Open Source Content Management

First of all, let’s start by explaining what does this commercial strategy mean. Bundling is a marketing tactic that involves offering two or more goods or services as a package deal (consolidation of requirements) for a discounted price, which is negotiated and mutually agreed between Buyer and Seller.

My broad experience in the field of Purchasing and Logistics Management and Strategic Negotiations, as purchasing leader in offshore well exploratory campaigns in Africa (Tanzania, Namibia, Angola, Benin) and South America (Colombia, Peru), allows me to introduce this innovative strategy for optimizing the exploratory project costs.

In 2011, I had the opportunity to apply this strategy as part of the planning and execution of the contracting processes required to support a well exploratory campaign offshore Tanzania. During the planning phase of the project, the six (6) drilling services listed below were identified as potential targets to apply the Bundle Services Discount strategy:   

• Directional Drilling & MWD/LWD/PWD, Real Time Data Acquisition;
• Wireline Logging Services;
• Drilling and Completion Fluids and Services;
• Mud Logging Services;
• Liner and Casing Accessories; and
• Well Testing (DST) & Coiled Tubing & Nitrogen.

As part of the Invitations to Tender (ITTs) sent to the four (4) selected vendors to participate in the above-mentioned processes, the following commercial condition/strategy “Bundle Service Discounts”, was included in the ITT document package:

“BIDDER may submit the present commercial proposal with commitment for additional discounts in future BIDS related to the current project, which BIDS may result in multiple equipment/services packages awarding. The packages to be tendered for this project are:

• Directional Drilling & MWD/LWD/PWD, Real Time Data Acquisition;
• Wireline Logging Services;
• Drilling and Completion Fluids and Services;
• Mud Logging Services;
• Liner and Casing Accessories; and
• Well Testing (DST) & Coiled Tubing & Nitrogen.

To avoid future doubts and questionings, in the future BIDS the prices to be offered shall be stated without the previously proposed discount for the package so the Company (Buyer) will analyze the commercial proposals as they are and will apply the proposed discount in the previous BID at its own discretion.”

With the purpose to standardize the commercial proposals to be submitted by Bidders, the following “Matrix of Discounts for Consolidated Services” was designed and provided to Bidders. They should simulate and submit various rate discount scenarios for the provision of the requested services.

Throughout the operationalization of this original and innovative commercial strategy, Bidders had to simulate several price discount scenarios for the provision of the drilling services listed above, in response to the Request for Quotation (RFQ). The objective of this strategy was Bidders to offer as much discounts in the quoted prices as possible, based on the Bidders’ possibility to consolidate the largest quantity of services (Bundle Services) with the purpose to optimize their costs and reduce the quoted prices. In response to the RFQ, Bidders submitted their prices for the drilling services package (six services).

It is important to highlight that, as a result of the bidding process, the evaluations considered two GLOBAL price discount options, i.e., (i) price discounts in the case of the services were partially awarded to two (2) or more Bidders, with individual discounts ranging between 1% to 10% (average of 3.5%); and (ii) price discounts if FULL services package was awarded to only one Bidder, with discounts ranging between 2% to 11% (average of 5.3%).

After intensive negotiations with the best-classified Bidder, a revised proposal of discounts for the provision of the drilling services for the Tanzania exploratory project was received from such vendor. Emphasizing that, even though the revised price discounts continue ranging between 2% to 11%, as originally quoted by this Bidder for the FULL package option, the price discount for the drilling and completion fluids and services was increased, from original 6% to 8%, which improved the average price discount for the services package from 5.3% to 6.5%.

As a result of the bid processes execution, evaluation and negotiation under my responsibility, one (1) vendor was awarded with five (5) contracts for the provision of (i) Directional Drilling & MWD/LWD/PWD, Real Time Data Acquisition; (ii) Wireline Logging Services; (iii) Drilling and Completion Fluids and Services; (iv) Liner and Casing Accessories; and (v) Well Testing (DST) & Coiled Tubing & Nitrogen. This was a big professional challenge, even more considering to operate in a remote location, which supported the operations in the reliable provision of the drilling services, and contributed with the successful execution of the exploratory well drilling campaign in Tanzania. This negotiation approach was the first experience in regards to consolidate the supply of the offshore drilling services to a major operator, and represented a paradigm change with respect to the traditional scheme of individual/isolated contract negotiations with clients, resulting in financial and operational benefits to the parties, as well as the following gains to the Contractor:

