Print this pageAAPG GEO 2010 Middle East
Geoscience Conference & Exhibition
Innovative Geoscience Solutions – Meeting Hydrocarbon Demand in Changing Times
March 7-10, 2010 – Manama, Bahrain
Risk and Portfolio Management for Exploration and Development with SAP-PPM
(1) IBU Oil&Gas, SAP AG, Walldorf, Germany.
(2) SAP Consulting, SAP Deutschland, Walldorf, Germany.
Handling exploration and production portfolios in the upstream oil&gas industry involves assessing risk or chance of success, overall timing, availability of resources or equipment and balancing large investments with possible revenues. This analysis in a multidimensional space is most oftenly a task carried out by entire departments or groups of individuals in oil&gas companies. Corporate standards hereby usually form a framework to ensure assessment and ranking of projects with constant quality and objectiveness. In most cases, the ranking of these exploration and development projects and subsequent decisions drive a company’s strategy over years. Hence a portfolio process and toolset that both provide visibility and transparency across all influencing factors and input parameters are required.
A portfolio decision-making process was developed following years of best practice research within the largest oil&gas companies. The underlying process is based on a common assessment of the chance of geological, drilling/completion and economical success. The objectivity of the overall process is assured by questionnaires enabled for true company-wide collaboration e.g. in peer-review teams as well as by rigid decision milestones. In portfolio management, this process is being tracked, overall quality assured, results analysed and lateron published to the upper management.
However, those - nevertheless important - non-financial and financial KPIs most oftenly blur the sight on the proper risk of projects. And in many cases the correct ranking in which projects should be executed is not determined. A proper risk and portfolio management process takes into consideration the skill level and the availability of appropriate resources and or equipment. This fact is overlooked in many exploration and development projects where timely project execution is essential. In addition to that, many companies handle portfolio management in quite different ways and qualities on a global scale. Risk is not assessed in the same manner and how it should have been in the different subsidiaries of leading E&P companies.
In order to avoid such a biased ranking of E&P projects, a centralised corporate risk and portfolio solution is required. This will ultimately result in greater success and increased reserves as well as better project delivery on time.