Profitable Contractor Partnerships

Need for Change

A 1992 independent North Sea oil/gas industry survey in Holland indicated that Shell Exploration and Production (NAM) costs were 22% behind the industry leader. New procedures and closer contractor management didn't achieve the desired results, and the same benchmark gave Shell a poor grade for contractor relations in 1993.

Shell's response was both inspired and dramatic. In what Tom Bakker (Head of Well Engineering) calls "a radical proposal for improvement," the partnership project was born. It would create a special cooperative contractor relationship for offshore rig-related work.

The GO (Golden Opportunity) team comprises six contractors representing various aspects of well construction and a group of Shell supervisors. The team works in partnership toward the objectives of superior well quality, safety, and environmental performance. 


The new contractor partnership GO is generating outstanding results for Shell, Holland's North Sea oil well drilling business. In the past, each contractor worked from a separate contract, with separate objectives, under separate supervision. "It was a totally fragmented situation," says Tom Bakker. "Our drilling business had a practically unworkable contract structure. It was impossible to work with the contractors toward a common goal." Shell Chart

As Bakker explains, "Partnering is a working relationship based on cooperation and continuity. Vital aspects of the relationship are trust, dependence on each other, open communication, and a determination to find win-win solution. Persona's Cooperation & Beyond was used to train all partners in how to work toward common objectives, and to plan for successful implementation.

Benchmarking Results

Independent benchmarking of wells participating in the GO project revealed an 18% cost reduction after only six months. This was almost five wells for the price of four, with no compromise in well quality—an improvement that would have placed Shell, Holland in the lead in the 1992 North Sea benchmark.

Results like these benefit Shell and contractors alike. Shell's improved market ranking should bring more development and a stronger future. Contractors' success is catching the eye of other operating companies and cost savings are being passed along to all participants as bottom-line incentives. The next project phase will extend the partnership program to onshore operations.

“We should never underestimate the damage and excess costs caused by people not working well together.”

Shell is adept at using new ideas to solve problems. "Shell pioneered this partnership approach, as they have been pioneers in so many other innovative activities," says Cooperation & Beyond developer and facilitator John Carlisle. Addressing the central relationship issues, especially trust, made all the difference. According to Bakker, "We should never underestimate the incredible value achieved by people cooperating."

Well Partners Build 40 Years' More Revenue

The critical success factors for well engineers are reducing costs, running ahead of program schedule, beating historical targets, and using innovative techniques that save time and material costs while improving reliability. Shell, U.K. is achieving all of these things by forming partnerships designed to help well engineering supplier teams achieve common goals. To accomplish this form of partnership among itself and its various vendors Shell has used Persona's Cooperation and Beyond process.

In addition to results like the stuck pipe incident reductions that are currently saving Shell, U.K. £2 million annually, efficiencies resulting from supplier partnerships are projected to support a total of 40 more years' operating on the key offshore drilling platforms. That is a real bottom-line result, in the billion dollar catagory, everyone can see.


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