How best to benchmark in a world full of data?

The practice of benchmarking is not a new concept to the oil and gas industry and its importance within all divisions of an operator has grown significantly over the last 20 years. The last ten are particularly notable, as the technology and products that capture and store this data have become more advanced, affordable and ultimately vital to a company's success or downfall. With such a large selection of products with seemingly similar offerings to choose from, what are the key distinctions to look out for if you are seeking to implement a stringent benchmarking program? Below I have outlined one factor to bear in mind above all else when looking to benchmark.

One topic I have heard raised again and again when discussing benchmarking amongst my peers is the difficulty in finding true comparative data. While the oil and gas industry is slowly getting better at this, we are not yet at a point where standardized definitions for measurements, terminology and processes can be assumed across geographical regions, individual operating companies or even departments within the same company. This makes the process of gaining true insight from multiple data sources difficult. With much of this data being taken from publicly available sources, and thus with little direct quality control against the original source, implementing major changes or performance targets within your own company based off this data comes with a certain amount of risk. So, what can be done to help ensure that you are grouping and comparing apples with apples? Setting clear company-wide definitions and measurement standards is the first step towards ensuring effective internal benchmarking. This will take a cultural change and strong organizational leadership to implement initially, particularly for multi-national operators, but establishing reliable internal benchmarking and reporting must be completed if any value is to be gained from looking at the performance of your peers.

Managing to set standardized definitions for data capture and measurements is obviously much harder to implement across the wider operator community, however there are organizations and industry groups that have managed to achieve this. There are many examples of informal arrangements taking place between operators within the same field or county in which data swapping and comparisons have taken place with the aim of improving overall performance and increasing efficiency. On a larger scale, peer-to-peer data sharing clubs such as Rushmore Reviews use a model of pre-determined (by the participating operators) data definitions and strict reporting parameters to build up a large database of wells from which reliable conclusions can be made. The advantage of the formalised versions of data sharing over the informal data "swaps" is of course third-party independent quality control, however this does come at a cost and takes up more of the operator's resources.

When looking to benchmark performance, be it internal or external, reliability of the data is paramount. In any organization or industry, implementing procedural change in order to drive performance improvement is a large undertaking that requires investment of both monetary and human resources. It is done with the aim of introducing long lasting performance improvements and promoting a culture of continuous learning. There are many factors to consider when choosing which data providers are the right fit for your company's unique requirements, but as with anything in life quality over quantity tends to pay off in the long run.

Learn more about peer-to-peer data sharing and benchmarking services from Rushmore Reviews.

David Masson, Rushmore Reviews Product Management Specialist, IHS Markit.

Posted 24 October 2019

This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.