We help clients unlock the full value of their oil and gas assets in a sustainable way using a combination of deep industry expertise and reliable, tested solutions.
Across the world, oil and gas operators are facing the margin-eroding effect of inconsistent production efficiency and high operating costs in an environment of low product prices. McKinsey experience shows that if operators are able to capture the full value of their operating assets, they can boost net present value by up to 30 percent and generate immediate cash by reducing lifting costs 20 to 30+ percent within a year.
From our experience with about 1,800 operational transformations since 2013, including around 200 in oil and gas, we know that capturing this opportunity requires a new approach. We created the Petroleum Asset eXcellence (PAX) Practice to focus exclusively on working with operators to sustainably unlock the maximum value of their assets. Our tailored approach, deep expertise, and proprietary tools help create reliable solutions for realizing production and efficiency improvement in the oil and gas industry.
What we do
PAX aims for impact starting on day one. Our structured, end-to-end approach examines seven key levers to rapidly boost production and reduce operating costs (Exhibit 1).
To improve asset performance, PAX focuses on two steps:
- Asset transformation
Working closely with your staff, we conduct a rapid assessment of current performance to form the basis for a series of workshops, where we set targets and together develop a transformation plan. We focus not only on leaner processes but also on enhancing capabilities.
- Managing assets
Our experts will diagnose performance gaps and form a new 2- to 3-year business plan.
Our people have exceptional technical expertise and have extensive experience in implementing change. As former operators, they have operated fields up to 250,000 boepd, assets with more than 3,000 people, and assets with more than $500 million per annum in operating expenditures.
Tools, resources, and partnerships
We offer analytical horsepower and tools that are unrivalled. Our proprietary benchmarking data sets are the most comprehensive and up-to-date available and can provide insight across any function or geography. Our tools go beyond just generating new insights— they are also designed to build and embed capabilities.
- We have conducted the Offshore Operations Benchmark for 20 years. It covers 20 companies and 200 production assets.
- Reliability Excellence Performance is an evaluation tool that we have used for more than a decade to asses sites in detail.
- We use the WRM benchmark and idea database to help maximize well and reservoir performance.
- We form strategic partnerships with external solution providers to support clients with mature oil fields.
- We have a proven methodology for lean drilling analysis.
- QuantumBlack, a McKinsey solution, brings unrivalled expertise in advanced analytics.
- Our Organizational Health Index (OHI) specific to the oil and gas industry helps to identify gaps and to recommend best practices.
How we work with clients
Operators typically bring us in when circumstances change; for example, when an asset is transitioning to a new phase of its life cycle, when there is a change in asset ownership, or when there is a change in the external operating environment. We support clients every step of the way, delivering lasting transformational change, from diagnosis to implementation to value realization (Exhibit 2).
Examples of our work
- We helped a Southeast Asian oil company boost production by more than 45 percent by implementing targeted well interventions. The company also reduced nonproductive drilling time to 14 percent from 19 percent and decreased third-party spending by 15 to 20 percent.
- We assisted an oil company based in India to improve well production by 20 percent within just 6 months of launching an initiative. We also helped it achieve a 3 to 5 percent production gain by making marginal fields viable.
- We helped a national operator in Europe reduce its capital expenditures by approximately 35 percent, using design-to-value interventions for small-capital-project categories in its onshore asset’s gas plants and tank farms.
- We assisted an international oil company with an offshore asset in the North Sea to reduce third-party spending by more than 30 percent, using a closed review of its demands and specifications and by upgrading procurement capabilities.
- We helped a national oil company achieve significant improvements in cost efficiency, quality, and compliance—amounting to about $200 million in early savings—by using change initiatives focused on fostering continuous process improvement among frontline teams and by simplifying corporate systems.
- We worked with a large offshore operator with numerous offshore assets to increase production by 5 to 12 percentage points across its portfolio. We used advanced human-performance analytics and simulator-based training programs using production-optimization scenarios. We also implemented standardized advanced-process-control logic across the control-system modules to “tune” production-process performance.