServices and Shell, Cairn Energy – the originaloperator of the Sangu Field in Bangladesh –carried out preliminary well design studies for adeep near-HPHT exploration well. This wasdesigned to penetrate the formations underlyingthe existing Sangu Field.

Following consultation with Brian Coakley andFrans Van Hoorn in Shell Bangladesh and atShell International Exploration and Production’srequest, Shell Expro were invited to review,comment and provide input into this welldesign, as Shell would assume operatorship ofthe concession prior to spud date.

Previous attempts to appraise these structureshad been unsuccessful due to a number ofsignificant technical challenges. In addition tothe technical challenges of drilling a nearHPHT well, there were challenges of rigmobilisation, contractual agreements andgenerally gearing up for a demanding operationin a logistically remote area.

Following several review meetings and discus-sions with the Cairn Energy design team inEdinburgh, it was agreed that the originalcasing design was underrated, particularly withregard to the intermediate casing.

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"By working together with the Cairn Energydesign personnel, and then getting managementcommitment, a challenging work programme wasundertaken, while minimising potential risk to a)personnel, b) the environment and c) seriousfinancial exposure."

Bruce McEwan, Shell Expro, UK

High pressure water influxes had beenencountered at previous unsuccessful attemptsto drill to the proposed depths.

The production casing was also considered ‘verymarginal’ to adequately contain full operationalloading in light of anticipated high thermalloadings / downrating factors.

The findings were accepted by Cairn Energyand Halliburton’s management and designteams. Cairn Energy, still in the ‘driving seat’ atthat point, actively and diligently sourcedalternative pipe, which was mutually acceptable,with a very short lead time.

To enhance actual drilling operations, a visitwas made by Expro staff (drilling specialists andcolleagues of the HPHT CoE).

Having reviewed the logistics support,manpower requirements and equipmentspecifications in conjunction with the workprogramme in Aberdeen they travelled toBangladesh to present their recommendationsto the Well Delivery Team.

It is understood that many of their recommen-dations were accepted and acted upon, e.g.primarily not to underestimate the complexityof the job and to man up appropriately.

The business value of this collaboration waspotentially greater than $5 million, should lossof pressure integrity of the casing have resultedin a serious well control incident.

� Brian Coakley Shell Bangladesh


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There is a Welsh word "cynefin", which is difficult to translate into

English language. "It describes that relationship: the place of your birth

and of your upbringing, the environment in which you live and to

which you are naturally acclimatised." (Sinclair 1998). This concept of

wholeness and history is what outstanding organisations are all about.

They have the trusted relationships and confidence that comes from a

community with common values and a common story about their

history, however short. *

PRE-STACK DEPTH MIGRATION

Unparalleled experience, outstanding technicalcompetence and a powerful computer processinginfrastructure are the characteristics of theNederlandse Aardolie Maatschappij/ ShellGeoscience Services Pre-Stack Depth Migration(PSDM) Centre of Excellence, making it a superbresource for reliable prospect evaluation and fielddevelopment. The NAM processing team hasdelivered more than 20,000 km2 of 3D land andmarine PSDM data. The value added by PSDMis some $50 million annually in NAM alone.Building on this local success, the expertise of thePSDM CoE can now be projected to everyoperating unit allowing global access to the mostpowerful imaging software and best geoscience inthe business.


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The PSDM Centre of Excellence saw aconsiderable reduction in computing unit costsby 21% over the first half of 2000, due to theoptimal use of Nederlandse AardolieMaatschappij computing infrastructure by largemigration jobs for Shell Expro, run from ShellGeoscience Services in Rijswijk. The structuralnature of these savings means a permanentfuture benefit to the Group.

It is expected that involving Shell GeoscienceServices with the resulting competitivecomputer costs will trigger more work.

The graph reports more efficient use of a ShellGroup resource to help reduce cost whilesharing benefit:

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GLOBALISED SEISMIC COMPUTING FROM NAM AND EXPRO

The co-location of computer processing units toexecute migration work is not essential asNederlandse Aardolie Maatschappij proved forShell Expro in its seismic depth migrationprogramme in 1999. Some 400 km2 of Expro’sMandarin and Turnstone fields in the CentralNorth Sea were required to be pre-stack depthmigrated by May and the prevailing industryclimate militated against expensive expansion oflocal CPU capacity.

Nederlandse Aardolie Maatschappij and Exproco-operated in the development andimplementation of data-exchange andmanagement procedures before executing theimage processing at Nederlandse AardolieMaatschappij’s computing centre and feedingdata back into Expro’s job management system.Part of the computer intensive work was doneat Nederlandse Aardolie Maatschappij in Assenwhilst the geophysical part of the migrationwork was still done at Expro in London andAberdeen. This globalised seismic computingsolution and procedure rationalising model isavailable for operating units throughout theShell network.

Shell Expro’s Sean Inde PSDM project is anexample of inter operating unit knowledge andresource sharing. Model building and updatingwas done by Shell Expro whilst migration jobgeneration and execution were entirely managedby Nederlandse Aardolie Maatschappij in closeco-operation with Expro in Aberdeen. Thisenabled Expro to benefit from NederlandseAardolie Maatschappij’s best practices for largescale PSDM cluster projects and to concentrateon the model building and updating. In turnthis partnership also allowed NederlandseAardolie Maatschappij to include Exproexpertise in its own workflows. This solutionwas followed by Shell Geoscience Services inRijswijk for Shell Expro’s large PSDM projectsin 2000.