• Cost reduction as per consolidation of the services provision;
• Optimization in the use of resources (personnel, materials, equipment);
• Service rates reduction due to economies of scale, based on a proportionate saving in costs gained by an increased level of production;
• Increase the Vendor’s Competitiveness in the Oil & Gas marketplace (service rates reduction).
• Reduction in the logistics activities and costs involved in mobilization and demobilization of personnel and equipment from the shore base to the drilling unit.
• Creating differentiation and greater value, enhancing the offer to the customer for a basic rate.

As a result of the aforementioned commercial strategy, 45 agreements for a total value of USD 232,000,000.00 were successfully executed; involving financial benefits of USD 6,000,000.00 because of the “Bundle Services Discounts”, obtained for the drilling service contracts (Mud Logging, Wireline Logging, Directional Drilling, Drilling Bits, Drilling Fluids, and Well Testing).

Other successful experience related with this commercial strategy was also applied in 2013 in an exploratory project in Colombia. I accurately identified seven (7) drilling services (mud logging, wireline logging, directional drilling, drilling & fishing rental tools, drilling bits, drilling fluids and well testing) representing between 10% (if Drill Stem Test was required in the well)  and 15% (if Dry Hole well) in cost with respect to the total value of the contracts portfolio required in this exploratory project, which were potentially supplied by the same group of top-quality vendors. I determined these references after analyzing the Authorization for Expenditure (AFE-Budget) of the project.  Because of the complex and productive negotiations conducted with the service companies, the seven (7) drilling services mentioned above were awarded to one Service Company involving price discounts per Bundle Services ranging between 3% and 15% (average of 7%). This effort resulted in savings for Operator of approximately USD 3,400,000.00 due to the consolidation of the provision of the drilling services in only one (1) vendor, increasing the commercial discounts when compared with the scenario to award the contracts to different providers and supported the first gas discovery in deep waters of the Colombian Caribbean Sea. 

It is important to highlight that this innovative and brilliant initiative designed and implemented in these projects can be applied in the United States with a high possibility to generate cost efficiency and profitability increase of the Oil & Gas Industry, as a result of obtaining potential rate discounts ranging between 8% and 12%. However, the above-mentioned potential discounts will be greater in the U.S. due to the existence of a large number of contractors in the Oil & Gas marketplace, which increases the competitiveness and demands from contractors an optimization in costs resulting in discounts increase, improvement of the business financial health and increase in cash flow.

A

activity attributes
atributos das atividades

activity cost estimates
estimativa de custos das atividades

activity duration estimates
Estimativa da duração da atividade Estimativa de duração das atividades

Activity duration estimates
Estimativa da duração da atividade Estimativa de duração das atividades

activity list
lista das atividades lista de atividades

activity resource requirements
Requisitos do recurso da atividade

alternative analysis
análise de alternativas

analogous estimating
estimativa análoga

assumption analysis
Análise das premissas

assumptions
premissas

B

berth
berço porto com

bid
licitação

Bottom-Up Estimating
Estimativa Bottom-Up

Brazilian Petroleum, Gas and Biofuels Institute
INSTITUTO BRASILEIRO DE PETRÓLEO, GÁS E BIOCOMBUSTÍVEIS IBP

budget
orçamento

budgeting process
processo de orçamentação

C

CCR
sala de controle central

central control room
sala de controle central

change management
Gestão de Mudanças

checklist analysis
Análise de listas de verificação

Claims administration
Administração de reivindicações

Close Procurements
Encerrar as Aquisições encerramento das aquisições

close procurements
Encerrar as Aquisições encerramento das aquisições

Close the project
Encerrar o projeto

Closed procurements
Aquisições encerrada

closure
Encerramento

Conduct procurements
realizar as aquisições executar as aquisições

constraint
restriçõe

contingent response strategies
Estratégias de respostas de contingências

Contract change control system
Sistema de controle de mudanças no contrato

contractual amendments
aditivos contratuais

contractual provisions
cláusulas contratuais

control procurement proces
processo de administração das aquisições

control procurements
administrar as aquisições

Control schedule
Controlar o cronograma

Control the Scope
Controlar o Escopo

correlation wells
poços de correlação

cost constraints
restrições de custo

Cost Management Plan
plano de gerenciamento de custos

cost-reimbursable contracts
Contratos de Custos Reembolsáveis

CPM
método do caminho crítico

Crisis management plan
Plano de gerenciamento de crise

critical chain method
método da cadeia crítica

critical path method
método do caminho crítico

D

Data gathering and representation techniques
Técnicas de coleta e apresentação de dados

