Latest Oil and Gas News Russia

Elena Moiseeva, Deloitte Manager
Ekaterina Pavlushkina, Deloitte Manager
Elena Lazko, Deloitte Partner


In searching for methods to improve the operating efficiency of an oil and gas asset, management sooner or later comes to the conclusion that the quality of the solutions employed by various levels of operational personnel must be improved. In addition to a company's corporate culture and the qualification level of the personnel, the other essential element is the availability of up-to-date high-quality process data. How can efficient data collection and storage be provided to meet each of the challenges facing the upstream business?

Why not ERP?
The current practice in Russia is to try to consolidate all the challenges being addressed under ERP systems with the real-time process control tasks, such as: equipment lifetime management, production monitoring, loss management, drilling management, and various service operations (process transport management, power facility servicing, etc.). The practical and methodological dissonance inherent is such an approach is obvious.

The reasons that these types of mistakes continue to be made are usually the same. Under the banner of minimizing the number of process platforms, additional functional modules are developed on the basis of either a current ERP system or one under development. The results obtained by a company are almost always counter to the original goal. Firstly, the total cost of ownership of the Information System is increased. Secondly, employees continue to use old tools while at the same time inputting data into yet another new system.

Cost-intensive ERP systems are primarily intended to support accounting, logistics, controlling, and personnel management. Attempting to modify an ERP system to the level of specialized management tools of specific oilfield processes leads to high-risk projects, sprawling budgets, and longer schedules. Any solution developed by a company remains unique to that company, generally has none of the permanency that is characteristic of industrial products, and requires serious expenses to maintain. We have identified several clear arguments against such an approach:

1. An ERP system is a tool for supporting traditional operations and is not intended for management of operations.
2. ERP systems are not sufficiently flexible in terms of customizing the user interface for ensuring adequate support of operations.
3. Modifying functionality is in itself a cost-intensive undertaking and additionally leads to the loss of standard support.
4. Even if a company has overcome all obstacles, customization and modification do not make it possible to fully automate specific operations, settings become less clear and flexible, and the user interface is complicated many times over.

For many years, dividing the tasks performed by an asset into governmental and corporate reporting tasks and business unit tasks has been a standard approach worldwide for engineering and automating oil and gas asset operations.

The approach that year after year demonstrates its validity involves operational personnel using specialized automation systems and tools designed to specifically solve their unique problems. At the current time, each oilfield process has specialized support solutions that are best in their class, have a solid history of successful implementations, and positive references from companies, which, including through the use of respective systems, annually achieve high performance and save millions of dollars.

Example 1: Oilfield equipment management
For this example, we will look at the oilfield equipment lifetime management process. At a minimum, the process involves the management of a large number of contracts with suppliers and contractors that perform equipment maintenance and repairs, manage the equipment stock, and plan operations.

Automation specialists are tempted to handle the entire scope of equipment lifetime operations exclusively from the standpoint of contract management since this functionality is generally already incorporated in an ERP system. In the first stage, they usually perform segment-based customization of their ERP system for any type of equipment maintenance and repair operations, such as maintenance planning, for example. Then, a failure cause registration module may be added as an expansion of the system. Naturally, standard ERP system configurations do not include the functionality of storing real-time operations data. A situation develops in which engineers continue to analyze failure causes using the statistics recorded in Excel, i.e., they do not have centralized information storage, and continue using the same methods that were available to them before the process was automated in the ERP system. At the same time, terabytes of data build up unnaturally in the ERP database, which nevertheless do not support either operational or analytical recordkeeping in the needed sections.

The next step in the expansion of this system is the modification of the ERP system to the level required for operational personnel to completely switch to the use of this solution.

Often the data received from the Process Control System (PCS) via certain gateways go directly to the ERP system, thereby creating monstrosities automating the operations from the PCS level up to procurement planning. Such systems are always "roads under repair", and unfortunately do not provide operational personnel with full process data or all means for analysis.

Returning to equipment lifetime management, we would like to note that, in addition to managing the interaction with suppliers and contractors, the system must also support the following tasks: record failure causes; analyze the causes of equipment failures in order to prevent emergencies; analyze times between failures; plan measures to increase equipment availability, etc. Using an ERP-based tool to resolve these problems requires more data than can be initially accumulated and then adequately presented for the required analytical purposes.

