Natural Gas Drilling Project Management

Introduction

This Project Report covers vital elements of project management aligned to the PMBoK knowledge areas to demonstrate best practices (Freidi 2014). For this Project Report ‘Our Project’ referred to as Natural Gas Drilling Project will be used to illustrate critical areas of project management.

Project Initiation

Our Project is set up to demonstrate natural gas drilling. It is the right project, conducted at the right place, time and with the right purpose.

The project sponsor, the State Government of Queensland, will initiate the Project.

Project Purpose

The main purpose of Our Project is to explore natural gas in Queensland, Australia using fracking technologies, technically known as hydraulic fracturing currently available.

Australia’s gas and oil industry is growing steadily because of increased demands both locally and abroad. The industry creates jobs and is a major source of incomes and taxes. Hence, it is a priority not only for the country but also globally.

This kind of project has been successfully undertaken in other parts of the country, including Western Australia and globally specifically in the US.

Our Project will result in abundant, clean, reliable and flexible natural gas fuel. In addition, other benefits would include raw materials for industrial processes, including plastic and chemical industries.

Project Stakeholders

Our Project will identify all stakeholders affected by the Project (Project Management Institute, Inc 2013). A research will be conducted to identify major stakeholders and their related needs. All stakeholders must be identified before the project implementation to avoid later challenges and resistance. Hence, stakeholders for Our Project will be identified in terms of sponsors and affected individuals, their expected needs and actual needs.

Sponsor: the state government is the major sponsor of the Natural Gas Drilling project. Thus, it will cater for project costs and authorize the expenditure. The project sponsor expects the project to be completed within the budget and on schedule.

Local communities of Queensland: local communities affected by shell gas exploration at Queensland are major stakeholders. Their major needs would include relocation, protection from exploration consequences, and compensation to relocate to new locations. The locals would also want employment opportunities during the project implementation.

The environmentalists: As noted in other parts of the world where fracking has been implemented, environmentalists present a significant challenge to this kind of project. They claim that the project is harmful to human and the environment. To avoid issues and litigation, environmentalists would be involved in the process to understand how the project team would handle all issues related to environmental concerns.

The public: the project is funded by public funds. The people of Queensland would be informed of the project objectives and the expected volume of natural gas and its benefits.

Local leaders: the project would involve local leaders to work with the local communities to avoid resistance and communicate project processes.

Our Project will prioritize various needs of all stakeholders based on relevance and importance to avoid project challenges and demonstrate project outcomes. Key decision-makers will be given priority in this project. The project will also address unstated concerns.

User Requirements

These are mainly specific requirements of stakeholders. Our Project will differentiate between needs and wants, identify similar needs, conflicting needs and use negotiation skills to obtain agreements.

The Project Objectives

Our Project objective is stated in terms of costs, time and quality. This approach will ensure that the project is delivered within the stipulated time, budget, and quality at the optimal levels based on the project scope (Brown 2014).

The main objective of Our Project is to drill about 3000 gas wells in Queensland within one year, while about 2500 will be ready for production or at the stage of water removal after nine months. Water removal is necessary before production to enhance quality.

All functional areas and quality aspects of the project will be observed during drilling stages to protect the environment.

The project is expected to cost $US25 billion.

It is expected that the Project team will deliver these objectives at the end of the project.

The Project Scope

This is the final stage of the project Initiation phase, and Our Project is now clearly identified and defined. That is, all the project stakeholders and the project team have agreed upon the project objectives, the nature of the project and the team to deliver the project.

The scope of this project covers Natural Gas Drilling at Queensland, Australia. The project team expects to deliver 3000 drilled wells within one year, with 2500 wells ready for production after nine months.

Our Project will not be involved in the actual process of gas production.

Planning

Our Project planning phase will account for the project scope, time, cost, risk, quality, procurement, and the project plan. Hence, Our Project objectives are well defined and agreed upon by all stakeholders

Scope

Our Project scope clearly defines what the project will deliver. Besides, it will also identify elements considered as out of scope to avoid unnecessary delays and conflicts later on at advanced stages.

