High impact value chain simulations at BG Group
Teams compete against each other to see which team can create the most value for its shareholders.
Tensions run high among the management team. The deadline for submitting bids for the exploration licences is rapidly approaching. News comes over the wire that the political system in their preferred country has deteriorated – a bloody struggle for power is underway.
Should they offer the new military power $80 million for what could be the biggest oil and gas find in their company’s history or remain focused on politically stable, lower potential markets elsewhere? With only 10 minutes to go, the management team is still grappling with a decision that could make or break their fledgling company.
But this is a simulation. Over the past two years BG Group, alongside BTS, a global provider of customized business simulations, has given more than 500 employees the opportunity to experience the type of decisions that BG Group’s management team has to make.
The Business Discovery program is a four-day workshop designed to improve employees’ abilities to make business decisions by increasing their understanding of the oil and gas value chain and its interrelationships. The workshop has been run at BG’s assets around the world from Brazil and Houston through to assets in Asia. Participants have ranged from well engineers and commercial managers to asset managers.
BG Group had been challenged with the problem of how to train their employees on the complexities of the oil and gas chain in a way that would be engaging and ensure that participants took meaningful learning away from the experience. The opportunity to work with BTS to develop a customized business simulation based on BG Group’s business model offered the answer to this dilemma. Together they were able to develop a unique experience for their employees, using BTS’s “do, reflect, apply” methodology to ensure the maximum level learning retention and applicability back on the job.
The Business Discovery workshop starts with an introduction of the business that the teams will be running over the next four days. The group is then split into four teams and sent off to start planning their company’s strategy, goals, and vision.
Over the next 18 years (four days in the simulation world) the teams compete against each other to see which team can create the most value for its shareholders.
The first decision they must make is with which country do they want to conduct business, choosing between mature, low-risk, low-potential countries, and politically unstable countries with high-potential hydrocarbon reserves. The next stage is to obtain seismic data and then bid for exploration licences, against the other four teams, all of whom are trying to secure the prospects with the highest chance of success and potential.
Once successful in obtaining licenses, the teams go on to explore and appraise their prospects in the hope of finding hydrocarbons and keeping their fingers crossed that they don’t drill a dry hole.
If the teams find reserves, they are then faced with the decision of whether to develop the field and then how to commercialize the reserves. For any gas reserves they find they must secure markets before the reserves have any value. They have the opportunity to sell to the national energy company, but volumes are limited so they may have to look at creating demand for gas through power projects, transmission and distribution projects, or perhaps by investing in a liquefaction plant to enable the gas to be sent to higher value markets.
To be successful, teams must have a clear strategy and align their commercial activities with their upstream activities, ensuring that markets are ready when the volumes go into production. They must also build relationships with partners.
Teams experience leadership and teamwork challenges as each member plays a different role, such as that of CEO. The participants also get the opportunity to meet with the energy minister (played by the facilitators) of the country in which they are operating, to try and build a relationship and agree to further projects in a country. This gives participants a unique insight into the company’s relationship with the government.
Managing the company’s HSSE (health, safety, security, and the environment) record and corporate reputation is essential; a poor company reputation will have a devastating impact on its share price. Teams are also faced with real life challenges and opportunities that have been faced by BG Group, such as spiralling rig costs and gas shortages.
Matt Peacock, communications director, who attended the Business Discovery course shortly after joining BG said, “One of the best courses I have attended in any job in 20 years. My team consisted of a diverse group of professionals from all backgrounds and nations, but we quickly came together, learned a lot, and had a lot of fun.”
It is not just BG’s employees who are impressed with the program; BG’s peers have recognized the contribution it has made to staff learning and development. In 2008 it won the Get Energy Award, which is designed to improve capabilities in exploration, production, and transportation of energy, and to work towards a sustainable global energy industry.
BG Group’s learning and development manager, Mark Benians, noted, “Business Discovery has played an important role in BG Group, by quickly and effectively improving employees’ understanding of our organization’s strategic business model.”
Sessions have attracted numerous prominent speakers from within the company, some who have regularly given their time to outline key business themes. They include Sir Robert Wilson, group chairman, who shared his experiences and BG’s strategy with a group of participants at a course in India. In addition, three executive vice presidents or senior vice presidents, and eight asset general managers have taken part – proof of the continuing high level of support from management for the program.
More recently, BG Group Houston launched a new course, using the experiential and simulation methods of the Business Discovery program, which sets out to model the unique advantage that BG gains from the way it manages the LNG (liquefied natural gas) value chain.
Having recruited more than 130 employees in the past year, BG Houston needed to bring new employees up to speed quickly in the LNG value chain, and provide an experience that would also help retain employees within the competitive marketplace. The course has also been designed to be used by employees working in BG’s LNG assets around the world and external partners who play a part in the liquefaction chain. A recent course in Trinidad & Tobago was attended by the country’s government and education officials and proved very successful.
“BG Group has met the challenge of aligning its managers, who are based across the globe, to its strategy. They have created excellence through teamwork and built its energy value chain expertise through Business Discovery and the LNG experience, with impressive results,” said BTS UK MD Joel Sigrist. “I congratulate the BG Group team on winning the prestigious Get Energy Award and commend their forward-thinking approach to talent development and corporate responsibility.” OGFJ
About the authors
Emily Fletty [[email protected]] is director, regional management and organizational development – Americas, and global liquefied natural gas region, BG Group, with responsibility for the AG LNG region. Prior to this, she was a human resources manager supporting LNG shipping and business development in North America and the Caribbean.
Tracey Smith [[email protected]] is a consultant with BTS where she is responsible for developing and delivering executive-level simulation-based solutions for leading corporations worldwide. She has worked with energy companies, including BG Group, National Grid, and Alstom Power, as well as clients in the pharmaceutical, services, and finance sector.