14 Jul Oil and Gas Business: Three ways to decrease operational costs in Oil and Gas
Having productive wells is only one half of the equation for a successful oil and gas producer. In this low oil price environment, cost management is more important than ever.
1. Employee Knowledge and Standards
Human error can be incredibly costly, and even dangerous, especially in the oil and gas industry.
To help mitigate human error, it is important to create measurable standards of work. This helps employees properly understand their roles and expectations in the company.
By creating an efficient feedback system, where supervisors and managers can effectively report their teams progress, you can prevent workplace error.
Combine this with a comprehensive training system and employees will be more likely to complete their tasks properly and in a timely matter.
2. Automation, Automation, Automation
It obviously isn’t optimal to replace all workers with machines (the robots haven’t quite caught up to that yet), but automation is a key factor in increasing workplace productivity, thus reducing operational costs.
The internet of things (IOT) can replace costly time spent travelling out to wells or facilities to check the status of equipment.
Using sensors that report automatically into your management software may be expensive in the short-term, but has a high return on investment.
Your current procedures may, however, need to be re-evaluated to prepare your organization for automation.
If you’re currently using spreadsheets to keep track of your data, it may be time to consider using an oil and gas management software system.
A specific, tailored, software solution will help reduce repetitive entries and ensure employees across your company can access your data in a timely and consistent manner, reducing additional training costs and wasted time.
3. Dealing with Vendors
Outsourcing can be cost-effective, however, outside vendors may be a high part of your operational costs.
Do not get complacent with your current vendors because they are “the ones we’ve always used”. It’s never a bad idea to shop around and see if you can get the same services for a more cost-effective rate.
Communication with vendors is very important as well. You may be able to get a discount by paying your invoices either early or on time. This is an appealing option to small vendors, who rely on an immediate paycheck.
Finally, it’s important to re-evaluate whether it is cost effective to use a vendor at all. As your business grows, you may notice you no longer need to outsource.
Nothing can be “Good Enough”
It’s important to constantly evaluate how your business is running. You should never be satisfied with “Good Enough”.
Do not let tradition get in the way of progress. It’s important to revisit old processes, vendors, and employee standards to ensure your company is operating as effectively and efficiently as possible.