Intercultural issues in the upstream oil gas industry
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INTERCULTURAL ISSUES in the Upstream Oil & Gas INDUSTRY. University of Warwick: November 15, 2012 Glen Burridge NDB – New Digital Business Ltd. Structure of Presentation 1. Overview of Upstream Oil & Gas business 2. The Three-Way Intercultural Challenge 3 . The Consequences

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Intercultural issues in the upstream oil gas industry

INTERCULTURAL ISSUES in the Upstream Oil & Gas INDUSTRY

University of Warwick: November 15, 2012

Glen Burridge

NDB – New Digital Business Ltd


Intercultural issues in the upstream oil gas industry

Structure of Presentation

1. Overview of Upstream Oil & Gas business

2. The Three-Way Intercultural Challenge

3. The Consequences

4. Possible Solutions


1 overview of upstream oil gas business

1. Overview of Upstream Oil & Gas Business


Intercultural issues in the upstream oil gas industry

The Upstream Oil & Gas Industry


2 the three way challenge

2. The Three-Way Challenge


Intercultural issues in the upstream oil gas industry

  • A. The NATIONAL Challenge

Algerian

American

Egyptian

British

Living in France

British

Living in Indonesia

Pakistani

7 Production Engineers

6 Reservoir Engineers

7 Geologists

3 Managers

2 Geophysicists

2 Admin Support

2 Software Support

1 Petrophysicist

1 Data Manager

Algerian-American

Living in US

British

Living in Hungary

British

Living in Australia

British

Portuguese

Living in UK


Intercultural issues in the upstream oil gas industry

  • B. The ORGANISATIONALChallenge

Operating Company

Government

Project 2

Operator

P3

Partner 1

Project 1

P2

P4

Consultants

Service Co 1

Contractor 2

Advisors

……Contractors n

Contractor 3

C4

C5

C6

…………..…………Sub-Contractors x many n?


C the technical challenge

C. The TECHNICAL Challenge


Intercultural issues in the upstream oil gas industry

The Technical Challenge I - People

The Big Crew Change:

- Large number of highest experience staff to retire in coming decade

- Missing Generation of mid-career professionals

- Budding economic powers providing increasing share of workforce

- Steadily more gender-balanced professional workforce

Knowledge Transfer:

- Professional operational status: 5+ years

- Project-specific expertise: 6 months+

- High degree of training, but poor mentoring of new staff

- Poor knowledge capture & transfer from experienced staff

Geoscientists (“Geo’s) vs Engineers:

- Large-scale, 4D conceptually-driven thinking of geoscientists

- Focused, measurement & building-driven view of engineers


Intercultural issues in the upstream oil gas industry

Engineer

Geologist

Geophysicists

So, an Engineer, a Geologist & Geophysicist are in a room with the Boss.

The Boss asks the Engineer “What’s 2+2?” The Engineer replies “4.0000″.

Then the Boss ask the Geologist the same question. The Geologist replies” Oh, somewhere between 3 and 5″.

Finally, the Boss ask the Geophysicist the same question. The Geophysicist replies ” What would you like it to be?”


Intercultural issues in the upstream oil gas industry

Well Engineer / Driller

Production/Facilities Engineer

Geophysicist

Geologist

Reservoir Engineer

Petrophysicist


Intercultural issues in the upstream oil gas industry

The Technical Challenge II - Process

  • Long, complex, projects with multiple partners & web of contractors:

    • - Differing perceptions of lines of command

    • - Matricial vs hierarchical decision-making structures

    • - Opposing motivations -> poor integration

    • - Vastly different psychological contracts (Handy, 1999)

  • Project Governance:

  • - Nationalisation of JV projects often written into Production contracts

    • - Ability of host country to effectively manage resources

    • - Training and technology transfer aspects often poorly executed

    • - National identity strong in management, but workforce diverse

    • - Major disparities in remuneration, roles and expectations

    • - Mentality conflict of operational expediency vs project management

    • - Office-based vs Operations (off-shore vs on-shore)


Intercultural issues in the upstream oil gas industry

Explore

Develop

Produce

“Cloud Thinking”


Intercultural issues in the upstream oil gas industry

Explore

Develop

Produce

$$$

X

X

$$$

X

$$$


Intercultural issues in the upstream oil gas industry

Explore

Develop

Produce


Intercultural issues in the upstream oil gas industry

The Technical Challenge III - Technology

  • Increasingly difficult targets:

  • - Geopolitical constraints

  • - No Elephants Left to Discover?

