As I highlighted in a previous posting, without accurate and timely information about the location and integrity of needed parts, equipment, tools and supplies, Oil and Gas owner/operators and their partners face a number of major risks, including environmental and safety risks, operational risks as well as economic and compliance risks.
Today, I want to turn the spotlight on some industry-leading projects that are leveraging innovative and practical solutions to address these challenges and risks. Owner/operators and their equipment and service providers are increasingly utilizing a widening array of wireless tracking and sensing technologies (e.g., sensors, RFID, GPS and SatCom) tied to software platforms. These solutions help them reduce risks while also squeezing greater efficiencies, cost savings and profits from their operations and capital projects.
Business Case Studies for Smart Asset Management
Ensco International, a global offshore oil and gas drilling contractor, wanted to replace its manual inventory processes with an automated system for its warehouses and fleet of 52 rigs, including six ultra-deepwater rigs under construction. Ensco had excessive spare parts and challenges managing inventory and preventive maintenance on spares. Its existing Enterprise Resource Planning (ERP) software contributed to these challenges because of its delayed data entry, exhaustive paper work requirements, and the complexity of workers using the software in the field.
By simplifying workflows, leveraging data from barcodes and RFID, and extending its ERP system to the “edge” of the enterprise with agile supply chain execution software, Ensco now has a fully automated system that synchronizes inventory information in near real-time among its warehouses and rigs. This integrated approach, which eliminates the white space between ERP and operational activities at the execution level, automatically collects and utilizes data end-to-end across operational areas. As a result, Ensco is now able to reduce and consolidate inventory while equipment is on the move to a new drilling location. At the same time, the company has improved its efficiency and the ability to find equipment when it’s needed. “Ongoing communications and the ability to know where everything is allows us to work more offline now where it really counts,” said Dave Pascoe, Rig Manager for Ensco International.
FMC Technologies is one of the world’s largest oil field service providers and manufacturers of parts and inspection and repair services for hydraulic fracturing jobs. The company wanted to use RFID to address pain points such as redundant inspections, job delays, and job cancellations due to non-compliant parts. By attaching RFID tags to oil field parts, such as pipes, valves, swivels and other components connected to manifold trucks and pumps, FMC had a new means of automating the identification process and dramatically decreasing the time it took to process equipment into and out of the field.
“The intent is to increase safety and efficiency while also realizing cost savings for our customers,” said Adam Berg, FMC Technology’s Engineering Service Manager. “FMC has developed a comprehensive business case behind the technology and its use within the hydraulic fracturing industry. This includes estimates of $60 million in savings per year industry-wide. RFID technology provides our customers with substantial improvements in their ability to address and improve some common industry pains around parts inspections and identification. The ability of RFID to alleviate or eliminate these issues is key to our business case”.
At the Dow Chemical Company, the company wanted to track a wide range of assets, ranging from cylinders throughout the extended supply chain – from suppliers to end-users and back – as well as to monitor hazardous rail cargo in real time. In the latter case, Dow wanted to address the high cost of “exception” events or potential critical failures and stay “ahead of the curve” with impending government regulations to improve safety for hazardous material transport. By incorporating GPS, satellite communication systems and sensors affixed to tank cars, Dow is now able to “ping” on demand or receive automated alerts of possible security breaches. Geo-fencing capabilities that leverage satellite images enable identification of the nearest first responder in the case of an emergency or security threat.
“Dow places the highest priority on safe production and transportation of hazardous materials,” said David Kepler, executive vice president, chief sustainability officer and chief information officer of the Dow Chemical Company, “and we are working aggressively to reduce risk and improve performance. The Chemical and Petrochemical industries should set the highest standards with advanced technology solutions like this to address concerns and ensure safe passage of chemicals in-transit or at rest.”
The Dow project has become a role model in its industry. Because of this project, federal funds are now available in the chemical industry to help implement similar types of solutions.
From a technology standpoint, the trend is for solution providers across the smart asset management spectrum to collaborate to address the needs of the industry. For example, our partners in this area include KBR Wireless and Shipcom.
Summarizing the Benefits
The deployment of automated asset visibility in supply chain fulfillment, from requisition to rig, can help owners/operators attain four overriding benefits:
- Reduce costly expenses of “hotshotting” equipment and expedited resources: hotshottings directly to the rigs; expediting resources on the rig and throughout the supply chain.
- Reduce lost production: Having real-time information on equipment and parts, reduction in search and receiving time will prevent a subset of the root cause of lost production.
- Enable safety and fiscal regulatory compliance: In more and more international operations, audit trail and receipt records are required for safety reasons and fiscal and customs compliance.
- Reduce errors and reduce inspection resources: Automating inbound, handling and outbound processes from requisition to rig.
Upstream production facilities in remote locations present especially challenging operational and supply chain risks. As Sid Snitkin, VP at ARC Advisory Group, said in a recent conversation, “Offshore rigs, for example, have scarce storage space. The rigs essentially have to treat the supply chain as their lay down yards.” Delayed or lost parts, such as drill bits or pipe, can cost operations and capital projects hundreds of thousands or even millions of unrealized dollars.
The breadth and depth of deploying such Req-to-Rig solutions can be for a few sites or across regions, depending on the scope of operations and the benefits of shared or aggregated visibility. Partners such as service and equipment providers and 3rd party logistics providers, in striving to serve the owner/operators better, can also attain tremendous benefits, which I will discuss in a future posting.
Terence Leung is the Director, Industry Solution Management for Commercial Industries at Savi Technology, a Lockheed Martin company. His keen interest is to bring ground-breaking and practical solutions to asset-intensive companies. Previously, he was responsible for solutions and marketing at NRX, an SAP solution partner serving asset-intensive industries in the area of asset information management. Terence was also with the High Tech business unit of i2 Technologies and supply chain and manufacturing practice of Deloitte Consulting.
Leave a Reply