Portfolio Management in an Upstream Oil and Gas Organization

Implementing portfolio management in an organization pres-ents organizational and analytical challenges. A successful im-plementation requires an integrated solution for both the peo-ple aspects and the analytical aspects of the problem. Strategic Decisions Group (now Navigant Consulting, Strategy Consult-ing Practice) developed and implemented a portfolio-management process and system for a client organization in the upstream oil and gas industry. The tailored process pro-vides a forum for decision-focused dialogue between senior management and asset teams. The system provides the analyti-cal support for the process and enables management to com-pare 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 deci-sions in the life cycle. To further integrate portfolio manage-ment into its business processes, the organization set up an in-ternal 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 strate-gies. The value added from strategic alternatives developed using the method is in the hundreds of millions of dollars