decision tree
árvore de decisão

Decision Trees
Árvores de Decisão

Decomposition
Descomposição

define activities
definir as atividades

Define the Scope
Definir o Escopo

definition of risk probability and impact
Definição de probabilidades e impacto dos riscos

Deliverables
Entregas

Develop the project management plan
Desenvolver o plano de gerenciamento do projeto

diagramming techniques
Técnica de diagramas

Direct and manage project execution
Orientar e gerenciar a execução do projeto

drilling rig
sonda sonda de perfuração

drillship
navio sonda navio de perfuraçã

E

early finish date
data término mais cedo

early start date
data de início mais cedo

EHS
Saúde, Segurança e Meio Ambiente SSMA

Emergency and Accident Communications Plan
Plano de comunicação de situações de emergência e acidentes

Emergency Response Plan
Plano de Resposta a Emergência

EMV
análise do valor monetário

enterprise environmental factors
Fatores ambientais da empresa

ERP
Plano de Resposta a Emergência

Estimate activity resources
estimar os recursos da atividade

estimate activity resources
estimar os recursos da atividade

expert judgment
opinião especializada

exploration well
POÇO EXPLORATÓRIO poço exploratório

Exploration Well
POÇO EXPLORATÓRIO poço exploratório

Exploratory Drilling Project
Projeto de Perfuração Exploratória

Exploratory Project Logistic Plan
Plano Logístico do Projeto Exploratório

F

finish-to-start
término – início

Fixed price contracts
Contratos de Preço Fixo

float
folga

forward and backwards pass
caminhos de ida e de volta

free float
folga livre

G

GSR
Razão de Solubilidade de Gás Inicial RGO

H

HAZard Operability Studies
Estudos de riscos operacionais

HAZOP
Estudos de riscos operacionais

Health, Safety and Environment
Saúde, Segurança e Meio Ambiente SSMA

HSE
Saúde, Segurança e Meio Ambiente SSMA

I

identify risks
Identificar os riscos Identificação dos Riscos

Identify Risks
Identificar os riscos Identificação dos Riscos

Identify risks
Identificar os riscos Identificação dos Riscos

Independent estimates
Estimativas independentes

Information gathering technique
Técnica de coletas de informações

Initial Gas Solubility Ratio
Razão de Solubilidade de Gás Inicial RGO

Inputs
Entradas

integrated change management
controle integrado de mudanças

Integration management processes
processos de gerenciamento de Integração

interviewing
Entrevistas

K

key inputs
entradas principais

L

late finish date
data término mais tarde

late start date
data de início mais tarde

leads and lags
antecipações e atrasos antecipações e esperas

list of potential responses
lista de respostas potenciais

List of qualified sellers
Lista de fornecedores qualificados

lump sum contract
contrato tipo soma global contrato soma global

M

Make-or-buy analysis
Análise de fazer ou comprar

Make-or-Buy Decisions
Decisões fazer ou comprar

Management System
Sistema de Gestão

milestone
marco

milestone list
lista dos marcos

monetary value analysis
análise do valor monetário

Monitor and control of project work
Monitorar e controlar o trabalho do projeto

monitor and control risks
monitorar e controlar os riscos

mooring berth berço
berço porto com

N

network diagrams
diagrama de rede

O

OPA
ativos de processos organizacionais ativos dos processos organizacionais

Operational continuity plan
Plano de continuidade operacional

Operational Logistics Plan
Plano Logístico Operacional

organizational process assets
ativos de processos organizacionais ativos dos processos organizacionais

