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JVViews: January 2012 Issue

The PASC 2011 Accounting Procedure - Now Available

eStudies and Web Based Learning

What is 'Lean' and Why Do I Care?

New for 2012!

New Social Activity Coming for 2012!!

The PASC 2011 Accounting Procedure - Now Available

The Petroleum Accountants Society of Canada (PASC) has released the highly anticipated 2011 version of the Accounting Procedure. Also released were three related interpretation guides required for a full understanding of the Accounting Procedure: Chargeable Engineering Activities, Chargeable Communication Systems and Chargeable Field Computer Systems.

The 2011 Accounting Procedure (and related documents) replaces all previous versions of the PASC Accounting Procedure (including the most recent 1996 version) that are currently in use for domestic joint ventures. The current PASC Frontier Development and Exploration Accounting Procedures still remain as guidance documents for frontier operations.

Special thanks goes to the PASC Joint Interest Research Committee for leading this change initiative and creating the documents that are key to managing joint venture cost sharing arrangements. The Board of Directors of PASC and the Joint Interest Research Committee also extend their thanks to the many industry stakeholders who actively participated in the process through the various industry feedback cycles.

Reference copies of all four documents can be purchased online at Organizations interested in purchasing a site license are asked to contact the PASC office.

About the Petroleum Accountants Society of Canada
The Petroleum Accountants Society of Canada (PASC) is a volunteer-driven, member-based association for Canada's top-performing petroleum accountants. On behalf of almost 300 members, who are drawn from more than 160 energy companies, PASC develops and disseminate accounting guidelines and best practices, offers customized continuing education courses and organizes regular professional development and networking events.

Table of Contents

eStudies and Web Based Learning

Please forward this information to your legal, accounting, engineering departments!

PJVA recently unveiled a suite of web based courses geared towards practicing and prospective JV professionals and personnel involved in the development and operation of a Joint Venture facility.

These courses, available via the eStudies link on the PJVA website, are a supplement to the Joint Venture Certificate Program offered through PJVA and Mount Royal University. The courses offered on eStudies are identical to the courses offered at Mount Royal, the only distinction being that the Mount Royal courses are applicable towards the Joint Venture Certificates while eStudies are not. As well, the eStudies courses are offered in segments such that the student can customize and streamline their learning experience.

eStudies courses include Joint Venture Agreements, with modules in Construction, Ownership and Operating Agreements, Unit Agreements, and Service Agreements as well as a course in Joint Venture Administration. The Agreements courses offer excellent background knowledge to anyone who works with or is bound by a Joint Venture Agreement. Joint Venture Administration details exactly how work is to be conducted within the legal framework of Joint Venture agreements.

PJVA is excited to offer customizable and accessible web-based learning options to industry professionals. Check out today and click on eStudies!

What is 'Lean' and Why Do I Care?

Q1. What is Lean?
Lean is a collection of ideas and tools companies use to improve productivity. Lean starts with the simple question "What does your customer value?" The work that each company does can be identified as either value or waste. The formal definition of Value is as the minimum activity that modifies or changes a product or service to meet customer requirements. Waste is everything else that people and companies do such as reprocessing, searching for information, double checking, fetching, waiting and so on. In fact, very little of what most companies do can be classified as value.
  • Lean manufacturing focuses on identifying and enhancing value for the customer. By identifying value we can then identify and eliminate waste throughout the entire value stream.
This is backed up by surveys of companies1 that have found that for a typical manufacturing company only 5-10% of activities add value. For service companies this can rise to 30-40%. Don't believe this? Think about if you have ever had to have a puncture on your car fixed. The actual time to fix the puncture only took a couple of minutes, but the whole process probably took many times longer.

Q2. Isn't Lean only really useful if you run a factory making widgets?
No process, when you look at it from start to finish, is 100% efficient. It doesn't matter if that process is making a car, doing a quote for a customer or drilling an oil well. Every process has opportunities for improvement. Lean provides a framework and tools for companies to drive out inefficiency. This is why companies such a Shell and Talisman are investing so much effort into Lean and why both Mount Royal and SAIT are now offering courses in Lean management.

