Improving Quality Control in Alliances and Partnering
Authors: King George E. 
Published: December 2007

E&P Exchange

King, George E., SPE, Amoco Production Co.

As producing companies opt to obtain products and services from single-source suppliers, the application of quality control (QC) will change. Even in these relation ships, the definition of QC remains the same: any and all actions taken to ensure that the product or service supplied is the one that was specified. As simple as this definition appears, it leaves open several major areas of dispute. At the root of the disagreement are two areas of contention: the setting and application of effective standards and the conceptual difference between QC and continuous improvement (CI) of the process. Three examples illustrate my point, each with different consequences to both the service company and the operator.

Some years ago, a service company certified a perforating charge to penetrate approximately 20 in. into a concrete target. The oil company used these charges for sometime but noticed very poor well performance. After a field foreman witnessed a gun-loading operation, he had the service supplier put a few charges back in the magazine for testing. When tested, the charges were found to penetrate only 3 in. into concrete. The problem was quickly traced to a severe manufacturing defect. As a result of this test, the operator and the supplier reached an understanding that resulted in the availability of much better perforating charges and a much higher quality in the delivered product. The well performance problem disappeared. This was only a beginning. Recognizing that the perforating charge was only a single component of a multicomponent process, the operator, service supplier, and charge supplier reached a performance agreement on gun tube wear, charges, and verification that continued to be used satisfactorily for several years.

The second example is in acidizing. In the 1970's, 1-qt samples of 20% HCl ordered for routine treatments in a large west Texas field from seven service companies were taken at the delivery point, the wellhead. Thirty samples were analyzed by acid titration and shown to contain acid strengths ranging from 0% (salt-weighted water with enough acid to affect litmus paper) to slightly more than 28%. The unexplained problems in this field suddenly came into sharper focus. Corrosion problems had jumped because inhibitors were less effective in the stronger HCl. The different acid strength also explained some of the poor well response. Changes in mixing (and discontinuing use of one small service company) resolved the immediate problem, although no continuous solution was sought.

The third example highlights an adversarial relationship. An alliance contractor had a specification for a resin-coated proppant with &lt;1% fines but supplied a product with &gt;4% resin dust. When challenged, the supplier was adamant that the resin dust did not decrease fracture-pack conductivity. Operator laboratory tests showed a significant drop in conductivity.

Too often, QC has been a game of cat and mouse as a supplier sought to provide goods or service at the minimum cost and the operating company, while requiring the minimum cost, also required adherence to a standard. In the worst cases, like the fracture-proppant case, the standoff usually resulted in high costs on both sides and in poor well performance. Producing companies often found substandard workmanship, materials, or services followed by excuses or quick fixes. Some producers developed judging criteria that resembled an endless series of "jump-through-the-hoop" exercises.

In partnering arrangements, how does QC change? The differences in QC in prepartnering to after-partnering depend largely on the agreements between the service user and the service provider. This depends heavily on the honesty, attitude, and general knowledge of both companies. As illustrated in the perforating-charge episode, the result should be a focus on how services affect well performance and, when out of specification, how they can be turned around to mutually benefit both companies.

QC should begin with agreement on effective standards of performance. In acidizing, for example, standards exist for the maximum contaminants in HCl. Why? Simple laboratory core tests have answered that question. Core tests using acids with increasing contaminant levels identified the limits where damage occurred as the acid was flowed through the core. When the standards are clearly defined in this manner, both companies gain an understanding of the consequences of a product or service that is below specification. Setting standards is rarely simple. When ordering a perforating job, for example, service users should remember that what they are really ordering is a hole in the casing at the right depth and at a certain penetration and flow ability. The service suppliers often point to in-house testing during manufacturing that promises a level of performance. This test- derived performance may or may not be functional, depending on whether it delivers the hole that the operator really needs. Tests and conditions that closely model well behavior are mandatory, and field testing of services may be required. Open minds are the best starting place.

Once standards are set, who should apply and supervise them? Do you let the fox guard the hen house? Trust is difficult to attain and easily destroyed. Many have sought to apply the quality-assurance process common now in manufacturing to producing wells. These attempts fall short for several reasons. In manufacturing, materials can be tightly controlled and the result can be quality checked by measurements or performance standards. With a well, the best standard is the well performance; the problem, however, is how you rate the performance. Given the formation differences that exist in every well, performance standards are extremely difficult to set with any accuracy. Enough margin of error (doubt about the accuracy of the producing performance prediction) is always present to make a result-based QC system untenable. The alternative is to hold the component pieces of the operation, like the acid strength checks, to realistic standards.

A prudent operator will always maintain a minimum level of QC regardless of the relationship with the supplier. A conscientious supplier will always maintain enough visible QC and statistical reporting to convince the user of the product quality in the event of a problem. The frequency and reporting requirements of supplier checks should be part of the contract. Operator checks should be designed to ensure steady operation of a quality process. Cooperation and open dialogue with the goal of increasing quality must be possible.

After the contract is signed, how can changes be handled? As technology or needs in an area change, the process and the QC should be open to change. Problems usually arise when the new QC checks or requirements result in a work-added condition. Flexibility must be maintained in all stages. When increasing knowledge or awareness points out a problem, change must be possible. When poor well performance in an area cannot be explained, a joint team of the operator and the service provided should be convened to determine the cause and make the necessary changes. This is CI.

QC and CI are not opposites. In a well-thought-out process, CI naturally follows QC. QC starts with ensuring that the process is the best it can be. CI looks for ways to improve the process through changes in the way we look at design or application. It is CI that is really natural and essential to a successful process. In looking back on the most successful programs, we can see that CI has always been present; we just didn't have a word for it. The challenge is to keep CI a part of a contract program.

QC costs you less than poor well performance. A good QC system may cost you money. The lack of one may break you. QC, as many companies have found, is essential. It is not something we can ignore or delegate blindly without accountability to other organizations.

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