Organizational Risks
Riscos Organizacionais

Outputs
Saídas

P

parametric estimating
Estimativa paramétrica

payment systems
Sistemas de pagamento

PDM
Método do Diagrama de Precedência MDP

Perform qualitative risk analysis
Realizar a análise qualitativa de riscos

Perform quantitative risk analysis
Realizar a análise quantitativa de riscos

Petroleum Postgraduate Institution
Instituto de Pós-Graduação do Petróleo

plan procurement
Planejamento das aquisições

Plan procurement management
Planejar as aquisições

plan risk management
Planejar o gerenciamento dos risco

Plan risk response
Planejamento das respostas aos Riscos

plan risk responses process
processo de planejar as respostas aos riscos

plan the scope
planejamento do escopo

Platform Supply Vessel
PSV

Postgraduate Dissertation
Trabalho de Conclusão de Curso

Precedence Diagramming Method
Método do Diagrama de Precedência MDP

prioritized list of quantified risks
Lista priorizada de riscos quantitativos

probabilistic analysis of the project
Análise probabilística do projeto

probability and impact matrix
Matriz de Probabilidades e Impacto

Probability of achieving cost and time objectives
Probabilidade de atingir os objetivos de custo e tempo

probability of occurrence
probabilidade de ocorrerem

Procurement
Aquisições

Procurement audits
Auditorias de aquisições

procurement contract
contrato de aquisição

Procurement contract award
Adjudicação do contrato de aquisição

Procurement file
Arquivo de aquisições

Procurement Management Plan
Plano de gerenciamento das aquisições

Procurement negotiations
Negociações das aquisições

Procurement performance reviews
Análise de desempenho das aquisições

Procurement statement of work
Declarações do trabalho das aquisições

project deployment
implantação do projeto

project initiation phase
fase de iniciação do projeto

Project Integration Management
Gerenciamento da Integração do Projeto

project kick-off term
termo de abertura do projeto

project life cycle
ciclo de vida do projeto

Project Management
Gerenciamento de Projetos

Project Management Information Systems
Sistemas de informações de gerenciamento de projetos

Project Management Plan
Plano do gerenciamento do Projeto

Project procurement management
Gerenciamento das aquisições do projeto

Project Reference Term
Termo de Referência do Projeto TRP

project schedule
cronograma do projeto

Project Scope Statement
declaração do escopo do projeto

project time management
gerenciamento do tempo do projeto

Project Work Breakdown Structure
Estrutura Analítica do projeto EAP

proposal
proposta

Proposal evaluation techniques
Técnicas de avaliação de propostas

PRT
Termo de Referência do Projeto TRP

PSV
PSV

Q

qualitative risk analysis
análise qualitativa de riscos

Quality Management Plan
plano de gerenciamento da qualidade

Quantitative risk analysis and modeling techniques
Técnicas de modelagem e análise quantitativa de riscos

quotation
cotação

R

RAF
estrutura analítica dos riscos

RAS
Estrutura Analítica dos Recursos EAR

Records management system
Sistema de gerenciamento de registros

Request for proposal
Solicitação de ofertas

reserve analysis
Análise de reservas

Resource Analytic Structure
Estrutura Analítica dos Recursos EAR

resource calendar
calendário dos recursos

resource implementation schedule
cronograma de aplicação dos recursos

resource leveling
nivelamento de recursos nivelamento dos recursos

rig
sonda sonda de perfuração

risk analysis framework
estrutura analítica dos riscos

Risk categorization
Categorização de riscos

Risk data quality assessment
Avaliação da qualidade dos dados sobre riscos

risk identification
Identificação de Riscos

Risk Management
Gestão do Risco gerenciamento dos riscos

risk management
Gestão do Risco gerenciamento dos riscos

Risk probability and impact assessment
Avaliação de probabilidade e impacto dos riscos

Risk reassessment
Reavaliação de riscos

risk register
registros dos riscos

risk register updates
Atualizações do registro dos riscos

Risk urgency assessment
Avaliação da urgência dos riscos

risks
evento de risco

rolling wave planning
planejamento em ondas sucessivas

root cause analysis
Análise da causa-raiz

S

Schedule
Cronograma

schedule baseline
linha de base do cronograma

Schedule Compression
Compressão do cronograma

Schedule Management Plan
plano de gerenciamento do cronograma

schedule network analysis
análise da rede do cronograma análise de rede de cronograma

schedule network diagram
diagrama de rede de cronograma diagrama de rede do cronograma

scope baseline
linha de base do escopo

scope management
controle do escopo

scope of work
escopo de trabalho

selected sellers
Fornecedores selecionados

Seller proposals
Propostas de fornecedores

sequence activities
sequenciamento das atividades sequenciar as atividades

sequence activities
sequenciar as atividades

source selection criteria
Critérios para seleção de fontes

staff turnover rate
rotatividade de pessoal

Stakeholder register
Registro de partes interessadas

Strategies for negative risks or threats
Estratégias para riscos negativos ou ameaças

strategies for positive risks or threats
Estratégias para riscos positivos ou oportunidades

