BHP Billiton: Challenges, Competitors, And Project Management

Introduction to BHP Billiton

Question:

Discuss about BHP Billiton and Optimisations techniques related to different issues.

BHP Billiton is one of the largest mining companies in the world. It is an Anglo-Australian multinational company that deals with mining, metals and petroleum. It is the fourth largest company in Australia. This company also have many projects in several countries worldwide. There are many challenges and issues related to different fields of the company. The hydraulic fracturing management is one of the challenging tasks faced by the company (Andrews 2016). For the betterment of the hydraulic fracturing management system solutions are required to be taken.

The main competitors of BHP Billiton are Agnico Eagle Mines Limited, Alamos Gold Inc., Alexo Resource Corp, Alio Gold Inc., Almaden Minerals, Ltd., Americans Silver, AnalogGold Ashanti (Chen 2016).

Project management is an important task to resolve the problems regarding a project and managing it. In an organisation there are many big problems related to the projects that have to be solved in a planned way. There are various things regarding project management like initialising the target, understanding the problem, estimating the cost of the project and assigning the task to the different team members.

In this report the overview of project management in accordance with the problem is discussed in details. The discussion contains real data and practical cases related to BHP Billiton.

About BHP Billiton and optimisations techniques related to different issues

BHP Billiton is an Australian company which has headquarter in Melbourne, Victoria. In 2015 BHP Billiton became the world’s largest mining company. It was formed in 2001 through the merger of the Australian Broken Hill Proprietary Company Limited (BHP). It serves worldwide. Jacques Nasser is the chairman of the company. Andrew Mackenzie is the CEO of the company. This company mainly extracts Iron ore, coal, petroleum, copper, natural gas, nickel and uranium. It collects almost A$ 30.9 billion as revenue (Bossi 2017). It has an operating income of US$6.2 billion (Boud et al. 2014). It gets profit worth US$ 6.2 billion. It has more than 65000 employees. Aussie minerals and oil company BHP Limited acquired UK miner Billiton plc in 2001. As a result a dual-listed company has been formed as a single entity. It is one of the largest diversified natural resources companies. The competitors of BHP Billiton are Agnico Eagle Mines Limited, Alamos Gold Inc., Alexo Resource Corp, Alio Gold Inc., Almaden Minerals, Ltd., Americans Silver, AnalogGold Ashanti (Chen 2016). Till now BHP Billiton has managed to become the biggest business entity in the market of oil and minerals extraction.   

Challenges and Issues Facing BHP Billiton

There are many challenges in the business of oil and minerals extraction. From designing the mineral extraction process to the last stage of supplying the minerals to different places, there are many stages that should be executed in proper way (Dodds 2015). In this organisation the main challenges are safety of the coal workers, creating proper automation system, maintaining transportation cost. There are many optimizations techniques that are used as the solution of the problems. The solutions may contain different techniques like linear programming, sensitivity analysis, network model, integer programming, project management, waiting line models, simulations. Here we mainly emphasise on project management as the main technique to solve the issues (Cosens 2015). As BHP Billiton is one of the largest mining organisations in the world, the project management is hard job to do. A huge amount of data is present for the analysis of different stages of the business. It is a big task to resolve the problem and handle the big data related to it.

In this report the problem regarding the hydraulic fracturing management is discussed. There are many safety related issues as well as cost related issues present in this report regarding the hydraulic fracturing management.

Real data and current status of hydraulic fracturing management by BHP Billiton

In this report the discussion is drawn on the responsibility of managing hydraulic fracturing by BHP Billions. During the recent downturn in the oil and gas industry we continued to make progress on optimizing and simplifying the hydraulic fracturing operations while maintaining our strong focus on protecting the health and safety of the workers and communities and limiting our impact on the environment (Hubbard 2017). The drilling and completions activities during fiscal year 2016 were limited to Eagle Ford ad Permian. Since 2011 the company follows the main principles which are followed by all the workers and management of the company. These principles say that the endeavor to be the safest company in the industry, protect the land where the workers operate, safeguard and manage water resources, minimize air emissions from our operations, and be a good neighbor to the communities. The workers carefully develop and rigorously implement safety and operating systems, properly train the people, and do not compromise our standards (Larson and Gray 2013). They only work with contractors who share our commitment to safety, and the company develops relationships and partner with the host communities which border our areas of operation. Workers construct and operate our facilities in an environmentally sensitive manner and the company conducts environmental assessments prior to initiating construction to minimize the impacts of the operations (Piper 2016). All of the shale plays maintain a plan that includes controls to manage impacts to land and biodiversity, and the intent is to restore the environment to its pre disturbance condition or better when workers leave. Reducing and Reporting Toxic Chemicals workers report the ingredients of the fracturing fluids used for well completions into Frac-Focus, the hydraulic fracturing chemical public disclosure registry. We are partnering with responsible service companies who are working to reduce the number and toxicity of chemicals that we use in fracturing fluids. The company does not use benzene, toluene, methylbenzene or xylem (BTEX) or diesel in our fracturing fluids, and for a high percentage of our wells we disclose all of the ingredients and additives by name and Chemical Abstracts Service Number with the maximum percentage responsibly managing hydraulic fracturing 1 BHP Billiton’s fiscal year. Some proprietary chemicals were eliminated entirely from use (Larson and Gray 2013). Frac-Focus allows the company to work with the vendors to apply a systems approach to improve the transparency of reporting chemicals company use to the public.

