Integrated Business Planning Improves the Competitiveness of Shale Oil & Gas Firms

Executive Overview
This report, based upon 45 interviews that ARC Advisory Group con-ducted with industry professionals, focuses on the upstream shale oil & gas value chain.

In large part, independent owner-operators developed the new shale oil and gas production processes that have led to this revolution in energy production. The "majors" have been conspicuously late to the game. The independent owner- operators focused on shale have spent far more on securing land rights and developing new production techniques than have the majors. Since they are often highly leveraged, bringing oil online quickly is critical to servicing their debt. A large part of their up-stream value chain is outsourced to oil service firms. The independents have traditionally valued speed and nimbleness over cost control.

Shale petroleum is transforming the US into a leading producer of oil and gas. But, the production boom also puts added pressure on margins for individual shale oil and gas companies. Containing costs will not be easy: wells decline quickly; shale basins are operated over very large areas; the value chain is long in terms of both planning horizons and lead times; and while the value chain relies heavily on outsourcing, trading partners are poorly integrated into the planning processes.

However, industry-specific enterprise applications for upstream shale oil & gas have emerged that can help streamline the value chain and improve margins.

Most integrated business planning has focused on product-centric supply chain industries. Shale oil & gas, in contrast, is a project-centric value chain. However, there is an increased understanding of how to do inte-grated business planning in project-centric industries like shale oil & gas, which could become a core differentiator for participants in this dynamic, rapidly growing sector of the upstream oil & gas industry.

Table of Contents

• Executive Overview
• The Shale Oil & Gas Revolution
• Pressures Grow in the Shale Patch
• Project-Centric Value Chain    11
• Integrated Business Planning "Shale Style"
• Conclusion

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Keywords: Upstream Shale Oil & Gas, Independent Owner-Operators, Shale Petroleum, Shale Basins, ARC Advisory Group.