Strengths, weaknesses, opportunities, and threats analysis
Análise das forças, fraquezas, oportunidades e ameaças

SWOT
Análise das forças, fraquezas, oportunidades e ameaças

T

T&M
Contratos por Tempo e Material

terminations clause
cláusula de rescisão

three-point estimating
estimativa de três pontos

time and material
Contratos por Tempo e Material

Time and Material Contract
Contratos por Tempo e Material

total floats
folgas totais

tracking
acompanhamento

trends in quantitative risk analysis results
Tendências nos resultados da análise quantitativa de riscos

U

UM
Unidade de Medida UM

Unit of Measurement
Unidade de Medida UM

V

Validate Scope
Verificação do escopo

Variance and trend analysis
Análises da variação e tendências

W

Waste management plan
Plano de manejo de resíduos

WBS
Estrutura Analítica do projeto EAP

What-If Scenario Analysis
Análise do cenário “What-if” Análise de Cenário “E-se”

What-if Scenario Analysis
Análise do cenário “What-if” Análise de Cenário “E-se”

Work Breakdown Structure
Estrutura Analítica do projeto EAP

Work Performance Information
Informações sobre o desempenho do trabalho

The need for petroleum-based energy self-sufficiency has led nations to continually seek new discoveries and to maximize hydrocarbon extraction, whether based on optimization and technological improvements in exploration and production processes, or by expanding exploratory horizons to search for hydrocarbons.

The 1950s marked a great increase in exploratory activity and the intensification of sea expeditions, made possible by the emergence of new exploratory techniques. Over the years, a wide variety of marine structures have been developed, including vessels and platforms equipped for drilling. Currently, some of these drilling units operate in water depths greater than 3,000 meters.

New frontiers in deep-water oil exploration have imposed a series of challenges for the oil industry. One of these challenges is to provide a high level of service for offshore platforms and drilling rigs in order to keep them operating 24 hours a day, seven days a week (24/7) in the most cost-effective manner. Thousands of people have to be transported to the platforms as well as food, maintenance parts, equipment, bulk, fuel, water and other fluids. Support boats and helicopters are used to meet such mobilization needs. Drilling operations are expensive and require continuous allocation of equipment, in some situations this allocation could be difficult to foresee.

A complex onshore logistics comprising a network of reliable suppliers, support base, seaports, airports, heliports, associated services, etc., is needed to support offshore operations in remote areas. Currently, most offshore logistics activities are still carried out in a traditional way, breaking or segmenting the logistics chain into "silos" with little synchronization throughout the process.

In order to successfully meet required logistical support needs for offshore exploration well, it is highly recommended to conceive each well as an operations establishment autonomous PROJECT, in which a Well Project Logistics Plan is carefully designed, with integrated planning and management of all areas involved.

The suggested approach allows for a paradigm shift, merging the concepts of integrated operations and supply chain practices, while applying the Well Delivery Process to improve project performance. The well delivery process execution-flowchart accounts for FEL methodology which provides the means for organizations to develop plans and oversee operations by reviewing the information furnished by project technical teams and stage-gates for reviewing project planning, where the management team decides whether the project may proceed to a next stage with adequate level of risk and uncertainty.

The proposed methodology is based on the available literature, articles and essays presented at international events of the oil and gas industry that deal with projects executed in remote areas, and on the professional experience of the author. This methodology shall serve as a contribution to the implementation of best practices and the development of governance guidelines & structured project methodology, focused on logistic support to establish exploratory drilling operations.

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* Dissertation - Postgraduate LATO SENSU in Petroleum Engineering, Accent in Well Construction. Brazilian Petroleum Gas and Biofuels Institute. Javier Zambrano. Rio de Janeiro, Brazil.