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Case Study

Frac sand availability improvement

unconventional oil and gas

While our client was enjoying strong demand matched by aggressive growth strategy in unconventional resources, they were challenged by constraints to meet demand for frac sand over the next three to five years. The business unit CEO needed assistance to install a modern, scalable central dispatch with integrated supply and demand process.

Our approach

We first conducted an analysis aimed at identifying frac sand improvement opportunities and an approach to install a scalable central dispatch. The scope included oil and gas corporate offices;  sand mine, production and loading facilities; and frac services field office located in oilfields. 

Sand Mine and Production Plant Findings:

  • Uncoordinated loading and dispatch schedules
  • Bottlenecks in loading locations – no visual boards
  • No standard procedures for planning, loading or reporting
  • No reports for loading or daily and weekly performance
  • Poor internal communication and collaboration

Headquarters and Field Findings:

  • No standard frac sand planning for long and short term
  • Fragmented involvement of all affected parties in demand and supply determination
  • Excessive demurrage and diverted loads
  • Limited oversight, performance measurements or feedback for field operations

Recommendations:

  • Design and install a supply/demand process with involvement and agreement of all affected parties
  • Design and implement an Execution Control System to manage the process with appropriate metrics and system elements
  • Improve load out throughput and productivity through lean bottleneck management and tools

Value Delivered

The analysis was completed within six weeks and subsequent implementation of organization, business process and management system changes was completed within 30 weeks. Changes include new supply/demand process, central dispatch, organizational structure, process enhancements to increase load out throughput, and cost improvements. 

Overall benefits achieved:

  • Financial benefits of $7 million to $11 million
  • Annual increased truck loading capability of 21 percent

Key achievements in more detail:

  • A comprehensive supply and demand process defines the end-to-end frac sand planning and tracking
  • The client moved forward with the creation of a scalable centralized dispatch offering a modern control room for 24/7 operations, including tools and processes for multiple sand and truck supplier management
  • GPS-based tracking enables up-to-the-minute transparency of trucking fleet as well as post-delivery reporting for analysis and validation
  • Client planning processes, tools and people forecast and manage long, intermediate and short demand for frac sand including coordination across multiple sand suppliers and trucking companies
  • The client implemented measures to more effectively control sand inventories providing a buffer for demand variation and seasonality
  • Truck loading efficiency at sand plant increased through improved scheduling and short interval controls that monitor for variation in execution and adjustments on a continuous basis
  • The client implemented organizational changes that provide well defined roles and responsibilities, training, staffing and management that delivers improved accountability, collaboration and ownership
  • A management system has been installed with accountabilities for well defined key performance indicators, meetings, tools and reports that provide for short interval review of performance trends, interventions and corrections using root cause analysis (RCA) and similar techniques
  • Realized multi-million dollar annualized impact through reduced cost in demurrage and increased productivity in truck loading as well as unhindered frac sand supply to meet growing demand

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