Portfolio management in an upstream oil and gas organization

Implementing portfolio management in an organization presents organizational and analytical challenges. A successful implementation requires an integrated solution for both the people aspects and the analytical aspects of the problem. Strategic Decisions Group (now Navigant Consulting, Strategy Consulting Practice) developed and implemented a portfolio-management process and system for a client organization in the upstream oil and gas industry. The tailored process provides a forum for decision-focused dialogue between senior management and asset teams. The system provides the analytical support for the process and enables management to compare decisions and assets across the portfolio and determine optimal allocation of resources. The system architecture builds on a rigorous model of the asset life cycle and the key decisions in the life cycle. To further integrate portfolio management into its business processes, the organization set up an internal core team to facilitate the process and work with the asset teams on an ongoing basis. This has helped reduce the time for developing regional and business-unit portfolio strategies. The value added from strategic alternatives developed using the method is in the hundreds of millions of dollars.