When do drilling alliances add value? The alliance-value model
A recent Gas Research Institute report details three previously unstudied aspects of alliances: specific measurable factors that improve alliance success, how a successful alliance should be structured, and when an alliance makes economic sense. For the purposes of this report, an alliance is defined by technical process integration, which includes joint planning, execution and evaluation. Technical process integration shifts the definition of an alliance beyond a simple focus on the commercial terms. The most innovative tool to emerge from the report, the Alliance-Value model, addresses those aspects surrounding when an alliance makes economic sense. The theory behind the Alliance-Value model is that the long-term viability of any drilling relationship hinges on its ability to create real value and achieve stability. Based upon the report`s findings, the most effective way to form such an alliance is through a detailed description and integration of the technical processes involved. This new type of process-driven alliance is characterized by a value chain which links together a common set of technical processes, mutually defined bottom-line goals, and shared benefits. The Alliance-Value model computes the net present value of the cash flows for four different operating arrangements: (1) business as usual (conventional competitive bidding process), (2) process-driven alliance (linking technical processes to accelerate production and reduce expenses), (3) incentivized process-driven alliance (linked technical processes with performance incentives to promote stability), and (4) no drill case (primarily used to gauge the market value of services).
- Sponsoring Organization:
- USDOE
- OSTI ID:
- 691513
- Journal Information:
- SPE Drilling and Completion, Journal Name: SPE Drilling and Completion Journal Issue: 3 Vol. 14; ISSN 1064-6671; ISSN SDCOE5
- Country of Publication:
- United States
- Language:
- English
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