By | April 7, 2020

In recent weeks, the Oil & Gas Industry has had to quickly adapt to the huge and sudden changes and challenges in energy market conditions, employee working policies and the global economy.

Exploration and Production (E&P) organizations have slashed capital spending. Oil field services companies are furloughing their workforce and heavily reducing their service prices to align with the activity level of their E&P clients. Refineries are grappling with employee health concerns as well as drastic shifts in demand, like the plunge in jet fuel demand by the airline industry and reductions in gasoline and diesel demand for car and truck transportation.

Uncertain times warrant discussion about being proactive when considering asset management strategies. Companies in the Oil & Gas Industry need to be resilient in order to rapidly right fit their operations and processes with these changes, and well-managed, structured, uniform and accurate master data is a key to this resiliency.

As some capital projects in E&P get canceled, and other ones continue as planned, the materials, parts, equipment, services and other resources that had been purchased for the now-canceled projects need to be reallocated and reused as much as possible to avoid unnecessary costs.

For example, if certain drilling projects are being scrapped in the Bakken oil field while some projects in the Permian Basin are continuing, there can be a significant inventory of parts and equipment that could be shipped and moved to the basin to make as much use of it as possible on the continuing projects. Companies do not want to overstock or overbuy items that they already have available within their enterprise-wide inventories. However, making these strategic cost-saving decisions is only possible if the company has high-quality and uniform master data descriptions and information about the items.

Having master data that is structured and accurate provides visibility into the inventory and confidence in its accuracy, so that quick, cost-saving decisions can be made to utilize parts and equipment on projects for which they were not originally intended.

For the oil field services that are streamlining their workforce and reducing service prices, they must find every means available to keep costs down on their drilling projects.

It’s imperative that the E&P teams in the field have the right part, tool or piece of equipment at the right moments in time so that any possible project downtime is kept to a minimum. At the same time, they can’t afford to spend money on items and resources that are not needed or to stock an item at a higher level than is necessary.

Accurate and standardized master data is required to manage the inventory of items to the precision necessary to achieve optimum costs and stocking levels to keep each project running as efficiently as possible. Also, it needs to be easy and quick for a field worker to search for an item they need or to request a new item that is not at their location. With such narrow project margins, there no time to waste looking for a needed item.

In the refining sector, companies need to be nimble to best handle a workforce and working environment affected by the latest health concerns.

If an employee gets sick, and that employee and others need to be quarantined, there can be a significant hole to fill to keep refining operations running fully and effectively. The performance of the employees that remain at work needs to be optimized, and a big part of making this happen is making sure all the materials and resources an employee needs to do their job are at hand.

There can’t be shortages of parts, tools, equipment or materials the employees need to do their jobs at the refinery. Also, with the demand of certain products changing drastically, the refinery must adjust accordingly, and therefore the resources and materials needed to produce much more of some products and much less of others have to adjust accordingly as well. The master data about all of the needed items must be dependable and robust so that the company’s inventory management can be fine-tuned to best support the changed refining operations and the stressed workforce keeping them running.

Also, with refining production likely to progress in fits-and-starts as the response to COVID-19 continues, many maintenance organizations may now have an opportunity to work on their backlog. In addition to reviewing upcoming plant maintenance schedules, pending job plans and potential anomalies, operators should develop or update plans for sourcing spare parts and replacing equipment.

Industry analyst ARC Advisory Group suggests, “Even though much emphasis has traditionally been placed on keeping a lean spare parts inventory, now may be the time to rethink this philosophy. Such uncertain times warrant discussions about whether, and by how much, to increase safety stock for critical parts to mitigate possible out-of-stock conditions and supply chain disruptions or vendor closures.”

Ultimately this downturn will pass, and the opposite trends will occur with capital projects coming back on board, service prices ramping back up and the demand for a variety of refinery products getting back to a normal level.

And we will all certainly rejoice!

This eventual big upturn will present new challenges around resourcing, inventory, items management, workforce efficiency and cost management. Companies that put optimal Master Data Management strategies in place now will be the best positioned to capitalize on a market upturn as a result of its excellent operations.

If you’re ready to accelerate your master data management strategy, download the “Top 7 Criteria for Next-Generation Master Data Management” infographic.