The Use of Lean Six Sigma in the Oil Industry
Rising costs, complexity and risks combine to make efficiency and operations more important than ever. The new reality with the declining price of the barrel is that the oil and gas market is forcing companies to focus on cash flow optimization and cost cutting. Improved business results can be achieved by managing quality data statistically through sound engineering principles. Variance Reduction International, Inc. (VRI) is currently providing a competitive advantages to many global oil and gas operations through the deployment of Lean Six Sigma (LSS). The LSS methodology and tools make processes Safer, Better, Faster, and Lower Cost. VRI encompasses the longest standing relationship deploying LSS in the upstream oil industry. Since 1998, providing services for Chevron, Texaco, Aera Energy, BakerPetroilite and Halliburton. Proven results in upstream oil companies have produced many completed LSS projects, demonstrating an average of $2.3 million in return on investment (ROI).
Combining Lean tools with Six Sigma
Six Sigma companies embrace the fundamentals of statistical thinking: all outcomes are produced through a series of interconnected processes and all processes vary. The key to success is to understand and reduce variance. Six Sigma teaches people to look at variance, not just averages. Through a structured roadmap, Define, Measure, Analyze, Improve, and Control (DMAIC), profound process knowledge can be achieved, and focused improvements can be made. Lean is a process improvement methodology that focuses on removing non-value added activities at the pull of customer requirements. Value stream mapping points to non-value added steps and allows for streamlining processes. Cycle times go down, costs go down. More can be done with less. Simply put, Lean simplifies the process where Six Sigma perfects the process.
The Oil and Gas Specialization of VRI
VRI has built long standing relationships in the upstream, midstream and downstream oil industry including petroleum industry giant, Chevron. VRI has mentored projects such as improving oil production, equipment reliability, fluid measurement systems, inventory management, work processes cycle time reduction, resource allocation of parts and people, implementation of new technologies as well as improving existing ones additionally, branching out into trans-service related entities such as health, environment & safety, procurement and human resources has been undertaken. Definitive evidence in upstream oil accomplished projects can be seen in SPE Article No. 84434, co-authored by R.S. Buell, SPE and S.P. Turnipseed of ChevronTexaco and entitled “Application of Lean Six Sigma in Oilfield Operations”. Overwhelming verification of process improvements in the areas of health, environment and safety can be seen in SPE Article No. 98564, authored by R.S. Buell, SPE, Chevron Corp., entitled “Creating a Culture To Deliver Sustainable HSE Performance”. A typical upstream oil project, as proven through our training at Chevron, Aera Energy and Halliburton, has realized a return on investment of $1.1MM in only 4-8 months. These staggering numbers prove the efficiencies that result from VRI’s easy-to-learn tools of Lean Six Sigma training in oil and gas operations.
Lean Six Sigma adaptations from other industries have been proven to synergistically combine, improving business results in oilfield operations. Financial benefits are delivered through our training courses and mentoring for project deployment. When course objectives are followed to fruition, they can provide a broadly embedded quality and statistical thinking through routine engineering and non-engineering problem solving, process simplification, process improvement and optimization ultimately leading to process perfecting.