IndustryVoice™: Integrated Operations Fuel Energen’s Success

Project Background

Based in Birmingham, Alabama, Energen is a low-cost producer of oil, natural gas, and natural gas liquids from the Permian Basin of West Texas and the San Juan Basin of northwestern New Mexico and southwestern Colorado. If everything that the exploration and production leader is doing today could be distilled into one word, that word would be efficient: Once-disconnected data and applications are now integrated, employees across the enterprise are making smarter decisions backed by real-time data, and the production teams are reducing production deferments and holding down costs in the field. But to fully appreciate what Energen is doing and how they’re doing it, one needs to rewind a few years and consider the challenges that they overcame en route to turning their vision of a fully integrated business into a reality.

The Challenge

First, lots of siloed systems and paper processes used to be in place at Energen, making it hard for employees to fully grasp what the data was telling them and what steps needed to be taken since everything had to be viewed in isolation. Second, the production system previously used couldn’t handle Energen’s complex monthly allocations, and viewing daily production information to see how individual wells were performing wasn’t easy, either. Lastly, because all of Energen’s AFE (authorization for expenditure) work used to be done on paper, knowing where AFEs were in the process and how drilling costs were stacking up against what was budgeted was next to impossible. “So we had to make a choice,” said Harry Rush, Energen’s Manager of Information Systems. A choice between maintaining the status quo or evolving into an enterprise defined by operational excellence.

The Solution

Rush and his team chose the latter, turning to P2 Energy Solutions to help them take their operations to a new level. Today at Energen, data siloes are nowhere to be found. Instead, all the data from the company’s various sources is brought together in a single location, allowing for better and faster decision-making. “We’re a more efficient operation now because we have one source of the truth,” Rush said.

On the production front, P2’s easy-to-use field data capture solution has helped Energen’s pumpers become more efficient and improve the accuracy of the data coming out of the field, which, in turn, has helped improve all of the company’s “downstream” processes. After all, production data is the engine that makes everything else go – revenue, royalty, marketing, engineering, and forecasting decisions and tasks all rely on accurate and timely production numbers. “Good data brings good decisions,” Rush said. Now everyone at Energen, from the field to the back office, has the data they need to make timely decisions and be confident in them. A P2 analytics and graphing tool is used to analyze the performance of individual wells and quickly determine which ones need to be attended to first. The result: Downtime is being minimized and production maximized. “Operations Summary” dashboards provide a snapshot of current-day, weekly-average, month-to-date, prior-month, and year-to-date production information, enabling the executives to see at a glance whether overall production is trending up, trending down, or holding steady. The information from all of Energen’s production sources – maintenance systems, production histories, and SCADA systems – is “rolled up” together and connected to digital representations of the company’s assets, giving richer meaning to the data since all the pieces can be analyzed together.

As for AFEs, everything that used to be done on paper – creating, reviewing, and approving them – is now done electronically. AFE dashboards are used to see where AFEs are in the process, identify any holdups and who or what is causing them, and “fast track” the documents through the process if need be. The AFE start-to-finish process used to take Energen anywhere from 3-5 months. Today, they can move AFEs through the entire process in as few as 35 days. Wells/AFEs are created in one spot and interop to the company’s accounting system. “The AFE visibility that we now have is so much better,” Rush said. “It’s helping us get AFEs in and out much more quickly.” AFEs can be viewed at the corporate, area, cost pool, budget area, or well level. LOE (lease operating expenses) dashboards are used to quickly compare what was budgeted for a project and what’s being spent. Whereas Energen’s cost codes used to overlap, they’re now separated out by prep, drilling, completions, and facilities work. This level of detail allows company managers to keep a tight rein on costs and hold the field personnel accountable for their individual projects.

So the price of oil may not be what it was a few years ago and upstream oil and gas teams may have fewer resources at their disposal. But the company at 605 Richard Arrington Jr. Boulevard in Birmingham, Alabama, seems to have cracked the upstream industry’s code and is answering its call for ultra-efficient operations.

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