UIBC 2022 Brings Member Companies Together Again in Person
Independent Project Analysis (IPA) held its annual meeting of the Upstream Industry Benchmarking Consortium (UIBC) from Monday, November 14 to Wednesday, November 16, 2022, at the Hilton McLean Tysons Corner in McLean, VA. The 3-day conference featured research presentations and working sessions for upstream sector owner companies that benchmark their capital projects with IPA. In addition to presenting new research, UIBC included company breakout sessions and in-person client meetings and a demonstration of IPA’s Upstream Team Staffing Assessment and TrueCost Opportunity Benchmarking Software.
Below we highlight the new industry research and focused topic sessions that were delivered exclusively for the first time during UIBC 2022:
FOCUSED TOPIC: Executing in the Disrupted Market
Ongoing E&P projects are experiencing multiple challenges in today’s turbulent market environment. Projects are slipping, and project teams seem unable to meet stage-gate requirements. Problematic areas discussed include contracting environment, supply chain disruptions, downsized project organizations, and increasingly complex portfolios. Although the current market cycle characteristics are not entirely the same as past cycles, IPA’s previous research can be used to navigate the current environment. This presentation outlines solutions to overcome difficulties in the challenged areas using IPA’s previous research.
RESEARCH STUDY: Production Attainment Lessons Learned
Actual hydrocarbon production is the ultimate asset outcome for all E&P companies—it is how they generate returns on their capital investments. IPA has previously shown that industry production attainment is around 80 percent, a metric that has not changed over the last two decades and has been a significant contributor to project NPV erosion. This study unravels some drivers of poor production performance and the lessons learned that can be implemented to improve the likelihood of meeting production goals. Ultimately every function, including business, has a role to play in improving this performance.
RESEARCH STUDY: What Makes a Good PEP?
Industry’s Project Execution Planning (PEP) has not improved over the last 20 years. Although schedule definition is a key component of the PEP rating, several other deliverables also contribute to the definition of this FEL component. In this study, we look into the deliverables that underpin execution planning and propose an updated operational definition of what makes a good PEP.
RESEARCH STUDY: Common Scopes, Common Challenges: Are We Identifying and Planning for These Risks?
Over the past 5 years, IPA has seen site and sustaining capital (SSC) offshore revamp projects continue to fail and systems continue to be out of control. Only a small fraction of these projects are competitive and predictable, which is the ultimate goal for most businesses. This research study aims to understand scope-specific issues for the most common offshore revamp projects and gain an understanding of the typical issues these projects face across all scopes.
RESEARCH STUDY: New Energy Organization of the Future
As the energy industry expands from a focus on fossil fuels, conventional refining, and petrochemicals to new and more diverse sources of energy and products, there is an increased focus on decarbonization for new and existing assets. These shifts mean that, as companies change the way they manage their legacy businesses, they are also developing new lines of business that come with different markets, partnerships, and competitors. Although every company’s energy transition journey is different, change is inevitable, and the decisions made by the industry today about how to organize and structure the project system will have lasting implications for years to come. In this session, IPA describes how the industry is approaching the energy transition so far from an organizational perspective, the implications these transition decisions have for the project system, and the issues companies need to be mindful of as they continue to shape their energy project organization of the future.
SURVEY RESULTS: Transition to New Energy
Renewable energy has become a critical part of the energy industry as companies continue to evolve their portfolios toward a sustainable future. IPA has surveyed many of the world’s preeminent energy companies to understand the challenges they face during this time of transition. This presentation covered the highlights of the survey results and was followed by a renewable energy breakout session to dive into further details.
RESEARCH STUDY: Early Commitment in New Energy Projects
The cost of entering renewables businesses is built around early commitment to projects, rather than the standard approach to final investment decisions. As such, reducing risk early in development is critical to positioning these projects for the best chances of success in typically what are low return businesses. In this session, we discuss the characteristics of early commitment businesses and the necessary changes to the project development process to reduce risk and facilitate well-informed commitments earlier. We also share leveraging strategies companies can introduce at the corporate level to streamline development of early commitment opportunities.
INDUSTRY TRENDS: Carbon Competitiveness and Low Carbon Scope Selection
Understanding carbon competitiveness has become an important decision factor in opportunity selection and project development. IPA has evaluated the carbon competitiveness of numerous E&P projects over the last couple of years. In this session, we present industry trends in project‑level greenhouse gas (GHG) emissions performance and emerging practices that influence this outcome. Finally, we highlight the key drivers of low‑carbon performance and provide quantitative insights into how certain decisions and scope choices influence carbon competitiveness.
RESEARCH STUDY: Supply Chain Risk to Capital Projects
The globalized orientation of supply chains is in a state of flux because of trade wars, COVID-19, and now the invasion of Ukraine. Disruptions to the manufacturing, delivery, and cost of goods, materials, and equipment seem to be the norm and the effect on projects is almost a certainty. Amidst this backdrop, IPA is conducting a detailed study of supply chain risk and resiliency simply because we believe that supply chain disruptions are not a transient phenomenon and further believe that the structure of the global supply chains for goods, in particular, will look different from today. As a result, the assumptions procurement organizations and project teams have made in the past with regard to securing equipment and materials for their capital projects may not be relevant going forward. The focus of this presentation is on understanding risk to capital projects, specifically due their supply chains. We present a hypothesis of a supply chain risk framework and then use this framework to measure project-level supply chain risk at a granular level using projects that IPA has evaluated. We believe this framework can be immediately deployed on projects for project teams to think in more detail about potential risk areas in their supply chains.
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