This project will only drill 3000 wells and make them ready for production after one year. The project will not include actual production of gas.

Our Project will involve five clear steps noted in well drilling as shown in the Work Breakdown Structure (WBS). The WBS is the most vital tool for the Project Scope. All tasks involved in well drilling processes are identified to ensure that the project is delivered within the time, budget and quality. For ease of understanding, the project deliverables, tasks and activities are identified.

  • Site identification
    • Identification of sites with oil and gas
    • Directional path to reach the target site
  • Obtaining the rig involves selection of tools and services needed
    • Drilling Rig
    • Drill string
    • Fluid System
    • Casing
    • Cement
    • Completion
  • Drilling the hole
    • Drill Surface Hole
    • Run Surface Casing
    • Cement Surface Casing
    • Drill Next Hole Section
  • Running casing and cement
    • Casing
      • Avoid freshwater accumulation
      • Isolate water formations with significantly varied pressure gradients
      • Remove unstable formations or zones
    • Cement
      • Safeguard and seals the wellbore
      • Separation of fluids and moving formations
      • Remove unstable formation
      • Elimination of unnecessary wellbore
      • Seal unnecessary wells
  • The completion
    • Remove water
    • Ready for productionOil Well Drilling

Project Time

Our Project time consists of time estimates, task schedules, RACI and Gantt chart.

The project time estimate

The task duration will reflect the expected amount of time for the entire project capturing all necessary activities.

Project Schedule

Task estimates will provide an opportunity to arrange tasks and durations in sequence and create the project schedule.

The project schedule will indicate all stages of the project progress for review, communication and collaboration. In addition, it will show major milestones achieved.

RACI Chart

All four elements of the RACI chart are captured.

Responsible

The project team will be responsible for all the project tasks. The Project Manager will lead the project team.

Accountable

The Project Manager will be accountable for the tasks. At the same time, individual team leaders will also be accountable for their achievements.

Consulted

The Project Manager is expected to provide feedback and contribute when necessary. The project team leaders will also provide feedback for different project tasks.

Informed

The project team leaders will be informed of any necessary decisions taken by the Project Manager.

The Project Manager Site Identification manager Tools and service manager Drilling Manager
Site identification A R I C
Obtaining the rig I C A R
Drilling the hole C C I A
Running casing and cement I I C R
The completion A I I I

The Project Activity-on-Node (AoN)

AoN is a visual tool of the network logic that captures the whole project schedule from the beginning to the end. The Project team may also use AoN for any other activities deemed necessary within the project, particularly if several activities are involved. In this AoN, only elements associated with the critical path schedule are included to enhance simplicity and understanding. It does not include any planned date for different activities.

The Project Activity-on-Node (AoN)

No activity has been completed so far. The project will start on 2 January 2016 and end in 31 December 2016.

Gant Chart

Project Budget

The project is estimated to cost $US25 billion until completion. There is no cost overrun estimated currently, but miscellaneous allocation is provided.

It is imperative to recognize that the budget accuracy will depend on actual costs incurred on specific sub-tasks, labor, equipment and related services. The project will be funded optimally (Skaf 1999).

Thus, estimated cost has been provided as the total cost to guide the project execution.

Site identification Costs
Obtaining the rig $3 b
Drilling the hole $10b
Running casing and cement $10b
The completion $1b
Miscellaneous $1b
Total $25b

Procurement

The procurement phase for Our Project will account for human resources, services, materials and equipment needed to execute the project successfully. The Project Manager and the procurement department will engage in selection of services, materials, equipment and suitable labor (Sweasey & Skitmore 2007). They will also write and assess tenders.

Procurement will also involve cost estimates and contract negotiation to get the best deals.

