Case Study on "Management Decision-Making"

Case Study 19 pages (5016 words) Sources: 12

[EXCERPT] . . . .

Ras Gas Background:

The North Field is the world's largest non-associated gas resource. In 2010, this national asset of the State of Qatar will supply 25 -- 30% of the world's liquefied natural gas, of which RasGas, a joint venture between Qatar Petroleum and ExxonMobil, will deliver about half. From 1999 to the present, RasGas has grown from zero standard cubic feet of production per day to 9 billion standard cubic feet per day and greater than 300 kbd natural gas liquids and have built the infrastructure of the world's premier LNG value chain. Proprietary producing wells are at the start of RasGas' recognized world's premier LNG value chain. Their performance enables each subsequent link in the chain and sustains billions of dollars of present and future investment.

World class wells are not the inevitable outcome of a world class reservoir. Innovation, integration and execution, are central to the way RasGas is organized and managed. Innovation is an important key to success because it not only improves company outcomes, but also the certainty that RasGas assets are delivering maximum value. Innovating while executing, requires a high-degree of integration; something that is not natural to most joint ventures. The RasGas collaborative internal frame-work which includes synergy, systems, comprehension, is vision driven and creates the necessary opportunities and frameworks to continue providing both a world-class product and equally effective customer service. Integral to world class performance is having consistent shareholder support of the new ideas and the innovation needed to achieve those objectives. In addition to providing secondees; a powerful technology base as well as proven worldwide expertise is provided by Exxon/Mobil. Other community partnerships are supplied through colleges and universities.

RasGas features a systematic framework which is required to integrate many elements simultaneously; people, systems, tools as well as many other elements integral to the successful continuation of an international business responsible for providing fuel to the world market. In the successful carrying out of this necessary and important service, innovation is an essential quality for the continued success of RasGas. Though it is necessary for consistent and reliable frameworks, innovation is also necessary to meet the growing and changing demands of a market as well as the inherent variability in a multi-organizational base. Where many other organizations can rely on a "status quo" no such comfort is available in the volatile world of natural gas drilling, processing, and distribution. In order for such a venture, not least because it is a joint venture, to succeed successful communication, allocation of tasks, leadership, interdepartmental understanding, definition of responsibilities, and the effective sharing of information and responsibility between departments is crucial.

Failure to be comprehensive represents loss of opportunity so in the well delivery arena we have taken special care to be comprehensive. Our functional coverage, where we systematically deploy expertise and innovation, covers the continuum of well construction milestones; drill, complete, and produce. For example, even as we have reached our development plateau of 9 BDF per day, the resources devoted to well related research studies have not diminished. Rather, the focus has now shifted from developing production to sustaining production.

In the functional area of well reliability and gas deliverability, we have created an accountable organization of specialists. One accountable group is the Subsurface Group who manages the reservoir and the well life cycle. It is comprised of 1200 people including rig operations, vessels, secondees, contractors and direct hires. SSG is staffed with experienced reservoir, petroleum, production, planning engineers, production petrophysicists, business support, and business process professionals, and a younger national workforce. It is divided into several departments with clear roles and responsibilities that mesh together in a way that complements the other departments and groups within to create the synergy necessary to get the job done. Everything Subsurface does is focused on delivering the potential of the reservoir and long-term, reliable, gas deliverability from our wells.

Problem statement:

Poor technical integration among the Subsurface Group's sections with regards to overall goals and objectives

RasGas Subsurface Group consists of multiple departments each consisting of several sections based on functional discipline. The overarching goal of the Subsurface Group is to effectively manage all aspects of gas supply related to; drilling, completion and reservoir management activities so as to be considered the operator of choice by shareholders. This goal can only be achieved if there is clear alignment and collaboration between the departments and sections. However, in the last few months several problems have taken place resulting in sub-optimal operations, additional cost and negatively impacting the image of the entire group. These problems include the followings:

Individual sections at times communicated independently with Shareholders, often with different messages. For example, during operations, PE, RE, and WMD were each communicating results back to Shareholders instead of sending one unified RasGas response. This confused the Shareholders resulting in the time required to get their direction to be increased. This in turn led to delays in getting instructions to the rig, adding increased time and cost to the operation.

Analysis and final reports for data gathered were not getting generated timely as various sections thought this was someone else's responsibility. This led to a very large backlog of analyses and lack of confidence by the Shareholders that RasGas could provide the reports in a timely fashion.

Findings tended not to be shared between the sections resulting in missing opportunities for enhancement

There was a tendency to have poor working relationships between staff from different sections due to the independent objectives of each section. This led to unhealthy competition and occasional subversion.

Work products were generally created in a serial fashion with one section handing off to the next with little or no collaboration. Section members tended to understand only their portion of the work product and had little motivation or interest in understanding the whole.

Staff members would often debate issues with each other at key Shareholder's meetings instead of presenting a unified RasGas response. This led to a lack of confidence by Shareholders in RasGas' technical capability.

These problems are resulting from an antiquated top-down management style within the Subsurface Group. A culture developed that did not promote; integration, collaboration, and teamwork. Consequently, the Subsurface Group has, on occasion, failed to meet the expectations of the Shareholders in fulfilling its drilling and reservoir management obligations.

One solution to the lack of integration is the formation of multi-functional teams whereby representatives from each function (i.e. section) are placed together. This has greatly improved collaboration and sharing of information resulting in improved work products, efficiency, and renewed confidence by the Shareholders that RasGas is the operator of choice. However, the formation of the ASTs in and of itself, was not sufficient to improve integration. There also needed to be a cultural change in the way staff approached their work. Under the AST culture, staff was expected to take less direction from their function, but instead work with their counterparts from other disciplines to proactively solve issues.

Major metaphor: Culture

As a result of the old style management ideology currently in effect, the departments and sections in the Subsurface Group tend to be isolated. Staff was expected to work only on items/issues related to their own discipline. Staff generally were not to be concerned about other disciplines. Effectively though departments needed to work together in order to achieve organization goals, at an individual employee level departments were not working cohesively. This environment of divisiveness and individual competition was ultimately counterproductive in the successful attainment of production and expansion goals (Wolfram, 2002). Culture is identified as the dominant metaphor in that systematically the developed culture of RasGas is the primary impediment to effective management of employee and team development. Because the environment is one of competition as opposed to coordination there is no unified front to present to share holders and often key assignments and processes are either not completed or completed in such a way that is sub-par. It is the culture of the corporation which ultimately must change before any significant changes are observed in performance and overall output.

Value was placed more on achieving individual performance objectives, or at best only section objectives, versus achieving overall RasGas strategic objectives. Staff tended to follow the traditions of an old style, non-integrated work environment whereby individual achievement superseded team achievement (Ackoff & Emery, 1972). Section and department managers tended to follow existing rituals and did not lead by example. They were often observed infighting instead of promoting collaboration and teamwork.

Trust: Sections contain one type of engineering discipline and they do not readily trust other section members leading to duplicity of work and getting second and third opinions. Sections and their managers seemed to be experiencing the silo effect. This lack of trust also conveyed a disorganized front to shareholders (Ackoff, 1981). If different departments were unable or unwilling to work together then how could it be trusted that they were the most effective and efficient choice for continued investment.

Communications: Overlaps of ownership and reporting led to… READ MORE

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