Case Study

Completion Cost Optimization

Analytics-Driven Strategic Sourcing for Completion Cost Optimization in the Permian

OpenInsights Strategic Advisory Services

CHALLENGES
FINDINGS
RECOMMENDATIONS
RESULTS

CHALLENGES

A Permian operator wanted to understand the impact of sourcing key chemicals from manufacturers versus a bundled offering and quantify either strategy’s fiscal implications.

FOCUS ON FRICTION REDUCERS

  • A key challenge in this analysis was streamlining the scope of the cost savings process. 
  • A review of the clients’ completion design over the preceding months showed a clear bias towards slickwater frac design.
  • Discussions with the engineering team suggested positive well performance associated with slickwater fracs had heavy loading rates of friction reducers and smaller proppant.
  • Given this, friction reducers became a key focus area for the analysis, representing more than 50% of completion spending in recent design generations.

FINDINGS

The Enverus OpenInsights Strategic Advisory Services team worked with the engineering and supply chain teams across the client organization to identify the completion design that fit the criteria both from an engineering and cost perspective. 

1

COMPLETION
SPEND TRENDS

2

VENDOR PRICE
ANALYSIS

FRICTION REDUCER SPEND ANALYSIS

SPEND SIGNIFICANTLY OUTPACED USAGE

The client’s friction reducer usage had been steadily increasing in the preceding months, but their comparative spend on friction reducer was increasing at a much faster pace. This typically is driven by purchase of more specialty higher viscosity products or could showcase cost saving optimization potential.

 

Looking at the trends below and the completion forecast for the organization, an expected spend forecast was generated. This helped quantify the need for cost optimization as it was becoming an increasingly critical component of the completion spend portfolio.

 

‹ BACK

VENDOR RATIONALIZATION

PRICING DISCREPANCIES

OpenInsights’ highly granular datasets identified seven vendors that had supplied the operator with friction reducers in the preceding 24-month time span. Over the same time period, normalized unitized pricing data indicated there were wide discrepancies in the pricing that had been offered.

 

‹ BACK

OUTLIER PRICING

VARIANCE ACROSS VENDORS

VARIANCE WITHIN
VENDOR OFFERS

RECOMMENDATIONS

Based on existing relationships, as well as the volumetric need for the client, the following steps were taken:

CHOOSE PREFERRED VENDORS

  • Vendor D had the largest variance in prices within its offering because different asset teams were using different types of friction reducers. An engineering review was conducted and Vendor D was identified as the preferred vendor but a specific friction reducer was selected as the clients’ standard offering.
  • Additionally, the need for certain specialty friction reducers was identified. Vendor B was selected as this supplier.

SET LONG-TERM FIXED PRICE CONTRACTS

  • Longer term, fixed price contracts were set with both providers to maximize cost savings.

RESULTS

Vendor consolidation, completion design review, longer term price contracts and strategic sourcing helped the customer uncover significant cost savings based on their annual completion schedule.

$70 M

ANNUAL SAVINGS

$200-350K

SAVINGS PER FRAC JOB

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