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MAINTENANCE STRATEGY ANDRELIABILITY ENGINEERING

The Centre of Excellence in Maintenance Strategyand Reliability Engineering has actively supportedShell Gabon, Shell Petroleum DevelopmentCompany Nigeria, and Brunei Shell Petroleum invarious stages of their Reliability CentredMaintenance (RCM) efforts. The CoE providedRoot Cause Analysis (RCA) training andimplementation support to Shell Gabon. Thisoperating unit sees RCA as an important tool inachieving their 'Produce the Limit' targets.

The CoE has considerable technical experience inoption selection decisions in new and changeprojects, using advanced mathematical simulationtools. Recent applications include the Brigantineproject in Expro and the EA and Bonga projectsin Nigeria. The Expro standard 'Operations inProjects' helps get the operations and maintenanceinputs to projects at the right time, and can beobtained through the CoE.

The CoE also works closely with other CoEs andGlobal Consultants, e.g., in Instrumentation &Control, to support OUs like Shell Gabon withRisk Based Inspection (RBI) and InstrumentedProtective Function (IPF) training.

Today’s competitive industrial environmentdemands that engineering systems perform overtheir entire lifecycle. The CoE enables projectmanagers to identify and include Operations andWell Engineering best practice in their projectsand assist teams to produce designs that maximisea facility’s Net Present Value by integrating lifecycle cost and establish a maintenance strategyconsistent with design safety case tasks.


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NORSKE SHELL, NEDERLANDSEAARDOLIE MAATSCHAPPIJ AND SHELLEXPRO

Norske Shell has been learning practical lessonsfrom the self-improvement of Expro’s Brentteam over several years. Throughout Autumn2000 the company has been gatheringexperience in new ways of working andinnovative approaches to planning, organisingand executing work both on- and offshore.

The Maintenance Strategy and ReliabilityEngineering Centre of Excellence has delivereda detailed maintenance strategy for active firesystems. Apart from the obvious cost-effectiveadvantage of capitalising on what we alreadyknow elsewhere, immediate and timely access toa well-defined strategy meant direct applicationor use of supporting documentation todemonstrate an overall improvement of testintervals.

A further Norske Shell workshop is plannedwithin the A72 Maintain Well and Facilitiesprocess, utilising Shell Expro’s Brent expertiseand experience and the developing relationshipsbetween the two companies.

At a strategic information management level,the Expro SAP team has presented to NorskeShell how SAP maintenance management hasbeen organised in their PM and PS modules.This in turn identified several reports Norske

Shell could copy and implement in its SAP PMmodule for the improvement of work andmaterial management. The company has nowcommitted to joining forces with both Exproand Nederlandse Aardolie Maatschappij informulating plans for its own forthcoming SAPupgrade.

"We will continue the focus on gainingknowledge across borders and on the exchange ofbest practice from our colleagues, to achieve ourobjectives in cost leadership and be the topinternational exploration and productioncompany of choice in Norway."


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ROOT CAUSE ANALYSIS WORKSHOPIN SHELL GABON

In 2000 John Cuckson, Shell Gabon's TechnicalManager, was looking for a breakthrough intackling production unreliability throughout theproduction process. Along with Shell GlobalSolutions, Shell Gabon set about pioneering a newprogramme to achieve this...


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Usually confined to the downstream refineryarena, the application of MERIT methodologiesto a dual-language, multi-site EP operation in aremote corner of West Africa was a ground-breaking first. As part of the programme, aseries of courses including reliability centredmaintenance (RCM), risk based inspection(RBI) and Instrumented Protective Functions(IPF) was delivered but by far the most criticalpart of the programme was to engage andbenchmark the entire maintenance organisation.

Production unreliability is seldom due to asingle cause. Human failures, equipmentmalfunctions, out-of-date processes andunexpected environmental changes may all playa role. Sifting through the evidence to reveal anunderlying pattern - and then to learn from it -is a demanding task. It is also one that needs tobring many different skills, perspectives andcompetencies together in the shape of operators,maintainers, designers, analysts and assetmanagers.

A powerful tool to emerge in this process wasRoot Cause Analysis (RCA). Material forteaching and coaching the application of thistool was developed and delivered by theMaintenance Strategy and ReliabilityEngineering Centre of Excellence in ShellExpro. The technique aids the systematicevaluation of what actually happens in anygiven incident and surfaces the true underlyingreasons for failure. It can be taught as an

"As one of the means to assist Gabon, MERIT isa novel way of bringing diverse perspectives tobear on common problems. It is already giving usbetter planning and much more focused failureanalyses. Most importantly, it brings the bestskills of our workforce together in a constructiveenvironment where we can agree higherexpectations than would otherwise have beenpossible.”

John CucksonShell Gabon, Gamba

applied methodology in many differentcircumstances. In fact it became so wellregarded in Shell Gabon that additionalworkshops were mounted for non-productionoperations-related departments. Centre ofExcellence consultants created and delivered acomprehensive on-site training programme inRCA in both French and English and went onto coach three separate teams in Rabi andGamba.

