Reduce costs, improve services and meet the challenge of disruptive competitors.
While today this could be levelled at pretty much any industry, in oil and gas the pressure to do so is intensifying. In addition to weakening economic growth in the US, Europe and China, energy transition from fossil fuels to renewables and continued skills shortages are accelerating the need for change. According to Deloitte’s 2020 Oil and Gas Industry Outlook, balancing short and long term requirements will be tricky but the focus really has to be on operational excellence and financial discipline.
So how will this happen? As oil and gas service provider Bakers Hughes has revealed, field service has a significant role to play here. The business claims that due to an improvement in technician efficiency and performance, “the Turbomachinery department drove nearly $2 million in cost savings.” That was just one department.
Traditionally field service and maintenance of machinery has been a substantial but necessary cost to oil and gas businesses. It therefore makes sense to try and address it, streamline it and optimise it, but how?
Reducing field service costs is in fact just one part of the picture. The technology innovation that can drive down costs and improve performance and efficiencies can also derive incredible intelligence from machinery, assets and services. This in turn can provide unprecedented levels of understanding in how to optimise production and distribution and even create new opportunities.
At the root of this is IoT. Through connected sensors the industry is already transforming. Many field service teams are currently operating maintenance jobs based on data from automated asset management tools. The ability to know which machines are broken, where wear and tear is approaching replacement, and which parts need replacing before even travelling and seeing a machine has multiple benefits – ranging from financial efficiency, technician utilisation and manpower, supply chain, safety and compliance as well as avoiding unnecessary downtime.
Truck rolls are a widespread industry problem and can cost anything from $150 to $500 per visit. As visits can get into the hundreds of thousands a year, it’s easy to see how costs can escalate. The Technology Services Industry Association’s The State of Field Services: 2019 report notes that assisted proactive support technologies can help service organisations reduce truck rolls by as much as 71%.
Through a combination of field service management and asset service management tools, any organisation can start to address its costly wasted maintenance journeys. By optimising the workforce, these tools can also improve employee retention, empowering service teams with mobility and renewed job satisfaction.
It also fits with the direction in which the industry is moving. According to Deloitte’s report, future investment is no longer a given. Oil and gas organisations must demonstrate they are worthy of future investment. Given that one of the biggest challenges facing oil and gas is energy transition, this is an important industry tipping point. According to the International Energy Agency (IEA)’s Oil and Gas Industry in Energy Transitions report, “Energy transition poses entirely new challenges for these companies and could prove disruptive to long-standing market structures, value chains, customer preferences, and the economic drivers for the oil and gas business.”
For organisations to evolve and meet new challenges they have to be of sound financial footing. As Deloitte says, “A prudent financial management strategy driven by operational and technological leadership could be key to retain or win back investors’ trust; and, while many companies have made excellent progress here, financial markets are still holding back to see if prudent financial performance can be sustained.”
The role of field service here is not to be underestimated. Turning a cost centre into a profit centre and providing the organisation with valuable intelligence on equipment and machinery performance can only drive it forward. Finding efficiencies is just the start.
By Mark Homer is Senior Vice President of Corporate Development and Head of Global Customer Transformation for ServiceMax