  • - Extreme physical environments (deeper water, arctic)

  • - Multitude of environmental considerations

  • - Rarely a “silver bullet” technology

  • Unrelenting levels of:

  • - Heterogeneous technology development

  • - Complex infrastructure testing & deployment

  • - Potentially massive data overload (which patterns, trends important?)

  • - Residual risk and carried uncertainty (the subsurface is never “known”)


3 consequences

3. Consequences


Intercultural issues in the upstream oil gas industry

Examples of 3-Way Cultural Challenges faced by Oil & Gas Managers:

Differences in interpretations / recommendations between local and expat subsurface staff:

Need to reconcile & select most appropriate fitting all necessary criteria

Critical Issue / Error / Risk Reporting:

Face, power-distance, individual vs collective responsibility

Goal Conflict:

Idiocentric Corporate multinational company goals vs Allocentric National Polychronic perspective

Large project planning:

Point outcomes vs consensus building. Time perceptions. Delegation.

Roles & Responsibilities:

Power-Distance, Linear vs Circular decision-making, Matrix vs Hierarchy. Multiple projects

Uncertainty handling (sub-surface environment, external constraints etc)

Recognition, acknowledgement, assessment, consequence


Intercultural issues in the upstream oil gas industry

  • International

National

European

British

Close-knit consultancy

Consultant

Client Interaction

English

THE INDIVIDUAL

Project Teams

Client Staff

Organisational

Solo work

Geologist

Engineer

Client Management

Geophysicist

Technical


Intercultural issues in the upstream oil gas industry

Western European

IOC (Integrated Oil & Gas Company)

National

Yemen

ORGANISATION 1

Russian Arctic

Organisational

North Sea

Technical


Intercultural issues in the upstream oil gas industry

Middle Eastern

NOC (National Oil & Gas Company)

National

ORGANISATION 2

Russian Arctic

Yemen

North Sea

Organisational

Technical


Intercultural issues in the upstream oil gas industry

Root Causes/ Failures of Macondo Well Explosion

Ref: US Chief Counsel’s Report to President

“As a result of a cascade of deeply flawed failure and signal analysis, decision-making, communication, and organizational - managerial processes, safety was compromised to point the blowout occurred with catastrophic effects.”

Perhaps there is no clear-cut “evidence” that someone the organizations in the Macondo well project made a conscious decision to put costs before safety; nevertheless, that misses the point.

It is the underlying “unconscious mind” that governs the actions of an organization and its personnel.

“Cultural influences that permeate an organization and an industry and manifest in actions that either promote and nurture a high reliability organization OR actions reflective of complacency, excessive risk-taking and a loss of situational awareness.”


4 possible solutions

4. Possible Solutions


Intercultural issues in the upstream oil gas industry

National

Understand

Cultural Intelligence

Communicate

Organisational

Engage

Technical

Ref: E. Plum et al., 1998


Intercultural issues in the upstream oil gas industry

What can be learnt by O&G from the world of aviation?

  • Recognition of the importance of Human Factors

  • - Integral to aviation industry training and culture

  • - Established as primary factor in many incidents

  • - Cultural factors tackled head-on with safety justification

  • High Reliability Organisation (HRO) foundations:

  • - Standard Operating Procedures (SOP’s)

  • - Checklisting

  • - Licensing

  • - Crew Resource Management (CRM)

  • - Command, Control, Communicate (C3)

  • Promotion of Quality Assurance, Safety & Excellence

  • - Non-negotiable barriers

  • - Confidential Reporting

  • - Pro-active RCA (root-cause analysis)

  • - Accident Investigation

  • High levels of accredited training all the way through an organisation

  • - Simulation, simulation, simulation…..

  • - Emulation of What If’s, Consequences, ….not just Deliverables


3 way cross cultural management requirements

3-Way Cross-Cultural Management Requirements:

  • Strong inherent understanding of and ability to distil:

    - complexity

    - risk

    - uncertainty

    - motivations

    - consequences

  • Ability to enforce, engage or drive (the “stick”):

    - best practice goals

    - learning from past mistakes

    - non-negotiable thresholds

    - 3-way cross-cultural awareness

    - awareness into action (RACI)

  • Encourage, steer and define (“the carrot”):

    - context-sensitive communication

    - multi-threaded, flexible management style

    - knowledge transfer, management & sharing

    - team-working as inter-cultural exercise


Intercultural issues in the upstream oil gas industry

Q&A


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