Several more programmes are scheduled for2001-2002 and early results for MERIT alreadysuggest a breakthrough in both practice andperformance.


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DRAUGEN MAINTENANCEIMPROVEMENTS IN NORSKE SHELLFOCUSED RESULTS DELIVERY 1999

Draugen is already a high-performanceproduction platform, producing 225000 barrelsper day of oil from a topside facilty originallydesigned for 95000 barrels. Maintenance costsare about 20 million NOK per annum abovethe best performers in the North Sea. The aimof the Shell Focused Results Delivery (FRD)initiative is to address this gap, so that Draugenbecomes a top quartile maintenance performer.

Øyvind Espeland, Head of Draugen OperationSupport, and his team decided that externalexpert advice would help them achieve theirobjectives and they would have the benefit ofpeer review and challenge. The Norske ShellFRD team was receptive and open tosuggestions of different approaches and newways of working.

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The Centre of Excellence staff from Shell Exproparticipated as virtual members of the FRD,aligning their own inputs to suit the Norwegiansituation. To enable this, Norske Shell arrangeda platform visit and participation in the FRDfrom the kick-off meeting onwards while theCoE staff organised visits and meetings directlywith their discipline counterparts. Similarly, theNorske Shell FRD team members arrangedvisits to Shell Expro to gain direct experienceand talk to a wider group of Shell Expro staff.The CoE provided supporting documents andreports to strengthen the case made by theFRD, especially when approval from theRegulator was required.

The FRD itself was very successful. At theclose-out session, attended by ExCom memberLinda Cook, the team explained howmaintenance costs would be substantiallyreduced and oil production increased by about

800,000 barrels a year. Additional costefficiencies and production increases will beworked on in the FRD implementation phase.

Business Value has been calculated atmaintenance cost savings of 13.4 million NOKper annum with added value of some $16 million per annum, calculated at $20 abarrel.

"Excellent support from the CoE, a major contributor to our success. One important spin-off effect hasbeen the new personal relationships between Shell Expro and Draugen Operations in several disciplinessuch that further exchange of experience and best practice can be continued for mutual benefit of theoperating units. I would give them 10 out of 10."

Øyvind EspelandNorske Shell, Kristiansund


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roRELIABILITY CENTRED MAINTENANCEIN SHELL PETROLEUM DEVELOPMENTCOMPANY NIGERIA 1999

Shell Petroleum Development Company(SPDC) identified their maintenanceperformance as a key driver to improvetechnical integrity, increase productionavailability and reduce unit costs.

To achieve their goal of becoming first-in-class,they put together an Asset Integrity ‘hit’ team,drawing on expertise available within theoperating unit network including ShellInternational Exploration and ProductionResearch and Technical Services, ShellMalaysia, Brunei Shell Petroleum and ShellExpro.

Reliability-Centred Maintenance (RCM),initially developed for aircraft but withincreasingly widespread industry application,was chosen as the key tool to achieve best-in-class performance. SPDC lacked RCMbackground and felt that Expro’s practicalexperience of RCM’s application and its transferof that knowledge could help them significantly.

Using RCM along with other innovativeapproaches in the early 1990s had enabledExpro to reduce maintenance costs by 40% and increase installation availability by 5% overfive years.


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The experience had taught them how to avoidthe pitfalls of RCM projects, the importance ofacquiring the right maintenance data, how towork within ‘given’ parameters such as availablespare parts difficulties and precisely whom toengage to ensure implementation success.Although there were a number of RCMmethodologies in the public domain, ShellExpro’s model was proven in the EPenvironment and the benefits weredemonstrable.

Working closely with the SPDC maintenanceteam, Expro provided essential interventionssuch as:

1) RCM briefings to East and West Divisionmanagement illustrating RCM application andbenefits 2) practical RCM workshops for maintainersand operators 3) a seven day training programme for amultidiscipline group of operators

"This was an excellent and progressive piece of work. We will be expanding this programme next year aspart of our drive to lower costs and improve system availability. We will continue the involvement of theMaintenance Strategy and Reliability Engineering CoE next year as we believe that they have broughtsignificant value to our work."

Mike Henderson, former Head of Maintenance Systems, Shell Petroleum Development Company

These operators were then assigned to becomeSPDC in-house experts, building up on-the-ground RCM expertise for the future.

Business Value is estimated by the customer tobe 100 times the investment. SPDC hasacquired in-house RCM capability and anRCM maintenance programme, adaptable tosome one hundred flow stations across theoperating unit.

� Bo BodegomShell Syria, Damascus


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BLYTH – THE DEVELOPMENT OF UK’SFIRST OFFSHORE WIND FARM

Wind power has been a core technology in theportfolio of Shell Renewables since 1998. Thegrowing profile of renewable energy supply,which will be a multi-billion dollar market overthe next 10 years, has several ‘drivers’ includingthe need to secure diverse energy supplies, acommitment to reduce carbon monoxideemissions and an ambition by governments inthe UK, the Netherlands, Denmark, Germany,Belgium, France and Sweden to exploit windenergy in their offshore environments.