Competitors of BHP Billiton

Water management is also an important part of the safety program. The waste management, well integrity and the monitoring of the process is important in case of water management (Kenny and Manvell 2014). The checking of the wells and drilling of the shale play an important role in the maintenance and management of well integrity. Pressure testing of the casing of each section, evaluation of the quality of the cement is required for the betterment of the service during the water management.

Here are some details of the drilling of the well. Beginning in 2015 company voluntarily implemented an ongoing pre-drilling groundwater monitoring program in the active drilling areas of our shale operations—which include the Eagle Ford and Permian shale plays. Groundwater monitoring is not applicable in Fayetteville and Haynesville due to the suspension of drilling operations in FY2016 (Cosens 2015). The procedure begins by identifying registered water wells within a 1,500-foot radius of each new well pad using geographic information system (GIS) mapping. Company then contact landowners to confirm the locations of any water wells in use, both registered and non-registered, and obtain landowner permission and an agreed date to sample the wells.

Shale plays	Total water use 1000bbls	Groundwater 1000bbls	Surface water use 1000bbls	Produced water recycle 1000bbls	Total water intensity bbls/mmbtu
Eagle Ford	25047	25047	0	0	0.079
Fayetteville	8	0	8	0	0.0001
Haynesville	0	0	0	0	0
Permian	7273	5609	0	1663	0.134

Table 1: The water consumption details and the intensity are given below in table.

Shale Plays	Total fresh water use 1000 bbls	Groundwater 1000 bbls	Surface water use 1000 bbls	Fresh water intensity bbls/mmbu
Eagle Ford	25,047	25047	0	0.079
Fayetteville	8	0	8	0.0001
Haynesville	0	0	0	0
Permian	7273	1579	0	0.029

Table 2: FY2016 fresh water consumption and intensity

Shale Plays	FY15	FY16
wells	%	wells	%
Eagle Ford	237	0	147	0
Fayetteville	5	0	0	0
Haynesville	25	0	5	0
Permian	44	0	32	0
Total	311		184	0

Table 3: Percentage of wells completed that experienced well integrity failures that resulted in release to environment

The main problem regarding water management is the presence of toxic chemicals present in the water. There are many toxic chemicals that are present in the underground water that mainly contains mercury, arsenic and other presence of heavy metals. The company does not use benzene, toluene, ethyl benzene or xylene or diesel in the fracturing fluids and for a high presence of the wells it is not disclosed about the ingredients and additives by name and chemical abstracts service number with the maximum percentage.

At the drilling operations in Eagle Ford and Permian we utilize a mobile reverse osmosis system to produce potable water and ice from local well water for workers living on site and to treat wastewater for use down hole during drilling (Paul 2016). This system eliminates most trucking of water and wastewater into and out of our drilling camps and reduces overall trucking on location by an average of about 39 trucks per month, equivalent to about 117,000 fewer truck miles travelled in FY2016 and eliminating 95 per cent of truck traffic into the drilling camp. It also promotes sourcing from a locally based small-to-medium enterprise.

Overview of Project Management

The water intensity of the operations is directly related to the level of drilling and hydraulic fracturing activities underway. Water intensity is not applicable in Fayetteville and Haynesville due to the suspension of drilling operations in FY2016. In the Eagle Ford and Permian shale plays where drilling and hydraulic fracturing work continues the water intensity is shown below (Poff et al. 2016). Permian total water intensity is higher because the overall production volumes from this newer shale play are lower in relation to the level of drilling and completions activity. However, the fresh water intensity is lower in the Permian due to produced water recycling and use of brackish groundwater (Price 2015). Cost is also an important issue regarding the hydraulic fracturing management. The cost is high for using large number of labors during the drilling. The amount differs for different places and it should be optimized for better hydraulic fracturing management.