The Project Manager will also use procurement activities to curb some risks associated with cost overrun. Several risks related to procurement methods have been observed. For instance, to avoid technical challenges arising from the contract, the procurement team will have to assess the project needs and the management expectations carefully. Some project risks will be managed through procurement using terms of contracts. For instance, the project will be protected from cost adjustments related to changes in foreign currency rates and rise in cost materials, labor and services. Thus, the procurement team must define all these requirements.

The procurement team will have to observe rigor in tender writing, estimate assessment and selection of qualified bidders. In addition, legal assistance will be required where necessary to negotiate and write the project contracts.

Project Reporting

When to report

The reporting on Our Project will commence immediately. For effective reporting, the reporting elements will be agreed upon with other project stakeholders, including Project Sponsor, the local communities and the intended beneficiaries.

Reporting on the project will be regularly conducted after one month. Alternatively, any other specific task that requires immediate attention must be reported immediately and followed with the swift feedback.

What to report

Based on stakeholders’ composition, the Project Manager will only report specific outcomes to specific stakeholders based on their needs and influence. For instance, the Project Sponsor would be informed of expenditure and outcomes while environmentalists would be allowed to assess information on environmental conservation.

The project status report will be used at interval to update stakeholders during the project implementation. Only appropriate format will be used in the status report based on the negotiation with stakeholders. The status report will generally provide the following elements.

Schedule: the status report will provide the initial approved period and completion date, approved changes and new dates for completion of various tasks.

Budget: the status report will account for the initial allocated budget, any approved changes and the estimated costs until completion.

Issues: the status report will provide any risks that threat the project objectives, the project scope, schedule, resource allocation, and quality of work among others. A log of issues and solutions will be developed to track challenges, show status, actions, responsible persons and issue closure.

Risks and Risk Management

Our Project, just like any other projects, is exposed to uncertainty and, thus, to risks (Hardy-Vallee 2012). The project risks will be identified and classified based on their impacts, possibility and response methods.

The most likely risk for this project is cost overrun. For instance, several directional paths may be drilled before the actual path is located. These tasks will be expensive and, therefore, increase project risks associated with delays and costs. In addition, system failures may also occur.

Litigations from environmentalists could also result from the project execution.

Other risks may occur because of delays associated with natural factors. In this regard, the following approaches will be used to manage identified and potential risks.

Avoidance – the team will plan appropriately with modern technologies and tools for drilling to avoid any risks altogether (Borštnar & Pucihar 2014).

Mitigation – the project team will develop the required plans to lessen risks.

Procurement – the procurement process will be used to manage risks. The Project Manager will have to manage these processes carefully.

Contingency planning – the Project Manager will develop an alternative plans to manage any potential risks.

Insurance – some elements of the project such as equipment will be insured to spread the risk.

Risks will be managed to ensure that the project delivers quality upon completion. While quality could be subjective, the Project Manager and team leaders will define elements that constitute quality (Denney 2005). Thus, the project team will plan elements of quality expected to be met with every deliverable. In addition, the stakeholders will also give inputs on quality aspects. Quality aspects will ensure that the project has met its core objectives, and it can be favorably evaluated to demonstrate its success in the final report.

Change Management

Our Project will require a formal change management plan to guide the implementation processes. As such, the plan will capture, evaluate, and seek agreement to avoid resistance. Upon receiving change request, the team will have to make proper analysis of the change with the aim of assessing the impact it will have on the project’s objectives and scope. Modification and adjustments to the grand plan will be done where necessary. The team will also keep a proper record of change and its impacts on the existing plan for proper auditing.

After carrying out thorough analyses on requested changes and the subsequent modification done to the project management plan, the project team will communicate to all affected stakeholders (McManus & Cacioppe 2011). The team will also update the change log with the adapted changes together with the rationale behind them. To enhance the effectiveness of the change management plan, the project team will categorize the possible changes according to their potential sources.

