Application of Toyota's Principles and Lean Processes to Reservoir Management: More Tools To Overload the Toolbox or a Step Change in Our Business?
Authors: Allan Malcolm E. , Gold David K. , Reese Dyke W. 
Published: June 2014

Aera Energy LLC was formed in 1997 to be a low-cost operator and producer in California. However, the low oil prices from 1998 to 1999 forced an examination of all operations in the office and in the field. Cutting costs, improving timekeeping, or reducing the scale of operations would not be sufficient without a step-change gain in efficiency. This step-change gain came from the use of principles and concepts developed in the automobile and construction industries. Toyota's twin pillars of just-in-time production and the ability of anyone to stop production rather than pass on defects, coupled with level-loading of work processes and reducing waste, were introduced. Toyota's principles were enhanced by the addition of “Last Planner” concepts developed for the construction industry. When both were implemented for reservoir-characterization and reservoir-development work, significant process improvements resulted. The resulting improvements are now being used throughout the company to improve quality by removing waste and reducing errors, to measure processes, and to improve cycle times.

The unconventional diatomite reservoirs and oil-sand reservoirs at the giant Belridge field produce 65,000 BOPD from 5,300 producing wells and 2,100 injection wells. The many drilling, completion, and workover rigs have a constant appetite for new wells. To maintain production and cost targets, everything in the office has to run reliably and efficiently at all times, as well as support field operations.

Different aspects of Toyota's principles and “Lean Manufacturing” are illustrated by use of project work for reservoir characterization, day-to-day reservoir surveillance, and the development work needed to plan and schedule new wells. The processes and projects typically have multiple customers and suppliers—internal and external. All involved, including knowledge workers (those who think for a living), need to work as a single system with a manufacturing mentality and to strive for continuous improvement. Customers of the knowledge work supplied by the geoscientists and reservoir engineers have benefited greatly from the introduction of the lean processes and the resulting smoother and more-effective workflows. In 2011, the Development Team's lean activities were recognized by the Association for Manufacturing Excellence, and the team received the Manufacturing Excellence Award that recognizes “continuous improvement, best practices, creativity, and innovation.”

The oil industry has a reputation of being slow to adopt new technologies and techniques. However, a Lean Manufacturing mentality introduces new ideas and ways of performing knowledge work that may change this paradigm while contributing to the bottom line with reduced cycle time and improved quality. A significant additional benefit is that geoscience and engineering professionals can spend more time doing creative work and less time fixing problems or reacting to system upsets—as they simultaneously reduce waste. However, to realize all these benefits and the step changes they provide, a thorough understanding of Toyota's principles and a Lean Manufacturing mentality are essential.