Lean Management For Hess -- April 2, 2015

Reuters is reporting:

Oil producer Hess Corp has turned to a manufacturing process developed by automaker Toyota Motor Corp to cut costs and boost production as crude oil prices lag.

Deploying a process called Lean manufacturing, and used by only a handful of other oil producers, the move has shaved roughly $400,000 off the cost of each North Dakota well in the past eight months, a savings that comes even as Hess adds more sand and frac stages on each well.

By mirroring Toyota, which pushed its employees relentlessly each day to focus on ways to produce cars cheaply and more efficiently, steps that helped it rival Detroit automakers, Hess hopes to emerge from the oil price slump stronger than peers.
The New York-based company believes that by using Lean manufacturing its 1,200 operated Bakken wells can remain profitable with U.S. crude oil prices above $40 per barrel, roughly $9 below current levels. 

Hess also said it could go so far as to survive with oil around those levels for the next eight years.

I think we're going to see a lot of this, also, going forward. Reuters is reporting:

The tech geeks are coming to the oil industry's rescue.

With the price of crude plumbing lows not seen since 2009, Royal Dutch Shell, Whiting Petroleum Corp and many others are turning to rocket fuel, Big Data, lasers, spectrometers and other new or revamped technologies to do more for less.

As North America's oil companies slash spending and lay off workers, established services firms and start-ups are hawking products that better assess oil and gas deposits, help drill fewer but bigger new wells, and boost output from old ones.

It is too early to judge whether the new tools can produce gains similar to those of the past six years, when well output kept rising at double-digit rates and the time needed to drill and frack new wells dwindled to about 10 days from 40.

Baker Hughes Inc saw more client inquiries about products that increase efficiency of existing wells in the first three months this year than in all of the past two years.