Case Study – Activity – Based Management in Shell Gabon
Case Requirements
1. SG TOTAL UOC per barrel = $140,640,200/(120,000 barrels/day * 365 days/year) = $3.21/barrel
Barrels of oil produced is a cost driver for some of the activities in RDS, but not all are driven by production of oil. UOC = Total Operating Expense (OPEX) excluding exploration, depreciation, and depletion therefore there are other activities like exploration, new capital equipment for exploration, research and development, depreciation on equipment, and depletion are costing money whether you are making oil or not.
RDS is monitoring costs per barrel and SG assembled the CLT team to learn how to control costs in order to get funding for off shore oil exploration …show more content…

I do not believe that the benchmarking study in Appendix A provides useful information for 2 major reasons. 1. The processes for SG and the benchmarked companies do not align in order to make an accurate apples to apples comparison. The way that the benchmarked companies categorized the activities do not match up with how SG categorizes their activities. Because they do not align their activities the same way in the same process groups, the numbers do not provide enough information to be able to go by for comparison. 2. The size and locations of the companies do not match therefore the numbers are going to be distorted also. It states that the benchmarked companies are larger in size and are located in the southeastern United States which is a completely different environment than where SG is operating. SG is operating based out of central West Africa with field operations