In co-operation with Shell Renewables, a smallteam of Shell engineers has worked withindustry partners to develop the Blyth OffshoreWind Farm. With a capital investment of £4 million, this strategic pilot has engagedseveral investing partners and attracted theinterest of government and non-governmentorganisations, such as the Department of Tradeand Industry, the European Community,Greenpeace and the Royal Society for theProtection of Birds (RSPB).

AMEC Border Wind developed the project toconceptual stage, whilst in the process securingall major licences and consents over three years.

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OFFSHORE STRUCTURESENGINEERING

From 2000, the Centre of Excellence for OffshoreStructures Engineering has been providing adviceand services on a range of topics includingstructural integrity, foundation design,installation, decommissioning, topside structuraldesign, and special loadings (e.g. conductordriving, blast design), etc. The following storiesare a few examples of work undertaken by theCoE. It is worth noting that the work goes beyondstructures for oil and gas production as isillustrated by the support given to the Blythoffshore wind project.


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They were joined in the implementation phaseby Powergen, a Shell project manager andtechnical experts from the Offshore StructuresEngineering and Underwater Activity ServicesCentres of Excellence. The CoEs’ input hasbeen invaluable, covering a wide range ofrelated disciplines, such as geophysical/geotechnical, metocean, offshore structures,underwater, electrical mechanical and safetymanagement.

The Blyth Offshore Wind Farm was opened byHelen Liddle, the UK Energy Minister, on 7thDecember 2000.

The CoE for Offshore Structures Engineeringwas also a key contributor to technologydevelopment for offshore windparks (e.g.installation methods) and has performed anumber of value engineering/peer assist reviews.CoEs in Shell are now recognised by the ShellRenewables wind power team for their uniquein-house competences, which will undoubtedlycontribute to larger developments in the UK,the Netherlands and elsewhere.

"This project represents a number of firsts for theindustry: the first offshore wind farm in UKwaters and the first project for Shell Renewables,Powergen Renewables, NUON UK and AMECBorder Wind. It’s also the first time AMECMarine has used its jack-up rig for a windturbine.

Throughout the project, the Offshore StructuresEngineering and Underwater Activity ServicesCoEs have been critically important in installingthe turbine technology and maintaining thehighest standards of safety on the job. With thelessons learned from this project we can beconfident that Shell is well-equipped to manageoffshore construction risks for offshore windfarms, one of our future growth businesses."

Huub den Rooijen Shell WindEnergy BV, Amsterdam


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NORSKE SHELL – NEW BUSINESS FORTHE DRAUGEN PLATFORM

The Centre of Excellence for OffshoreStructures Engineering was contacted by NorskeShell to assess the technical viability ofincorporating significant additional loads ontothe Draugen platform from the proposedMikkel tie-in.

The technical feasibility to proceed with thedevelopment was confirmed for this ‘stepchange’ in topside load distribution.

SHELL IRAN OFFSHORE – SAVINGSON OFFSHORE TECHNICALQUALIFICATION

The Soroosh and Nowrooz platforms,comprising a multi-structure offshoredevelopment operated by Shell Iran,commissioned a technical qualification for thepurchase of conductor connectors. This was toaccount for fatigue loading induced byconductor driving and in-service loading.

This work enabled cost savings of around $1.5 million to be made. In addition, the CoEdeveloped several low cost options fortemporary support configurations of pre-drilledconductors to enable early production of theSoroosh and Nowrooz fields. Detailed dynamicanalyses were done within a tight time scale toassess the technical feasibility of the mostattractive options.


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SHELL NAMIBIA – UNDERWATERINTERVENTION IN KUDU

Kudu is a gas development in 180 metres ofwater, approximately 140 kilometres off thecoast of Namibia. The area has little existinginfrastructure and limited local supportfacilities. The water depth is right on the limitof routine manned diving while waveconditions are similar to marginal CentralNorth Sea operations. The developmentrequired an Underwater Interventionphilosophy to be created that took account ofits specific conditions. Expro was approachedon the basis of its underwater servicesreputation and experience and commissioned todevelop an appropriate intervention strategy.

Shell Expro had undertaken many suchassignments in the North Sea sector and forother Shell operations in similar areas, such asMalampaya and Bonga. The basic theme was todesign out intervention as far as possible, butwith recognition of the practical limitations;therefore careful preparation and considerationwas given to future planned and unplannedintervention. The customer also requested thatthe work include detailed assessment of thedemands of initial installation and constructionof a largescale offshore development in a remotelocation.

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UNDERWATER ACTIVITYSERVICES

Acting as a Centre of Excellence for UnderwaterActivity Services (UAS), Shell Expro inconjunction with Shell Deepwater Services offersexpertise and advice on underwater engineeringand operations support to the EP and Groupglobal business. The UAS CoE ensures on behalfof its customers in Shell International Explorationand Production / Shell International Oil Products / Renewables that current operations aresafe whilst also ensuring that future underwaterassets (in any water depth) will be reliable, easy tomaintain, decommission and remove in the future.

The primary aim is to provide cost effectiveunderwater advice and operational support whererequired to each development at every field phase.operating units can benefit from continuouslyrecycled, specialist underwater field workexperience in managing work efficiently within theparameters of best practice in health, safety andprotection of the environment. Based within ShellExpro the team delivered added value of $57 million to Expro in 1999 and estimated $6 million added value to the Group.


