Case Study

SAGD Well Pad Facilities Project Lead Time Reduction

Problem

The extraction of heavy oil occurs at surface facilities called well pads, which typically contain multiple pairs of steam injection and heavy oil production wells. SAGD well pads have a limited production life with declining production over time, creating the need for new well pads to be developed and built on a continual basis to maintain and maximize levels of production. 

Our client, a major Western Canadian heavy oil producer, was battling the rising costs of delivering facilities projects associated with SAGD well pads.  Combined with the 50% decline in the price of oil,  our client was looking to reduce costs in order to remain competitive.  The Kaizen Institute was engaged to identify waste and remove non-value added work when delivering well pad facilities related projects.

Root causes

• Redundant handoffs, rework and Silo management of deliverables.
• Supply chain interdependencies were unclear which resulted in pushing work onto other departments.
• Intervals for managing deliverables were not frequent; problems were only identified when budgets and schedules had already been impacted
• Project schedules contained excessive float and too much contingency.

Solution approach

The main goal of identifying waste and the removal of non-value-added work was to reduce the lead time required to deliver the well pad projects.  The Kaizen Institute facilitated KAIZEN™ events with the individual functional project teams to identify wasteful activities and determine solutions to minimize these activities.  Suggestions for improvement were then rated with respect to impact on lead time reduction and ease of implementation.  Improvements were implemented by our client, with assistance and guidance from the Kaizen Institute.

Benefits

• Functional project teams felt empowered and exhibited boosted morale by witnessing the implementation of their suggestions; they were a major part of the solution to improve the business.
• Over 200 ideas were put forward by the functional teams; activities resulting in over 25% reduction in lead time were identified. 
• A single day saved in project execution was calculated to be worth approximately $50K. This project will save over $7.5M per well pad on completion.
• The team has adopted a new way of executing projects; development of a templated well pad design, use of a project “obeya room” and the development of more robust project management skills are all planned to maintain the improvements made.