Controlling costs in slow times: the importance of data tracking

by Curt Finch

As oil prices stabilize and production continues to grow, the oil and gas industry has the need to continuously focus on controlling costs. According to a recent Reuters article, the rapid growth of oil production activity worldwide has led to an increase in equipment and operating costs, as well as a shortage in specialized workers. What this means is that companies must reduce their per-unit costs in order to grow their profits.
 
Fortunately, improvements in rural cellular coverage and mobile technology offer a solution. Companies can now track their data electronically, offering visibility into and control over their lift costs. And with oil prices moderating, controlling costs may be one of the only ways to get a competitive edge in an increasingly crowded field.

Untapped data
The oil and gas industry has always generated a vast amount of data captured through oil wells, process equipment, financial operations, and pipeline and refining operations. But until recently, this data has not been adequately managed or leveraged by E&P companies of all sizes for business insights. In many cases, the data remained fragmented and underutilized on various paper spreadsheets.

While companies know how important cost data is to their business, they may not have had the means to accurately track their costs in real-time. As the oil and gas industry has become increasingly manufacturing oriented, dependence on timely data has increased as well. Companies must process the streaming data from remote drilling sites and make quick decisions about equipment, personnel, and safety. Additionally, with the current high cost of labour and demands on equipment, errors and delays are more and more costly. Accurate, timely information has never been more important.

New connectivity
Improved cellular and internet connectivity in rural areas offers a new way to gather, store and leverage information. Historically, cellular coverage was slow to deploy in remote areas because of lower density populations. This is great news for oil companies, as most now have access to wireless coverage in remote locations.

Because of improved availability of mobile access, companies can now track information via sophisticated software, rather than relying on paper spreadsheets. Advances in mobile technology make it much simpler for field workers to log pertinent data in real-time via smartphone or tablet.

Tracking lift costs
E&Ps know firsthand that monitoring and controlling lift costs is very important. According to the most recent data from the Energy Information Agency, the total upstream cost (finding and lifting) for producing oil averages $33.76 per BOE (operating costs + finding costs) in the U.S and $24.76 per BOE in Canada. Prices are expected to decline modestly due to non-OPEC supply growth and still tepid developed country demand.

Monitoring lift costs – including costs associated with transportation, labour, supplies, supervision, pump operation, electricity, and other expenses – is made much more efficient through the use of a Web-based time and expense tracking system with mobile capabilities. On-site workers can track time, expenses, and equipment usage on a per-project basis. The best systems will integrate with and feed this data into your accounting/ERP system.
This data allows companies to know their costs in real-time, tracked directly at the source. This makes it easier to spot potential problems and avert them before they slow production. But the real value lies in consolidating and leveraging this data over time.

Moving business forward
Better knowledge of costs gives companies a better understanding of where money is spent and which areas of production are most or least profitable. For example, real-time data tracking can uncover overlooked expenses, such as the cost of refurbishing transportation trucks between sites. These uncovered expenses can then be charged back to the appropriate parties, lowering overall costs.

Additionally, tracking employee time and equipment usage by project allows companies to reduce non-productive time and optimize employee allocations. According to the aforementioned Reuters article, oil, gas, and pipeline employees are some of the best-paid employees in the U.S. For example, Texas workers take home around $15,000 a month. According to a study by Canadian Business, even in Canada, oil & gas supervisors, petroleum engineers and chemical engineers earn a median annual salary of $75,000 and up. At this expense, it is imperative that companies allocate employees properly to maximize productivity and profits.

And perhaps most importantly, by tracking site data over time, companies can establish reliable key performance indicators (KPIs) against which current and future projects can be accurately assessed. Companies can more precisely predict how a new lease will perform by analyzing historical data from similar operations, improving cost estimates and lease evaluations. Integrated historical data also helps companies assess health, safety, and environmental impact, which are all increasingly important factors in the face of new, stricter regulations.
 
The oil and gas industry is facing a huge opportunity with improved mobile connectivity in the field. This improvement allows for the subsequent benefit of more accurate data collection at the source. If E&P companies pursue these new opportunities to automate the capture of real-time cost data at the source, they will be better positioned to compete effectively going forward.
 

Curt Finch is CEO of Journyx.

Latest News

Sponsored Content

TESTS SHOW VOLVO AT 20 PERCENT LOWER COST PER TON

The Volvo EC350E and EC380E were put up against two industry leaders to see how each would perform in terms of productivity and fuel efficiency. The four comparable machines were equipped with fuel meters and put through the same test, loading trucks at maximum power. The results were used to calculate estimated time and cost to move 551,156 U.S. tons (500,000 metric tons) of material. Calculations are based on 50-minute work hours, 8 hours per day.