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Drawing on accumulated experience andknowledge built up over many years, the CoEprepared a report addressing full lifecycleunderwater intervention requirements in thecontext of Shell’s challenging infrastructureconditions in offshore Namibia. The report isavailable from Shell Expro. Business value wascalculated at greater than $1.6 million withquantum lifecycle returns and benefits.

"Shell Expro was able to provide timely cost effective advice which proved to be of

particular benefit during the development of various front-end philosophy documents

and our construction contract strategy. The study was also used extensively during the

compilation of the Asset Reference Plan. Early contact with Shell Expro has also

identified a number of components (e.g. diverless tie-ins) which will allow the

project to standardise on field proven equipment and hence avoid unnecessary design

activities in the future."

Gregor Henderson, Project Engineer, Shell Namibia"This was an excellent opportunity to use a wide range of Shell Expro expertise and

advice in underwater activities to directly and substantially reduce potential

underwater Capex and Opex for Kudu. We were able to help remove the need for services,

identify potential health and safety threats as well as prepare Shell Namibia for the

unexpected."

Mike Kettle, Shell Expro, UK.

Henderson, Gregor

Shell Namibia - Underwater Intervention in Kudu - Message

EPT-HO

Shell Namibia - Underwater Intervention in Kudu


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SHELL HAZARD AND RISK EXCHANGE (SHARE)

The SHARE team has provided consultancy andsolutions provision to many Hazard and Riskmanagement issues in operating units and NewVenture Operations over the past two years. Thestrength of having experienced staff withcomplementary skills in Shell Exploration andProduction Technology Applications and Research,Shell Expro and Shell Global Solutions has meantthat advice and services can be provided promptlyand efficiently across a wide range of HSE matters,particularly in the Project HSE Hazard and RiskManagement area.

The team has a core of multi-discipline technicalstaff - four in SIEP, five in Expro and 20 inThornton - plus the wider resources of theirrespective organisations and many approvedspecialist contractors. Its objective is to ensureconsistent and effective application of RiskManagement techniques for hazards associatedwith EP facilities and activities. By maintaining aconsistent high quality assessment, they assist inreducing risks to a tolerable level for the minimumcost.

In most large project environments, knowledge is disclosed

over time scales measured in years not weeks. Story telling

has proved a powerful knowledge disclosure technique in

this respect .... *


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ABU DHABI HSE CONSULTANCY

Shell Gas Abu Dhabi has jointly completedwith Abu Dhabi National Oil Company thefirst phase of a study on Sour GasDevelopments. This is planned to produce some800 MMscfd of sour gas (33% H2S, 10%CO2), treat it and then use the sour or acid gasfor enhanced recovery. In this HSE criticalactivity they needed a consistent and highquality of HSE project input throughout the 10 month study.

The SHARE Team provided a team leader andfocal point from Shell Exploration andProduction Technology Applications andResearch, who also led the HAZID study andmanaged the Environmental baseline study.SHARE also provided an HSE Plan for theproject, with a detailed approach fromfeasibility study to the abandonment phase andco-ordinated this work for the study duration.

Specialist resources were supplied from otherteam partners, including dispersion modellingand quantified risk assessment from ShellGlobal Solutions, development of a plant layoutand Layout Risk Assessment from a ShellExploration and Production TechnologyApplications and Research consultant and teamleadership and HSE risk management advice fora review of drilling activities.

SHELL CANADA FIRE ENGINEERINGHAZARD AND RISK ASSESSMENT

The Sable Island project in Shell Canadacontacted Exploration and ProductionTechnology in Rijswijk to seek the support of afire engineering specialist to participate in aproject review and provide specialist designadvice. The SHARE team was able to deploy itsmembers from Shell Expro for specialist inputin support of Shell Canada’s hazard and riskmanagement assessment.


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"Managing knowledge assets…. in a fast-moving information economy

is the cognitive equivalent of white-water rafting, of going with the

flow and trying not to capsize. It requires alertness, flexibility and a

light and buoyant craft. It will not do to shoot rapids in a paddle-

steamer" (Boisot 1998). White water rafting requires trust, common

understanding and common stories that bond the community of rafters.

To achieve this we will need to rediscover the story telling skills and

consequent resilience of our Hunter-Gatherer Ancestors. *


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NEDERLANDSE AARDOLIEMAATSCHAPPIJ AND SHELLINTERNATIONALE PETROLEUMMAATSCHAPPIJ

In 1991 Shell Internationale PetroleumMaatschappij requested Nederlandse AardolieMaatschappij to perform a subsidence study forShell Petroleum Development Company’s EAfield in Nigeria. The stacked unconsolidatedreservoirs could present an engineering problemfor the platform design. The study supportedthem in the decision making.

SUBSIDENCE & COMPACTION

Hydrocarbon production may lead to surfacesubsidence due to reservoir compaction, a simpleand unavoidable fact of life in Shell’s explorationand production sector. Therefore the consequentimpacts of an exploitation region need to be fullyunderstood in terms of the long-term economicviability, existing technical infrastructure (e.g. wellintegrity) and the environment.

