Application of lean manufacturing principles to coal seam gas production*

Abstract

Themes covered:

1. why lean;

2. how lean manufacturing aligns with our business;

3. the areas of focus for lean production;

4. early results; and,

5. the expected rollout going forward.

This paper examines the application and alignment of lean manufacturing principles to CSG production at Arrow Energy. Arrow Energy is a vertically integrated energy provider with a focus on exploration and production of CSG. Implementation of lean manufacturing is a critical success factor for Arrow to deliver on its aggressive expansion targets.

The lean manufacturing philosophy is not a new concept. Pioneered by Toyota, lean manufacturing has proven (if well implemented) to be able to deliver improvements in delivery, cost, quality and safety. In a commodity business all costs must be scrutinised and the focus on lean drives value for internal and external customers and allows practitioners to identify and remove waste from the system.

While CSG production does not look like a traditional manufacturing business, the lean approach to continuous improvement does in fact apply. High volumes of repetitive work in areas such as well drilling, well completion and surface infrastructure deployment support the case for applying the philosophies of lean manufacturing. Long distances between work cells and variability of work conditions, not normally associated with traditional manufacturing, do present challenges; however, these challenges impact any type of improvement effort and the lean production principles can be readily adapted to these conditions.

Early applications of lean philosophy have been applied to surface infrastructure deployment with a measured reduction in lead time of approximately 70%. Additional engineering and process redesign work is underway, which will provide additional improvement.

The expectation is that over time Arrow will deliver a strong lean culture throughout the organisation, which will have a significant impact on the bottom line results.