Potential sources of change

Stakeholders

Our Project is most likely to affect the local communities. Consequently, the project team expects them to resist the project implementation on their land. During gas well drilling, the local community members will be required to move. To mitigate resistance, they will be engaged in decision-making processes through wide consultation. Individuals will be compensated for land while local youth will be employed. The project team will also ensure that it informs the communities about the project benefits (Packendorff, Crevani, & Lindgren 2014).

The project team will be asked to meet all project requirements as scheduled. Any delays will be mitigated through paid overtime work.

Work

There are possibilities that the work to be done in carrying out Our Project will be more difficult than we anticipated. This shall call for addition of capital and labor. The project team will communicate to the sponsor on issues concerning the additional cost of labor and capital. The revision of terms of employment caused by work difficulty will be done where necessary and communication done to the affected individuals.

Delays related to procurement

The process of procuring is subject to changes since it has more than one interrelated elements. This may be resulting from issues like delayed funds or delays from the suppliers. Delayed procurements will influence project stakeholders differently. The project team will promptly communicate sources of delays to all affected stakeholders. The team will then promptly act on the given feedback.

Variances in estimated costs

During the implementation process, the cost incurred could be either higher or lower than the estimated cost. In the case that the cost is higher than the estimates, the project team will assess the extent and liaise with the project sponsor for additional funds.

Risks triggered

In the course of project plan implementation, there could be chances of exposing the stakeholders to risks. The project team will work with experts to assess the magnitude of the risks and come up with appropriate courses of action. Communication will be done to the affected individuals, clearly explaining what is important for each and what is expected from them.

Mistakes

The team will commit itself to ensuring that everyone knows their role in order to avert mistakes. In addition to this, the team will collect data for comparison with the objectives. If mistakes are made, the project team will evaluate them with the aim of establishing their sources and impacts they will have on the project’s objectives. After a comprehensive review, the team will involve the relevant stakeholders in applying the appropriate corrective measures.

In conclusion, after considering the possible changes, the team will ensure that changes are implemented smoothly, with lasting benefits and the consideration on change outcomes on the project and all the stakeholders. The team will coordinate unique sets and objectives arising from change and the existing plan.

Managing Communication

The project team will come up with a communication plan that will be applied for communication throughout the project’s life cycle. The plan will put into consideration all project stakeholders and their varied requirements at any given time for information. Additionally, it will put in to place mechanisms to ensure that all stakeholders get appropriate up-to-date information on the project progress.

The team will categorize project stakeholders based on their information needs to deliver all communications through the right channels and right stakeholders. The basis of categorizing information will be guided by the questions, what kind of information is required? Who needs to communicate? How frequent the communication is needed? In addition, what needs to be communicated?

Communication with team members

In communicating with team members, the communication plan should put into consideration the diversity of the team members. People from different cultures, in different age brackets, with different educational level and so on will have different methods of communication. Team leaders will be responsible for communication with the Project Manager.

Communicating with other stakeholders

The team will come up with strategies to ensure that all the stakeholders will get information they require and in a manner that they will understand.

To enhance efficacy in communication, the team will put into consideration the following measures.

Picking a communicator

The team will pick a good communicator (the team leader) and consequently assign them the duty to communicate on behalf of the team. Persons selected will have a good knowledge of the projects progress, and they will accurately respond to queries as they arise. Therefore, the choice of the person to communicate on the team’s behalf will be informed by the communication expertise and communication skills.

Appropriateness in communication

The project team will ensure that all stakeholders get information they need, in a way they will understand. Communication will be done in a timely manner.

The methods used

The methods of communication to be used will include both formal and informal. The selection of the method will be done in accordance with the appropriateness and timeliness of the method.

Use of templates

To maintain standardization and enhance clarity, the project team will use carefully designed templates in communication where necessary. There will be deliberate efforts to explain clearly every project element and contents to stakeholders. Consequently, stakeholders will be informed on what is required of them in terms of responses and feedback.

Feedback

The project team will make use of feedback to evaluate the effectiveness of communication. Feedback should also be a tool to inform subsequent decisions.