Shell’s strong historical connection with theNetherlands provides a unique perspective on thetechnically complex issues of subsidence andcompaction through hydrocarbon extraction. Thathistory began with a moving coastline alreadybrokering an uneasy balance between naturallysubsiding land and varying sea levels overthousands of years. It continues to this day withina shifting arena of technological development,economics, politics and public opinion, for whichour corporate ‘learning curve’ has been steep andchallenging.

Nederlandse Aardolie Maatschappij (NAM) inconjunction with Shell Exploration andProduction Technology Applications and Research(SEPTAR) offers a Centre of Excellence forresearch, analysis and measurement in compactionand subsidence, seismicity, subsidence engineeringand environmental advice.


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D I S T R I B U T E D T E A M S

Distributed teamwork is the ability of business teams to work productively together, accessingand working on information simultaneously, regardless of their physical location and timezone.Rapid advancement in desktop computing, communications technology and ‘groupware’ PCproducts, coupled with decreasing prices and a deeper understanding of organisational workflow,now make possible a level of remote collaboration unimaginable only a few years ago.

The on line, face-to-face sharing of information and knowledge supported by distributed teamingtechnologies, enables a rich bandwidth of communication that clearly surpasses the traditionaltelephone call, email or internet chat-room. Shell has been taking advantage of such developmentsby aligning its technology infrastructure, management processes and people skills with operationalbusiness suitable for the application of global virtual teams.

The Shell EP Organisational Performance and Learning team offers a complete methodology fordistributed team implementation with complete support, facilitation and coaching programmes toget global staff teams up-and-running.

Here are some of the company’s early success stories in making global distributed teams happen….


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WORK IN ABU DHABI FORSOGAT II

In 2000, consultants from Shell InternationalExploration and Production in Rijswijk and theWoodside Opportunity Framing team inAustralia delivered a team and project kick-offworkshop to the Abu Dhabi Sour Gas Team(SOGAT). This was the first workshop inwhich capabilities and experience in new waysof working and Shell’s Capital to Value (C2V)initiative including opportunity framing werecombined into one.

Objectives of the workshop were building,organising and energising the team, as well asdelivering a project roadmap, comprising keyelements of the project plan, such as keydecisions and milestones, drivers and barriersand stakeholder analysis. Participants perceivedthe workshop, and in particular thecombination of new ways of working andopportunity framing elements, as very valuable.

The Sour Gas Team in Abu Dhabi, a jointeffort of Shell and ADNOC, aims atformulating a development plan for Arab sourgas production and selecting a reservoir forsour/acid gas injection. This project should helpfill the forecasted gap between gas productionand demand in Abu Dhabi in the near future.

OPAL hopes to have the opportunity to co-operate on similar team and project kick-offworkshops, when requests for these are received.

� Joost ZegwaardShell Int. E&P, Rijswijk


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Our experience with the Rabi V

irtual Team has produced learn

ing points of value to

any organisation interested in

utilising this new way of vir

tual working:

- The approach needs to be adapt

ed to the nature of the task,

the culture of the

parties and the skills of the

virtual team members.

- Select members carefully giv

ing attention to 'chemistry'.

Teamworking skills are as

important as technical compete

nce and once the team becomes

productive, resist

changes since new member induc

tion takes a lot of time.

- Allow trust to build among m

embers, through quality time a

nd informal

events/activities.

- Objectives and targets have

to be shared by all team membe

rs with clear authorities

and boundaries between locatio

ns established.

- Define 'fit-for-purpose' wor

k plans as early as possible,

preferably in the first

'workshop' event and allow for

some flexibility and the sett

ing of realistic short

term targets. Avoid reporting

for its own sake.

- Team members must be allowed

sufficient time to their virt

ual teamwork.

- Face-to-face meetings remain

a crucial part, while videoco

nferencing can be of

only limited use and internet

websites can only really help

in the transfer of

large data files.

Virtual teamworking proved to

be demanding with communicatio

n and organisational

issues coming on top of normal

project challenges. Neverthel

ess these disadvantages

were more than outweighed by t

he benefits of accessing globa

l know-how. We were

convinced that virtual teamwor

k can give a boost to technica

lly challenging projects.

The approach adopted however n

eeds to be carefully tailored

to the nature of the

problem at hand. Our experienc

es and suggestions for improve

ment have been taken up

by the OPAL team and will be u

sed in future consultancy, gui

delines and best

practice material.

Rob Kleibergen, Shell Gabon

Kleibergen, Rob

Rabi Virtual Team: learning points of value - Message

OPAL Team

Rabi Virtual Team: learning points of value

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THE RABI VIRTUAL TEAM: MOBILISINGGLOBAL KNOWLEDGE TO SOLVELOCAL PROBLEMS

Rabi is the largest oil field in Gabon with aSTOIIP of 1750 MMstb and an estimatedultimate recovery of some 850 MMstb. Comingon-stream in 1989, the maturing field with itswater and gas breakthroughs, has been graduallylimited in its oil production, coming off plateauin 1998. In mid 1997 a performance, develop-ment and operational review from a multi-disciplinary perspective was undertaken throughthe application of a Virtual Project Teamconcept, linking Gamba in the Gabon and ShellInternational Exploration and Production inRijswijk: the ambitious target – Raise the RabiNet Present Value by increasing the ultimaterecovery of the field by 10% or 80 MMstb.