For a comparison, we present a sample list of tasks that can be carried out by specialized systems that have been on the market for quite a long time:

1. Plan equipment maintenance and repair operations.
2. Track the status of repairs, from the repair ticket to its completion, and monitor the repair results.
3. Approve repair tickets, requisitions for repair materials, or equipment decommissioning.
4. Plan maintenance operations down to an individual operation, which makes it possible to precisely describe all actions required for completion of a work order.
5. Plan human and material resources, and reserve and record the actual use of these resources per individual work order. Compare planned/actual use in real time.
6. Plan and record tool usage. Track tool expenditures down to an individual work order.
7. Review the availability of materials and tools directly from the work order. Create procurement requisition for required materials directly from the work order. Create third-party service requisitions directly from the work order.
8. Perform equipment inspections in conjunction with other operations.
9. Track serviceable spares. Track the process from removal of the part through arrival for in-house repairs up to arrival at warehouse from in-house repairs. That is, after a part has been repaired, it becomes available at the material warehouse.
10. Track alternate spares, i.e., spares that may be used on the fly in place of the sought-after ones.
11. Track pieces of equipment as materials, which makes it possible to implement the complete equipment procurement cycle from requisition through delivery to the onsite warehouse up to installation.
12. Link any work to a project.
13. Track project safety requirements.
14. Track schedules and costs against project budgets.
15. Manage the remaining balances of project budgets in real time.
16. Implement an on-condition maintenance (OCM) system that uses monitoring checkpoints to take regular readings (for example, temperature or pressure) and generates maintenance work orders when the values go beyond the set limits.
17. Manage instrumentation calibrations. The system uses the required calibration data to generate regular calibration work orders and stores calibration results.

Example 2: Drilling management
We present yet another example of an asset-level operation - exploration and production drilling management. This process involves contractor relations, investment planning, processing of geological data, drilling operations planning, and procurement. Obviously, an ERP system cannot fully support these operations or maintain the well file, which is a key element of the process.

At the same time, existing specialized systems have the following capabilities:

1. Process well status data during planning, drilling, completion, testing, and workover.
2. Visualize wellbore arrangement, from spud-in to abandonment.
3. Significantly facilitate accounting, analysis, and concurrent usage of data under a single system due to the comparing of databases on completed projects, problems, equipment failures, and plans with actual and unforeseen events.
4. Manage drilling rig progress.
5. Display real-time key operations data, including priority, location, and current status.
6. Manage drilling downtime.
7. Display data on drill rig leasing (for the Client) or on drill rig availability (for the Contractor), including dates, rates, and attachable documents.
8. Identify important dates in operations (deadlines, stages, and conditions).
9. Estimate wellsite resources, such as personnel, equipment, or services.
10. Create individual reports for presenting data on operations and drilling rigs.
11. Inform corporate users, partners, or service providers on changes in the drilling rig progress schedule.
12. Group together operations for a single drilling rig so that when the first operation dates are changed, the dates of subsequent operations are automatically changed accordingly.
13. Use a unified database to plan, distribute, and measure performance for construction and land remediation.
14. Use financial data snapshots for efficient monitoring of operating expenses.
15. Clear presentation of lease obligations makes it possible to improve the decision-making process with regard to obtaining or assigning property.

We could present numerous examples of how the functionality of specialized systems meets the current oilfield needs as opposed to ERP solutions. We would like to emphasize that the main advantages of such systems are simple implementation, integration capability, and effective support in solving day-to-day problems. These systems can provide oilfield specialists with complete, high-quality, and timely data required to make efficient operations-related decisions.

The shifting of priorities in selecting oilfield information systems toward specialized tools is only a matter of time. This approach has proven itself in many successful companies and may serve as a point of reference for the IT personnel of oil and gas assets.

Labels: benefits, Deloitte, ERP Software, oil gas, Russia

posted by The Rogtec Team @ 11:33 

1 Comments:

 ERP software said...

Hi,
Very good article.
Observation:
1)many of the oil industries are using ERP system right now.
2)Same time lot of customization process is also needed.
3) Small scale oil companies using Open source ERP software too.
Thank you

18 November 2008 09:49  

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