Series on Earned Value Management: Applying Earned Value to Overcome Challenges in Oil and Gas Industry Surface Projects


By Williams Chirinos, MSc, PEng, PMP 

Alberta, Canada


Statistics show that the failure rate of projects in the oil and gas industry is greater in comparison to other industries. To overcome this particular challenge, a new project management methodology based on earned value is outlined, because new and emerging ideas are needed to reverse this trend in the oil and gas Industry.


Even though there is an effort to implement the best project management techniques worldwide, energy projects regardless of their size still experience difficulties, particularly in the oil and gas industry.  Oil and gas surface facility projects have difficulties meeting the three successful criteria; delivered on time, with a final actual cost on or below budget, and in full compliance with the requirements.

This article describes the main characteristics of oil and gas surface projects and analyzes the major challenges encountered during the planning and execution of these types of projects. This article also addresses the current use of earned value project management in the oil and gas industry and presents a reason why this technique has not been widely applied. In the last part, a new project management approach is presented to facilitate an effective implementation of earned value in the oil and gas industry, in order to increase the probability of success and return of investment of capital surface projects in the near future.

Oil and Gas Surface Projects

Oil and gas industry surface projects are needed to transport and process the crude oil and gas from wellheads to shipment facilities. Usually wellheads are in remote locations such as deserts, jungles, offshore deep-water and onshore desolated areas. These remote locations are also usually under seasonal cold or hot temperatures and with restricted and difficult access roads. To move the multiphase flow (oil-gas-water) from the wellheads, it is required to install multi or mono phase flow lines and artificial lift equipment like pumps, compressors, pressure vessels, and electrical and remote control units. On the other hand, oil sands deposits are mined when they are close to the surface and large trucks are used to transport the oil sands to the extraction plants.

Surface process plants are needed to separate oil, gas, water, and sand streams into independent ones. These process plants are located also in remote and sensitive natural areas, relatively close to the wellheads and oil sands. Further process facilities are needed to take each independent stream into specification and ready for distribution or usage. The crude oil is mixed with other oil streams or further dehydrated and transferred to field storage tanks. The gas is processed in extraction and compression gas plants for distribution and commercialization. The subsurface water is cleaned for reinjection into the reservoir as a pressure recovery method, and the sands (plus residual water) are transferred to holding ponds for reclamation. The previous steps are called upstream process, which are part of exploration and production companies working on the oil and gas extraction business.

At the field storage tanks or shipment facilities the oil and gas are finally transferred to downstream process refineries through pipelines or floating ship vessels. Pipelines are the most efficient method to transport hydrocarbons. A pipeline project usually requires pump stations to keep the liquid flowing or compressor stations to transfer the gas to the destination points.


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Editor’s note: This series of articles, some previously published in The Measurable News, is provided by the College of Performance Management (CPM), the world’s leading professional organization devoted to integrated project and program performance management.  This article originally appeared in the April 2013 edition of The Measureable News, republished here with approval of the author and CPM.  More information about CPM can be found at www.mycpm.org. 

About the Author

pmwj20-mar2014-chirinos-AUTHOR PHOTOflag-canadaWilliams Chirinos

Alberta, Canada

Williams Chirinos is president of INEXERTUS, Inc. a project management consulting firm specializing in  providing software applications, consulting, and training services to implement the latest and most effective project management techniques.  He has project management experience and expertise, substantiated by more than 20 years of experience in the Oil and Gas Industry and EPC environments.  He obtained his Industrial Engineering degree in Venezuela and a Master of Science degree in Petroleum Engineering at The University of Tulsa, Oklahoma, in the United States.  He is a Project Management Professional (PMP) credential holder and an active PMI member since 2006. Currently he is an Associate Editor of the Oil and Gas Facilities for the Society of Petroleum Engineers, and was a Technical Editor Reviewer from 2005 to 2012. He is also the President of the PMI Southern Alberta Chapter Toastmasters Club.  Mr. Chirinos can be contacted at [email protected].