The Result: Volvo delivered a 20% lower cost per ton and moved 15% more material per hour. Get tips about how to get the most from your excavator at volvoce.com/exfactor. 

Learn More

Tags
Pipelines

Blackmer sliding vanes show superior performance against other versions

Blackmer, part of PSG, a Dover company, has announced that its TX Series sliding vane pumps feature the reliability, durability and efficiency that make them ideal for use in the transfer of a wide array of petroleum-based products, such as diesel fuel. Specifically, the sliding vanes in Blackmer TX Series pumps have been engineered with the strength needed to excel in these types of critical applications over competitive models, especially foreign "knockoff" versions. Lab tests show Blackmer sliding vanes outperform competitive knockoff models by more than two-to-one in flexural-strength tests.

Read More

Tags
Drilling & Production
Industry News

RMP Energy announces Elmworth battery start-up

RMP Energy Inc. has announced the recent successful commissioning and start-up of its 100% owned and operated Elmworth 2-23 oil battery and gas handling facility in the Elmworth (Gold Creek) field of West Central Alberta. The 2-23 Facility is presently handling the initial crude oil and natural gas production from two (2.0 net) of RMP's Middle Montney drilled wells (3-22-68-3W6M and 4-18-68-2W6M). Early-stage well production results are encouraging and the Company anticipates providing detailed production data once the wells produce for at least thirty calendar days. The start-up of the 2-23 Facility marks an important corporate milestone for RMP as it enables the Company to begin realizing commercial benefit and return of its capital investment from its new core area, which encompasses 82.5 net sections (52,800 net acres) of acreage prospective in the Middle Montney reservoir. The 2-23 Facility, which can be expanded as required, has initial design capacity to handle 1,500 bbls/d of crude oil, 8.2 MMcf/d of natural gas and 7,500 bbls/d of emulsion.   

Read More

Tags
Instrumentation, Systems & Automation

Advanced LVDT signal conditioner

H.G. Schaevitz LLC dba Alliance Sensors Group introduces the S1A AC-LVDT Signal Conditioner that offers smart and fast LVDT setup with built-in null indication and simple front panel pushbuttons to set zero and full scale. Engineered to work with the widest range of AC-LVDTs, RVDTs and inductive half-bridge sensors including 3-wire GE LVRTs and GE gas turbine LVDTs with the buck-boost, the S1A DIN rail module supports LVDT operation and indicates most common failures. 

Read More

Tags
Software & IT

IoT driving digital transformation, research report shows

IoT has become the leading technology for digital transformation and is the number one priority for 92 percent of organizations, according to global research findings published by Inmarsat. The Inmarsat Research Programme study, focusing on the enterprise application of the Internet of Things (IoT), revealed that machine learning (38 percent), robotics (35 percent), and 3D printing (31 percent) were also key requirements for effectively delivering digital transformation for business.  

Read More

Tags
Software & IT

Cloud-based solution makes SCADA secure and scalable service

Honeywell Process Solutions (HPS) announced the launch of Experion Elevate, a real-time process supervisory control and data acquisition (SCADA) solution delivered as a secure and scalable service. Experion Elevate allows for predictable costs, easy upgrades, and continual support. It is a member of Honeywell's suite of cloud-enabled solutions for operations technology and information technology (OT/IT). HPS made the announcement at its annual Honeywell Users Group symposium.

Read More

Tags
Industry News
Power Systems

Kubota Engine increasing footprint in Latin America

Kubota Engine America is increasing its footprint in Latin America by collaborating with key partners, already adding 24 distributors in more than 20 different countries to its growing network. Kubota's growth is fueled by its dedicated Latin America development team that has spent the last two years identifying the best distributors to address local needs and strategically planning to bring and support Kubota's reliable Japanese technology to more people. 

Read More

Tags
Industry News

Oil Sands Advisory Group provides first round of advice to Alberta government

The government of Alberta has received the first round of consensus advice from its Oil Sands Advisory Group (OSAG). The group is composed of leaders from the oil sands industry, environmental groups, and affected communities. Its first task was to advise the province on growing oil sands production in compliance with its legislated 100 megatonne cap on annual emissions.

Read More

Tags
Industry News

Oil sands production forecast expects strong additions through 2019

IHS Markit has released its outlook for Canadian oil sands production through 2026. IHS Markit expects large production growth through 2019 — making Canada the second largest source of global supply growth during that time. More modest but sustained growth is expected beyond 2019, with oil sands production at the end of 2026 around one million bpd higher than in 2017.

Read More