Techniques of data collection

The information regarding the problems and the hydraulic project management are collected from various sources. The main sources are the websites, individuals of BHP Billiton. Information is collected by observation and analyzing techniques of different facts of the organisation. Interviews were also taken from the person to collect several data from him.

Persons who were interviewed for the information.

The project manager and the project director of BHP Billiton were interviewed to get the idea about the issues regarding a project of the organisation and also the solving techniques used to solve those problems.

Why he/she is the right person of providing the data.

Project manager is the person who takes the main initiatives and makes the principles of the project. He is acknowledged about all the information regarding the planning, distribution of works and other parameters related to the project. Project director makes the proper execution of the plans and the work. Project director has all the information record and the impact of the analysis of the data.

Summary of the data which is collected

After an accredited laboratory analyzes the water samples, it is recorded that the results in our internal data base, and provide a copy of the results to the landowner. The water intensity of the operations is directly related to the level of drilling and hydraulic fracturing activities underway. Water intensity is not applicable in Fayetteville and Haynesville due to the suspension of drilling operations in FY2016. In the Eagle Ford and Permian shale plays where drilling and hydraulic fracturing work continues the water intensity is shown below (Poff et al. 2016). Permian total water intensity is higher because the overall production volumes from this newer shale play are lower in relation to the level of drilling and completions activity. However, the fresh water intensity is lower in the Permian due to produced water recycling and use of brackish groundwater (Price 2015). Cost is also an important issue regarding the hydraulic fracturing management. The cost is high for using large number of labors during the drilling. The amount differs for different places and it should be optimized for better hydraulic fracturing management.

Hydraulic Fracturing Management at BHP Billiton

In this report project management is mainly highlighted as the optimization technique. The optimization technique is used to solve different challenges regarding different projects in BHP Billiton (Burke 2013). BHP Billiton is one of the biggest organisations in the mining industry. It has a large variety of tasks that cannot be executed without proper planning and estimation of each stage of the tasks. Project management deals with initiating, planning, executing, controlling and closing the task or the work given to a particular team to achieve specific target maintaining all the conditions (Cosens 2015). A project is a generated to produce a particular solution or result or service which has predefined starting and ending. A project is normally constrained by time and funding. In a project there is different type of works that should be done in a synchronised way so that the proper execution of the work is done. Generally a project is given to a team. In a team there are different people having different ability. So it is easy to solve all the problems regarding a project in a team environment. In project management the main work is distributed among different members of a team (Kenny and Manvell 2014). The main part of project management is to optimize and allocate the necessary inputs and apply them to meet predefined objectives. Project management has different approaches to handle a project like phased approach, lean approach, iterative approach and incremental approach. In the phased approach the main work is distributed in a series of different stages that have to be completed. The main stages are initialization, planning, design, construction, monitoring, controlling and completion or closing (Hay et al. 2017). The stages of project management depend on the type of the organisation. For a company dealing with construction, has different stages from a company that deals with IT projects. The lean approach in project management is important to focus on delivering value with less waste and reduced time. Iterative and incremental project management is used for huge projects in which phased approaches cannot be used. Constraints like time, resources are important factors in project management. To execute the projects in proper way one must analyse all the possibilities regarding the results and steps during the project. When there are uncertainties regarding a project, then project management follows the critical chain approach (Hubbard 2017). Critical chain project management also deals with time and resource constraints (Williamson 2016). The target of Critical chain project management is to scale up the amount of projects in an organisation. A well planned approach to project management is the product based planning, that depends upon the identification of all the products or project deliverables that helps to achieve the project objectives. It sets up a well planned project in output oriented way and not in activity or task oriented way. In process based management the use of maturity models like capability maturity model and OPM3 are observed. The OPM3 maturity models refer to such project management techniques that can perform successfully, consistently and predictably for executing the strategies of an organisation (Meyer 2014). In case of project production management the use of operation management is done to the supply of capital projects. The management of a project depends on a aspect of the production where the project transforms inputs like materials, information, labour, plant and machines. In case of benefits realization management the main importance is put upon outcomes or the benefits of the project.  The example of providing a project to the needed things can agree to provide a computer system which will analyze information and payrolls. Initiating a project is the first step of project management. In this step the nature and the scopes of the project are identifies (Leach 2014). It is very important to understand the business need of the project in order to make the project successful. The understanding of the business environment is important here to understand the challenges regarding it. The initiating stage of the project management should include the steps to solve different problems related to it. The steps are processing the business elements for making the goals, monitoring the process, analysis of the costs and financial elements and the advantages like budget, analysis of stakeholders and the persons needed for the project, project managing including schedules, costs and deliverables and detailed discussion in strength, weakness, opportunities and threats to the business. The next step of project management is to plan in the correct way. Planning is not only the most important part of the project management system, but also it is related to finalise the project into correct direction. The team as well as the authority take an important role in implementing the planning. The team should perform in accordance with the plan for finalising the project (Theodori et al. 2014). When the project is already started, then it is lead to a level of details. There are also many steps in planning process of project management. Those are determining how to plan and develope the aspect. The next steps are selecting the team which will work in the planned way. Identifying the deliverables is the next important step. Making the structure of the system is one of the most important steps in project management. The next step is to develop quality measures and the approval for starting the work. Finding and understanding the responsibilities in each step is important for the team members as well as managing body to make the project successful (Vajargah and Oort 2015). The other steps are executing, monitoring and controlling. Execution is an important part of the project management. The main essence of execution is that the planning which is done for getting the result of the project is implemented in the proper way due to execution. The execution and the implementation of the phase ensure that the steps of the project management are executed properly. Monitoring is one of the important parts of project management and it consists of the processes that are performed to observe project execution so that potential problems can be identified in a timely manner. The next step is about the monitoring. Monitoring consists of those processes that are performed to see the project execution for identification of potential problems. Controlling is the step of project management that helps the steps to be optimized in order to meet with the proper planning. Controlling includes different types of modulation processes for the proper execution of the main project.