Use of written agreements

The team’s communication system will put emphasis on written agreements even when negotiations are done verbally. The written agreements will be used in project recording and as evidences in case of disputes.

Version control

The team will ensure that issuance of documents is regulated, it will therefore make use of numbered documents, each document having a unique number, and they will all bear the name of the project. Dates of issuance will be recorded and only designated officers will have the responsibility to issue such documents.

Project Closure

The steering committee in coordination with the project sponsor will ensure that the project will come to a formal end. This will be done upon the completion of all elements defined in the project scope and objectives attained. The team will carry out the closure in a manner that all the stakeholders will be satisfied that the project is completed.

The team will pay attention to the following three aspects, which include, handing over, commissioning and project evaluation.

Commissioning

With the complete outline of the project, the project team will transfer the project to the sponsor as a completion. Final user will require training where necessary. As such, the team will organize for training programs and provide the necessary training materials such as training manuals for production purposes.

The team will also check on all issues identified and any other issues noted after handover. Some of these issues may include safety of all workers and all the other stakeholders, environmental regulations and compliance, and the available technology.

Project handover

At this stage, the project team will finalize on all contracted services. All the related documents will be handed over to the appropriate stakeholders. Demonstration of the use and the intended benefits will be done to all the stakeholders.

Celebration

Efforts of all stakeholders involved in successful delivery of project in time and with high standards will be appreciated. Additionally, a formal project closure will be provided.

Project Evaluation

The team will come up with a project evaluation plan, which will be geared to assist individuals to learn from the experience, and use gained experiences in the future. The following is a breakdown of the evaluation process the project team will follow.

Post project review

This will be a review to check on how effective the project is based on meeting the set objectives. The team will have to account for all stakeholders in order to be as inclusive as possible in this review.

Benefits review

The outcomes of the project will be reviewed in relation to the returns it will give the beneficiaries. This will be done six months after the delivery of the project. The rationale for carrying this exercise will be to provide information about viability of the project. The information obtained after the review will be stored and used in future decision-making processes.

Future projects recommendations

The elements in the project whose delivery is to be done will be included in future projects after comprehensive development.

Contractor’s performance review

The project team will evaluate how effectively and efficiently the contractor has met the set objectives. Knowledge obtained will be used to determine whether the contractor and resources used will be considered for future projects.

Collecting, organization, and archiving of project records

The team will collect all the projects records, organize them, and finally archive them in an easy to retrieve way.

Reference List

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Brown, JT 2014, The Handbook of Program Management: How to Facilitate Project Success with Optimal Program Management, 2nd edn., McGraw-Hill Education, New York.

Denney, R 2005, Succeeding with Use Cases: Working Smart to Deliver Quality, Addison-Wesley, Boston.

Freidi, SS 2014, ‘Determinants of the Best Practices for Successful Project Management’, International Journal of u-and e-Service, Science and Technology, vol. 7, no. 3, pp. 173-186. Web.

Hardy-Vallee, B 2012, The Cost of Bad Project Management, Web.

McManus, B & Cacioppe, R 2011, An Integral Approach to Project Management, Web.

Packendorff, J, Crevani, L & Lindgren, M 2014, ‘Project Leadership in Becoming: A Process Study of an Organizational Change Project’, Project Management Journal, vol. 45, no. 3, pp. 5–20. Web.

Project Management Institute, Inc 2013, A Guide to the Project Management Body of Knowledge (PMBOK® Guide), 5th edn, Project Management Institute, Pennsylvania.

Skaf, MA 1999, ‘Portfolio management in an upstream oil and gas organization’, Interfaces, vol. 29, no. 6, pp. 84-104.

Sweasey, R & Skitmore, M 2007, ‘The Use of Formal Project Management Processes in the Procurement of Queensland Aged Care Facilities’, International Journal of Construction Management, vol. 7, no. 1, pp. 43-56. Web.