6 Challenges in Oil and Gas and How to Solve Them

February 12, 2020
Oil RigThe oil and gas business operates within complex global and national frameworks. Expansion into new geographical regions and environments can create new opportunities for revenue growth, but it also increases the complexity and risk of the business operations themselves. Additionally, ever-changing regulatory frameworks enforced by different national governments adds to the growing complexity that oil and gas companies are operating within.

These factors, paired with an increasingly competitive market, produce several challenges for the energy industry. Based on trending research and our experts’ experience, we have listed the top 6 challenges energy companies face regularly, and our recommended solutions.

Challenge #1: Increasing visibility into complex operations to control costs and optimize performance

Oil and gas companies operate in some of the most physically and politically challenging environments on earth. Add to that factors such as unstable market prices, fluctuating demand, complex compliance and regulatory systems, projects that involve multiple third party suppliers, and a workforce that has widely varying education and skill levels – and it’s clear that oil and gas companies have some of the most complex operations out there.

In order to manage risks, control costs and optimize the performance of employees, oil and gas companies need to gain increased visibility into their operations. One strategy for achieving this has been the adoption of a ‘digital oilfield’ or ‘integrated operations’ to optimize production and reduce economic, environment, health, and safety risk. With the implementation of modern systems like Microsoft Dynamics 365 and EnergyCONNECT, a digital transformation and a unified system is right around the corner.

Challenge #2: Improve collaboration with oilfield services to improve logistics

Even oil giants like Chevron and ExxonMobil must rely on third party suppliers to provide special equipment and expertise for different parts of the oil and gas supply chain. For oil and gas companies, oilfield services perform business-critical functions. Thus, a mistake or inefficiency caused by one company can have a devastating effect. Additionally, poor collaboration and communication can slow down projects and increase inefficiency.

Energy companies and oilfield services can work more effectively together by taking advantage of solutions such as cloud-based collaboration platforms like an Energy CRM solution, through which they can share detailed planning and forecasting information and standardizing inventory measurement processes for workers in the field.

Challenge #3: Develop a high-performing culture through training, new systems and ongoing management

Employee onboarding, retention and training have become a critical issue in oil and gas, as competition for talent heats up. Emerging markets such as India and China are starting to open, not only increasing global demand for oil and gas but also competing for talent. The talent shortage isn’t helped by the looming retirement of the industry’s most experienced workers either. This is leading to skilled employees moving from company to company in search of the best offers and creating new challenges for companies to both retain their existing employees. It cannot be said enough, that companies must look to retain their skilled staff through robust learning and development and succession planning opportunities.

Challenge #4: Make the connection between improved asset management and execution excellence

If you don’t have good equipment, it is hard to be operationally excellent. Well designed, maintained and managed assets ensure smooth and efficient operations. Successful asset management can be delivered through IoT devices which include proactive maintenance, remote monitoring of equipment, and automation of business processes. These disciplines impact the integrity of infrastructure and equipment and best practice facilities have comprehensive, fully integrated systems with IoT.

Challenge #5: Use metrics as a “vital sign” of the effectiveness and the efficiency of your operational improvement efforts

It’s an old management adage that “you get what you measure”. Coming up with the right metrics is crucial to gaining the right insight and visibility into business operations. The next stage is coming up with not only real-time insight into operations but also developing metrics and analytics that can anticipate and help staff respond to issues before they become problems.

Overall Equipment Effectiveness solutions reduce the time to detect failures in equipment through real-time alert management based on sensing abnormalities. Thus, also reducing the time to resolve the issues through automated and collaborative data sharing.

Challenge #6: Enable knowledge transfer to maximize operations

Different sectors of oil and gas, like midstream, exploration & production, and oilfield service companies, have traditionally all operated differently. But, there can still be benefits to leveraging unified best practices in these different sectors and standardizing processes where practical to achieve maximized efficiency.

Experts from each of the core areas — operations experts, safety executives, maintenance directors, and management — must come together and participate in designing a model that is broad enough to be applicable to all the assets.

Modern technology is continually expanding and providing many solutions to industry challenges that energy companies face. Don’t let your company struggle with these challenges anymore. If you have questions about energy software or our tailored energy solutions, contact us. Our experts are always happy to answer any questions and give you unbiased advice.

Author: David Huether, SVP of Sales

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