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The power of foresight

Published:  25 June, 2015

Oil and gas exploration has seen huge technological transformations from the early twentieth century to the present day. It has been on an incredible journey in the last century and it has shaped all areas of industry, from logistics to agriculture. Jonathan Wilkins, marketing manager of European Automation explains how this has impacted the logistics and supply chain for common components.o

Today’s oil and gas sector is facing brutal competition for an increasingly limited resource, and getting things wrong can be very expensive.

It is well known that downtime in oil extraction is among the most expensive in any industry, with one hour costing up to $1,000,000 in lost revenue, fines and maintenance activities. What’s more, the associated safety, environmental and reputational concerns also add to that cost.

Furthermore, oil companies come under extreme scrutiny from regulators, their communities and environmental observers. One way to ensure minimal downtime and zero accidents is to analyse big data.

Petroleum and gas exploration are real time activities and engineers need ‘as you drill’ information to make the right decision. Site operators need to know whether they are going in the right direction, whether to drill horizontally, vertically or stop altogether.

And this is a difficult undertaking; everything noteworthy happens underground, miles inside the earth’s crust. Or, if you are lucky to be working on a sea rig or platform - braving the fury of the elements - additional environmental factors need to be taken into account.

Gathering data is crucial for scheduling maintenance activities. It allows site managers to anticipate malfunctions and pro-actively search for solutions while the systems are still functioning.

Beginning the process of looking for a solution once the drilling has been brought to a halt, potentially for safety reasons, is already a lost battle. Site operations personnel need to interpret big data and continuously make provisions in case something goes wrong in the future.

Having this pre-emptive big picture view saves money and potentially lives. What’s more, it gives engineers the insight they need to choose the best supply chain solution to suit their needs.

If you are drilling in the North Sea and realise that one of your pumps, motors or inverters is coming to the end of its life, then you must think ahead. Where can you get the part quickly and at a reasonable price? When you finally get it delivered, what guarantees do you have that it will work? When is the best time to schedule the repairs? Will you need additional support during maintenance?

Often you will be in a situation where, for traceability and validation purposes, the new part will have to be identical in every way to the old one. Unfortunately, thanks to the long lifespan of most upstream applications, the old part can often be obsolete, or at the very least extremely rare by the time it needs replacing.

It’s quite possible that you won’t have the time or financial resources to wait for the part to come from old stock elsewhere in your business. Equally you won’t be able to stock all the parts you may or may not need. It can be counterproductive to keep large stocks of rarely purchase items.

Just in time

Just-in-time philosophy teaches us that everything needs to be calculated with extreme precision. You shouldn’t have unnecessary stock taking up space in your warehouse and monopolising the company’s capital – this is the challenge set by lean industry thinkers.

Although the savings are considerable when applying lean techniques, oil firms subject themselves to very high risks. A fragile supply chain, with delicate links can result in millions of pounds spent on replacing broken components when an emergency arises.

So it becomes imperative that you create provision for a robust logistics chain that will not disappoint. The best way to do that is to create relationships with spare part suppliers that are committed to delivering the products you require as you need them.

Try looking for a supplier that doesn't rely on their warehouse alone, nor on those of a handful of preferred manufacturers. A good supplier will employ multi-sourcing tactics that ensure there is an entire network of manufacturers and distributors available to supply each type of component. This ensures that when a customer in a mission critical market places an order, the supplier can pick and choose the product with the best price and quickest delivery option.

This can sometimes be true even if you need an exact match for a component. For instance, did you know that many Omron and Yaskawa inverters are identical in every way, except the badge on the front? A good obsolete component supplier would.

Supplier qualification is another essential policy to apply to the logistics chain. It is important to not just look at the capacity of one manufacturer, but to do a risk assessment on the financial health of the company, its infrastructure, and product quality and last but not least, company culture.

Energy exploitation companies need to look at their supply chain and only place their trust in companies that can really deliver.

Modern oilmen know that luck and gut feeling are no longer enough when drilling for that next big win. Assessments of all kinds, countless hours in the lab and big data analysis are the tools they need in order to ensure safe operations, free of unplanned downtime.

European Automation stocks and sells new, used, refurbished and obsolete industrial automation spares.

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