Holistic oil field value management: using system dynamics for ‘intermediate level’ and ‘value-based’ modelling in the oil industry

System dynamics has been seen primarily as a strategic tool, most effectively used at the highest level of stategy to identify robust policy interventions under a wide range of scenarios. However, an alternative, complementary and powerful role is emerging. This is at an ‘intermediate level’ in organisations to coordinate and integrate policies across the value chain. It is at this level where business value, as defined by the discounted value of future free cash flow, is both created and destroyed. This paper introduces the need for ‘intermediate-level’ and ‘value-based’ modelling and emphasises the natural role of system dynamics in supporting a methodology to fulfil the need. It describes the development of an approach and its application in the oil industry to coordinate the response of people and tools within operational, financial and commercial functions across the value chain to address a variety of problems and issues.