The Rabi Virtual Team saw its primary rolesfrom the outset as:

• Providing contacts, expertise and informationto identify and apply Shell Group andindustry-wide best practices to Rabi – itsmotto was “mobilise global knowledge tosolve local problems”

• Acting as a resource broker, making specialistresources available to Shell Gabon to work onfocused projects which do not usually justifyan increase in local establishment

• Fundamentally challenging the developmentrationale and technical solutions to identifyand work out possible breakthroughopportunities

• Efficiently implementing the available state-of-the-art technologies

Eight virtual teams were created with coremembers from Gamba and Rijswijk and eachproject undertaken was assigned a coordinatorresponsible for progress tracking and reporting.All teams sought and found outside expertiseduring certain project phases. For example,visits were paid to Norske Shell to compareRabi with Troll and Petroleum DevelopmentOman (Through Tubular Drilling) whileindustry experts from Arco, Prudhoe Bay wereconsulted to implement best practice.

Team members had weekly local progressmeetings in both locations, followed by atelephone or videoconferencing meeting withmost members present.

Projects undertaken by the Rabi Virtual Teamin practice included: • Production Scenarios and Facilities de-

Bottlenecking • Well Review and Remedial Action• Novel Horizontal well completions (‘Tilted

Bucket’)• Reduction of Well Costs

• Well Re-surveying• Location of remaining oil by cross-well

seismic• Production System Optimisation Model • Wax Inhibition

By Q4 1998 the Rabi Virtual Team reached itsend with most of the expected benefits beingachieved. A post-implementation review wascarried out by the Organisational Performanceand Learning team. In total it is estimated thatthe Virtual Team approach directly contributedto an increase in recovery of 17 MMstb,corresponding to a net present value of $30 million at $14 a barrel. Scope for another22 MMstb additional recovery was identified.

In terms of non-tangible benefits, teammembers enhanced their skills and personalnetwork while the Rabi Virtual Team helpedchange the mindset within Shell Gabon,resulting in increased openness to the outsideworld. Many new contacts have beenestablished within the Group as well as withservice companies, which will continue tofacilitate information exchange in the areas ofhorizontal well technology and thin oil rimdevelopments.


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MSTHE ATHEL GLOBAL VIRTUAL TEAM –PETROLEUM DEVELOPMENTOMAN/SHELL INTERNATIONALEXPLORATION AND PRODUCTIONKNOWLEDGE GLOBALISATION IN THEEP SECTOR

Discovered in 1989, the intra-salt Athelsilicilyte is a unique source and reservoir rockfound in the South Oman Salt Basin, whereslabs of Athel silicilyte are encased in salt at fourto five kilometres depth. The play is charac-terised by light sour oil, hard over-pressures anda high-porosity, low-permeability micro-crystalline quartz matrix rich in organic matter.

Production tests illustrated both the challengesand the opportunities to extract hydrocarbonsfrom the unique reservoir. Seven years after theinitial discovery 15 million cubic metres hadbeen booked in Al Noor out of an expectationSTOIIP of 210 million cubic metres while asecond discovery in Al Shomou strengthenedthe play’s significance in the explorationportfolio. While a development appearedattractive, Al Noor failed to rank in PetroleumDevelopment Oman’s development portfolioand it was felt that a technology breakthroughwas needed to transform explorationexpectation into production reality.

A ‘difficult’ field requires focus and a genuinedesire to make it work. Treating such assets as aperipheral activity using conventionalapproaches may result in early screening outand missed opportunities.

Indeed early workshops failed to engageknowledge of the environment fully and itbecame apparent that a dedicated Athel team inPetroleum Development Oman was needed.Athel was moved from an exploration to adevelopment unit and while that provided thenecessary focus to mature a field developmentplan, it created the false impression that Athelwas being addressed efficiently and about to be resolved.

In the early stages there were administrativecomplexities between the involved departments,creating unecessary tension and hamperingtechnical integration and consistency. A kind ofemail-fuelled electronic warfare developed and agrowing knowledge gap between PetroleumDevelopment Oman and Shell InternationalExploration and Production, linked to theirvarying capacities to commit dedicated projecttime, also became apparent. It proved difficultfor any one to maintain overview and ensurecohesion.


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• Organic matter is characterised, with directimplications on reservoirs characterisationand exploration portfolio management

• A comprehensive microstructure sheds lighton basic rock properties and provides thefoundation for a reservoir model

• Improved definition on seismic opens up newlateral prediction possibilities in the intra-saltAthel slabs

• The biggest fracs in the Middle East placed intwo Athel wells remove the last hurdles toreserves booking and to a commitmenttowards the Phase 1 Al Noor development

• Water- and gas-flooding studies led the wayto growth opportunities

• The unit technical cost has decreased from$10 stb to less than $7

This de facto emergence of a virtual team, withall its tensions and challenges, was given realimpetus with a Q1 1998 workshop. Weproceeded to build the technology plan aroundsix technology clusters – Characterise the Rock,Find More Athel, Optimise Product Flow,Model the Reservoir, Enhance Oil Recovery,Reduce Well Cost per Barrel – with each jointlyrun by focal points in both PetroleumDevelopment Oman and Shell InternationalExploration and Production. They wereresponsible for the planning, execution andimplementation of projects in their area.