Q3. So how is Lean different from other ways to improve productivity?
Typically when most companies look to improve productivity they look at the big value add things they do, be it machining metal or a doctor treating a patient. They then look to find ways to make these steps more efficient. In Lean we call this "point improvement". In contrast Lean companies look at the whole process called the "value stream" that the part or patient travels through the company or medical centre. By looking at the value stream from order taking to delivery you are able to see where value is created and where waste is in the system. Understanding the whole process enables companies to identify where their efforts will have the biggest effect on reducing waste and therefore increasing productivity.

Q4. I thought Lean was just a collection of tools such as 5S and Six Sigma?
These tools are one very important part of Lean; they provide the methods through which companies can improve productivity. They are also often highly visible and therefore easily recognized. Lean is about the bigger picture. Lean thinking involves taking a holistic view of productivity and moves away from point improvements towards improving the whole process. A Lean company is always looking for continuous improvement.
  • One important lean tool is called a value stream map. Value stream maps are used to identify the fraction of each step that adds value and what fraction of each step is waste and ways to improve.
Q5. I thought Lean was about being Lean and mean - one less person?
Some companies have taken this approach; often it is called "business process reengineering". It typically doesn't work out well. Any productivity gains made usually quickly disappear, as few people in the company really want it to succeed. Clever companies use Lean to improve capacity, shorten lead times and improve quality. They achieve these changes by working with staff collaboratively to map and improve process or to reorganise a work area to improve work flow. The best companies revisit their previous improvement efforts, looking and finding opportunities to make further improvements.

Q6. What has Lean got to offer Oil and Gas companies?
Lots. Virtually all Alberta O&G companies share the same operational constraint - getting hold of and keeping good qualified people. To not make the best use of these people and have them do work that is inefficient makes little sense. Lean provides the thinking and tools for companies to get rid of inefficiencies and enable their processes and people to achieve more. This in turn makes for a less stressful, more empowered workplace and a more a productive and profitable company.

Q7. If you were to recommend doing one "Lean" activity what would it be?
I would do a spaghetti map for a business process or product that you know has problems. A spaghetti map uses a drawing of the layout of the workplace. Trace the path, for example, that a purchase order physically takes through the company travelling between departments from one desk or work station to the next. A well done map will quickly show how much back and forth happens and where unnecessary steps and delays are in the process. One trick is to walk the process backwards; this way you find the real route, not the one that is supposed to happen.

1 Summary of information from Institute of Industrial Engineers (US), Cardiff University (UK) and the Lean Alliance Germany.

Article submitted by Jim Beswick, a Lean Consultant

Editor's note: A timely article as we prepare to compete in a global gas world according to Peter Tertzakian, chief energy economist at ARC Financial Corporation, who was recently quoted in the Daily Oil Bulletin (Jan 13/12): "Why are we scared of competition? Let's get on with it. Let's get into the global supply chain and supply the world and capture the high value and compete." Sounds like lean is in. Stay tuned for future lean articles by Jim.

New for 2012

PJVA LinkedIn Group
PJVA is now on LinkedIn, the world's largest professional network. It's a great way to stay connected and exchange ideas with other PJVA members and industry professionals.

Look for an invitation to join the PJVA LinkedIn group in the coming weeks.

New Social Activity Coming for 2012!!

Unofficial and Informal Beer and Networking!
As a result of the popularity of the annual Christmas social and the great time everyone had socializing and networking at that event, PJVA is going to host a monthly beer and networking event, at an as yet undetermined pub, in downtown Calgary.

Starting February, we will be getting together after work one day per month to sit down, have a beer, or other such libations and chat, network, talk business, don't talk business, what have you.

All are welcome! For now, everyone will responsible for their own tab.

More detail to follow as it becomes available. For any questions or suggestions on locations, please contact Social Director, Marcel Savoie at

PJVA was incorporated in 1985 to represent individuals and organizations involved in petroleum joint ventures. JVViews is published to keep members informed about upcoming PJVA and industry events, courses and seminars offered and/or sponsored by PJVA and current projects being facilitated by the Association.