Water Management at BHP Billiton

Project management is one of the best methods to optimize the problems related to a project. There are many challenges during performing a project. The project management is the chosen among the other methods as it is a method where predetermined planning is done. Due to planning and estimation of the stages regarding the project it is easy to estimate the possibilities and can take proactive measures to control the problems.

In the above discussion of hydraulic fracturing management many issues and problems are identified. These issues regarding the drilling of well, presence of toxic chemicals in the water can lead to serious problem. Different optimization and steps are taken in order to overcome the problems regarding the hydraulic fracturing management. In this report the application of project management is used to optimize and overcome the challenges present due to the reasons which are already discussed (Schwalbe 2015). There are many important steps in project management analysis. In the first step the initialisation of the task is done. In the initialisation process the stages of project management are discussed and the problems are identified. After identifying the problems, those should be discussed in details to understand deeply. The next stage of project management is planning (Valipour 2015). Planning of the project is the most important step of the project management. In this step all the estimation and the distribution of the work are done. Then the program should be executed in proper way to make the project successful. In project management generally an excel sheet is prepared that is used to assign the task among different people of the organisation. The estimation of cost and time is also done in order to execute the project in proper way (Verzuh 2015). The finalisation of the project depends upon the proper distribution of work and the estimation of the cost and time in project management. In this project there are many issues regarding the hydraulic fracturing management. First proper machines should be arranged for drilling and the cost should be estimated. Then the labour cost should also be estimated and the task should be distributed among the workers for proper execution of the project.

Conclusion

BHP Billiton is one of the largest mining companies in the world. It is an Anglo-Australian multinational company that deals with mining, metals and petroleum. There are many challenges and issues related to the hydraulic fracturing management of this company. For the betterment of the hydraulic management system solutions are required to be taken. From the above discussion it can be concluded that the hydraulic fracturing management of BHP Billiton can be more advanced with the help of project management. In this report different aspect of project management is discussed to solve the problems related to the hydraulic fracturing management. For proper completion of the project the estimation and the planning of all the stages are important to be decided. There are lots of factors which should be remembered at the time of planning about the project. In this report the arrangement of drilling machines for extracting water from well is done and also different methods are discussed for reducing the amount of the labour cost.

From the above discussion the followings are recommended

It is recommended that machines with better technologies should be used in order to make the hydraulic fracturing management more advanced.

The cost of the project can be decreased with the application of the automation systems as discussed in the report.

Project management takes an important role in order to solve the problems regarding the hydraulic fracturing management.

The steps discussed in the project management part should be followed to make the project in a planned and well structured way

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