An Athel focal point also doubled up asTechnology Co-ordinator and focused on theoverall process. This re-organisation created astrong sense of ownership and responsibilitywith the entire Petroleum Development Omanteam committed to ‘making it work’.

The main technical and financial results to dateare as follows:• Coring advice: state-of-the-art procedures and

new developments led to successful corerecovery

• Customised equipment allows micro-permeability measurement under stress andproves the limited permeability degradationduring depletion


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MSDISTRIBUTED TEAMING IN RESERVOIRENGINEERING – IMPROVINGCUSTOMER SERVICE WITHCOLLABORATIVE SOFTWARE

A number of operating unit reservoir engineersthroughout the world used to send their largereservoir simulation data sets to ReservoirEngineering Support through a courier tapeservice, typically taking up to one week. Workon the data was completed and the datareturned to the customer. Any further iterationsof the process could easily result in a delay ofup to three weeks.

By utilising on-screen data-sharing MicrosoftNetMeeting applications such as Xvision(FrontEnd, MoReS, GFPT) a number of PCapplications such as PANSystem, Word,Powerpoint and Excel can be viewed andmanipulated by multiple users in variouslocations around the globe at the same time.Implementation of this new collaborativesoftware environment took about one and a halfdays of meetings to determine the optimumenvironment and install it on our hardware.

The resulting saving in elapsed time – hoursinstead of weeks – has been key, especially if thesimulation study is on the critical planningpath. Any delay could impact on the projectschedule and ultimately the production start-up.

Our learnings:• Use the telephone ‘hands-free’ to reduce

bandwidth use and allow clearer voicecommunications

• Make sure local Information Technology staffinstall the tool and check functionality

• Coach other team members on the tools’ useand benefits


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URDANETA WEST DISTRIBUTED TEAM– FROM ZERO TO 100 IN 90 DAYS

After the initial appraisal phase of UrdanetaWest which resulted in boosting productionfrom 5,000 barrels per day to some 40,000,Shell Venezuela recognised it had to upgrade thepotential to 60-70,000 barrels if it was torecover its investment. Shell InternationalExploration and Production was contacted tohelp enable a technical breakthrough inmarginal field development, lacking the localresources to undertake a high technology studyon its own. The problem of tough carbonatedevelopment and heavy crude lifting requiredinnovative techniques which could only begained by merging expertise across boundaries,regardless of geographical distance and timedifferences.

A distributed team was established betweenSIEP and Venezuela with a ninety day remit to‘breakthrough’. The Organisational Performanceand Learning team was engaged to implementappropriate methodologies and communicationstools. The process involved:

• Full implementation of the OPAL team’sPeople, Process and Technologymethodologies and workshops

• Team selection from Maracaibo, Caracas andRijswijk with additional interfaces to ShellCanada, Petroleum Development Oman andNederlandse Aardolie Maatschappij

• Capturing processes, roles and responsibilitiesin a ‘team handbook’

• Alta Vista Forum, email and conferencingprotocols and facilities establishment

• Microsoft NetMeeting and Virtual NetworkComputing implemented and trainingprovided

The benefits for Shell Venezuela flowed throughquickly, including:

• A breakthrough technical solution was foundand an implementation plan developed in ahighly compressed timeframe, the keyelements being achieved in 30 days

• Knowledge was transferred rapidly with fullremote data collaboration throughout

• Cost savings estimated to have covered directOPAL costs two to four times over

• Shell Venezuela now has core new ways ofworking methodologies for the future


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Acknowledgements

The Shell International Exploration andProduction Organisational Performance andLearning team based in Rijswijk, theNetherlands would also like to gratefullyacknowledge the help of its Shell colleaguesaround the world in sharing their stories.

STORIES FROM THE EDGE

References

* The New Collins Concise EnglishDictionary

* American Heritage Dictionary of the EnglishLanguage (Third Edition)

* The Concise Oxford Dictionary

Published November 2001. All rights reserved.

© Shell International Exploration andProduction B.V.Technology Exploration and ProductionVolmerlaan 8, 2288 GD Rijswijk,The Netherlands

Additional copies can be obtained via:Telephone +31 (0)70 311 2627

SupplyAny supply of the technology is subject toagreement on a contract and compliance withall applicable export control regulations.

Stories from the Edge

Not subject to EAR - No disclosure of technology

EP 2001-5313 / P03168

Copyright SIEP B.V. and SIEP Inc., November 2001The copyright of this document is vested in Shell International Exploration and Production BV, The Hague, TheNetherlands, and Shell International Exploration and Production Inc. Houston, Texas, USA. All rights reserved. Neitherthe whole or any part of this document may be reproduced, stored in any retrieval system or transmitted in any formor by any means (electronic, mechanical, reprographic, recording or otherwise) without the prior consent of thecopyright owner. This document contains no detailed descriptions of technologies originating from the USA.


Shell International Exploration and Production B.V.Volmerlaan 8, Postbus 60

2280 AB Rijswijk, The Netherlands

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