GPS-enabled devices help answer important logistical questions.
E&P executives are under great pressure to make the right location decisions when it comes to leasing, drilling, and exploiting reserves. These decisions are delivered by the best technology in the world – and carefully analyzed by experts.
However, there are other key location-related variables E&P executives should carefully consider that also can significantly impact operations and profitability wholly apart from where to invest and drill. When it comes to maximizing performance in the oil field, executives will run more efficient, profitable operations when they know the answers to the following four questions.
Where is my equipment?
Locating equipment in the oil field has always been a challenge. The oil field is a 24/7 operation. Valuable assets like frac tanks, generators and pumps, trucks, vessels, and cargo are constantly in motion across drilling rigs, platforms, shore bases, marine vessels, and vehicles. Many sleepless nights are caused by operators and service providers scrambling to get the right equipment to the right site at the right time. There’s not an operations manager in the industry who hasn’t bolted up in bed late at night worried that a key component for a job scheduled the next day is missing.
Ironically, equipment tracking and management has traditionally been a low-tech, tedious, labor-intensive process. Even today, many companies manually manage key assets (and their locations) in spreadsheets – or even on whiteboards – and are often forced to guess the latest locations of specific equipment.
To address the challenge, an increasing number of rental companies, service companies, and operators are starting to use location-based technologies to simplify asset management and operate more efficiently. For example, E&P companies are leveraging GPS and other wireless technologies to instantly locate and manage their valuable equipment.
Consider the real-world example of a supermajor operator awaiting a key chemical shipment from its chemicals supplier for offshore production. The operator was unaware that the job had already been loaded on two intermediate bulk containers and made an urgent call to the chemical services company to determine the shipment’s status. Leveraging this new technology, the service provider was able to check the GPS system and determine that the shipment had been on the dock for two days. Crisis averted.
In another example, an operator sought a solution to better manage its equipment headed offshore in Brazil. Some shipments were more important than others, but the dock was so crowded it was almost impossible to navigate and quickly find key equipment. The operator was able to solve the challenge by leveraging GPS tracking.
Where is my money?
There’s a famous expression attributed to John Wanna-maker in the late 19th century, “I know half the money I spend on advertising is wasted; I just don’t know which half.” In the oil field today, most executives could paraphrase that expression by saying, “I know half of my rental equipment billing is wrong; I just don’t know which half.” Not even the biggest E&Ps own all their equipment, and there is often a lot of time wasted by service companies and rental companies as they try to sort out who had what and when – and how much the bill should be.
Invoice discrepancies between rental companies and service companies are not uncommon. In one recent case in which there was some disagreement, an operator’s rig manager asked, “What does the GPS show?” Based on the data tracked via GPS, the manager was able to determine that the equipment was there for nine days. The operator’s representative instructed the service company to pay the invoice for nine days, and the case was closed.
Another situation involved an equipment rental company providing powered equipment such as generators and light towers to well sites. The company’s business model was to charge customers only for the equipment utilization time. But what are best practices for determining actual equipment utilization? Should they rely on a rotating group of site workers to remember when the equipment was on? In this case, by leveraging GPS devices with engine runtime capability, all doubt was removed. The runtime data combined with the location record accurately captured it all, eliminating any “he said, she said.”
Where is my risk?
The oil and gas industry has an exemplary safety record compared to virtually every other industry. But there is always risk. Knowing the location of radioactive sources is an example in which GPS tracking technology can prevent or limit a risk of major fines and penalties. Another area of concern is vehicle safety. The fear of lawsuits and/or injuries keeps a lot of HSE executives up at night. But vehicle tracking combined with driver performance metrics (tracking speeding, hard braking, etc.), can help mitigate that risk.
To illustrate, Geoforce works with an offshore helicopter service company that equips its fuel totes with GPS tracking and shares the location data (including duration on specific rigs) with a supermajor operator. The key safety issue is fresh fuel. The ideal rotation at the rig is a “first in/first out” process, which limits the risk of stale fuel. But offshore rig operations are hectic, and when new fuel totes arrive on deck, the older totes might easily get pushed to the back. There’s a risk of a “last in/first out” rotation, where the fuel stashed in the back is never used. The solution in this case was simple: Give the operator the ability to specify the fuel tote to be used based on GPSenabled “days on site” reports, even if it means rig workers have to do a little extra work to find the right tote.
Where is my opportunity?
Opportunity tied to knowing equipment location in the oil field comes in many flavors. One of the most obvious is missed jobs. Consider that one lost job for a service company because it can’t find a piece of equipment could be a six- or seven-figure loss. Branch offices that know this sometimes “hoard” key equipment, just so they won’t be caught short. If the service company flies blind on location, it either loses money completely or buys more equipment than necessary for the just-in-case scenarios.
Take the example of a service company with five locations within an operating region. Logic says that expensive equipment such as US $100,000 sand separators should be shared between locations as no single location will need them 100% of the time. But in reality human nature takes over. When location A is bidding on a job that needs a sand separator – and it doesn’t have one – a phone call to location B might yield a less-than-truthful response: “No, I’m not sure where that equipment is.” Location B knows it might also need that sand separator soon, so it is reluctant to part with it. But with GPS tracking there is no question. When location A calls to request the sand separator for a job starting Thursday, it can see on the track-and-trace system that location B has one. The result: an end to hoarding plus a measurable increase in utilization.