Today’s oil and gas companies face a challenging landscape, where staying competitive means constantly adapting and improving. A crucial factor for success in this industry is keeping a close eye on vital Key Performance Indicators (KPIs) like cost per barrel, production efficiency, and return on investment. However, many companies are still using multiple systems across different departments. Each system plays a pivotal role but makes it hard to track their KPIs, let alone optimize them.
In this article, we’ll discuss the issues that arise from using disconnected systems and processes, and how they can negatively impact a company’s performance. We’ll also explore the benefits of streamlining operations and adopting centralized last-mile delivery mechanisms to improve communication, collaboration, and overall efficiency across each team. By making these changes, oil and gas companies can work towards lowering their cost per barrel and staying competitive in an ever-evolving market.
Current State of the Energy Industry and Their KPIs
In the oil and gas industry, several KPIs play a critical role in determining a company’s performance and profitability. Among the most important ones are cost per barrel, production efficiency, and return on investment (ROI). Lowering the cost per barrel is crucial for improving profitability, while higher production efficiency ensures better resource utilization and increased output. Financial returns generated from investments in exploration, production, and other activities reflect a company’s ROI, which is the ultimate goal.
While companies may need multiple systems for a large amount of back-office financial/accounting requirements – often times this back-office burden creeps into the field and slows down the very activities that impact the KPIs in a negative way. The traditional logic is that you need different systems for different activities – however, this approach can have several negative consequences on a company’s KPIs. Inefficient data management and communication result from using disparate systems through to the last mile, increasing operational costs and complexity. Additionally, siloed departments can hinder collaboration and decision-making, making it difficult to track and measure KPIs accurately.
For example, a Permian company faced significant challenges in managing its Drilling and Completions projects due to utilizing over 150 vendors without any real-time insight into their availability. The company relied on phone calls, text messages, emails, and entries into ServiceNow, which only a few dispatchers had access to. This uncoordinated approach led to:
- Overall confusion
- Inefficiencies in scheduling
- Instances of no vendors showing up at a critical step, causing expensive delays (e.g., a rig rental can easily cost $50,000/day)
- Two vendors showing up for the same task, resulting in delays, confusion, and invoices from both, potentially increasing job costs
To address these issues, the company implemented a solution that allowed vendors, field personnel, and dispatchers to be on the same page. This new system provided real-time information on who was showing up, when, where, at what time, and for which job. Additionally, the platform enabled all vendors to specifically accept or reject jobs with clear receipts for all parties. This streamlined approach improved communication, reduced confusion, and enhanced overall project efficiency.
Identifying the Problems with Disparate Systems and Processes
Lease operators in the field often find themselves in a reactive maintenance cycle, leaving little room for strategic planning or optimization. Foremen in control rooms manage lease operators and address tasks driven by various concerns, while engineers and analysts struggle to pass on strategic improvement plans and track the work done by different vendors.
The underlying issue lies in the scattered and disconnected nature of data management within each team. Employees may use different tools like Power BI for data visualization, but there is no centralized system to capture and provide context across the board.
Crucial data is often exchanged through chat messages disconnected from official work orders, creating a gap between those who spend the money and those who do the work. Field operators are left out of the loop, and the information collected lacks the necessary context for accurate analysis and decision-making.
This disjointed approach to managing operations makes it challenging to compare results across multiple wells or understand how different approaches might yield different outcomes.
A centralized system would enable a seamless exchange of information between all stakeholders, including lease operators, foremen, engineers, and analysts. This would improve visibility into ongoing tasks, vendor performance, and overall operations. Lastly, a SaaS-based platform would provide the necessary context for the data collected, enabling a more comprehensive understanding of how different strategies and approaches impact the business.
Leveraging W Energy Software for Enhanced Efficiency and Visibility
W Energy Software can provide upstream and midstream oil and gas companies with the much-needed transparency and unification of their processes. With a centralized platform, engineers, planners, schedulers, controllers, foremen, lease operators, and technicians can all access relevant information in real-time, ensuring everyone is on the same page.
One of the most significant benefits of W Energy Software is the visibility into vendor operations. Traditionally, companies have little insight into the work performed by vendors, often resulting in the payment of invoices without a clear understanding of the services rendered. With W Energy Software, companies gain full transparency into the work performed by vendors, from accepting the job to completion and the submission of the required information. Field personnel can now approve the work on-site, reducing the chances of paying “ghost invoices.”
For instance, if a planner identifies that two groups (electricians and maintenance) need to work together, the foreman can coordinate with them to ensure the lease operator visits the site only once for lockout-tagout procedures. This efficient coordination minimizes downtime, reduces the need for multiple visits, and can potentially lead to bulk discounts when working with vendors with multiple skill sets.
Additionally, W Energy Software can also help optimize vendor management, as the platform enables companies to monitor vendors on-site and make real-time decisions. For example, if a vendor crew is waiting for a delayed operator to lock out the system, the company can reassign the crew to another job to avoid wasting labor costs. By providing visibility into vendor operations and field activities, W Energy Software empowers oil and gas companies to better manage resources, minimize downtime, and ultimately improve their KPIs.
Unlocking the Full Potential of Oil and Gas Companies with W Energy Software
The outdated processes and disjointed systems that plague many oil and gas companies hinder their ability to lower costs per barrel and achieve their full potential. By implementing W Energy Software, organizations can overcome these challenges and create a unified, transparent, and efficient system that streamlines communication, collaboration, and data management across all stakeholders.
In an industry that demands constant adaptation and innovation, embracing W Energy Software’s unified platform can be the catalyst for oil and gas companies to drive growth, enhance performance, and achieve their core KPIs.