Oil and gas businesses operate in an industry that is subject to complex global and national constraints ranging from continuously fluctuating prices to strict regulatory monitoring. To thrive, these organizations need to constantly adapt to the ups and downs in the industry. Achieving this requires, among other things, excellence in their core operations — crude oil exploration, processing, and supply.
But there is one supporting function that can have a direct impact on operations and even cripple the entire venture if not well managed — maintenance management. Certainly, challenges encountered in some regions of the world will differ but there are some common maintenance challenges that impact companies across the globe.
This post examines some of the biggest maintenance challenges operators in this industry experience along with possible solutions.
1) Minimizing Production Costs
Although crude oil prices are rising, the fact remains that prices will always be volatile. The constant interplay of factors that oil companies cannot directly control – especially political and global influences – makes this unavoidable. Thus, companies that want to remain competitive in this market still need to thoroughly research avenues for extracting and producing refined products at lower costs.
Another angle to consider is that as old wells rapidly dry up, the need for unconventional exploration such as horizontal drilling and ultra-deepwater drilling is increasing. Agreed, these techniques provide avenues for more revenue but the cutting-edge technology required comes at higher costs, risks, and complexity than traditional drilling.
This is the reality of the oil and gas industry today.
For the maintenance unit, they can help increase productivity and minimize production costs through:
- More efficient procurement and use of resources especially spare parts and inventory.
- Automating as much of the daily maintenance process as possible. This can be achieved relatively easily through the use of most modern computerized maintenance management software (CMMS). Using CMMS will help reduce labor costs, help keep workers safer, and deliver more lean processes.
2) Environmental Concerns
The oil and gas industry has always been a closely monitored sector and individual organizations are tasked with devising better methods for exploration/production with minimal environmental impact.
Governments keep introducing regulatory controls, fines, and carbon reduction targets because of the often catastrophic environmental impact of oil industry-related accidents such as the 2010 Deepwater Horizon oil spill.
The image below is courtesy of the NOAA and shows the largest oil spills in U.S. waters from 1969:
Air pollution is also a major concern and just recently, a report by the Canadian Government shows that the oil and gas sector has now overtaken transportation as the highest producer of greenhouse gases.
All these factors add to the complexity and scrutiny that oil and gas companies must operate under. To reduce their environmental impact, these organizations must comply with various restrictions on how they can use natural resources for their operations.
Take water for instance: it is a vital component for oil extraction and production. Every operator’s maintenance strategy should include a robust plan for water acquisition, transport, storage, treatment after use, and safe disposal. Without careful water management, there is a greater risk of production problems and regulatory penalties.
Their maintenance strategy should also include plans for handling effluents, hazardous byproducts, and wastes, as well as ways to detect leaks and other critical problems as early as possible. This is the most effective way to ensure minimal environmental pollution.
3) Asset Maintenance
Oil industry assets are typically complex, extremely expensive, and require specialist attention to replace or repair. These assets range from process equipment (fixed or rotating), facilities, oilfields, rigs, etc.
Each of these assets have very specific functions they perform in the production process. Plus, several oil installations are offshore and not easily accessible compared to on-land counterparts.
This means that maintenance ineffectiveness, especially of critical assets, could generate a significant financial loss for operators. In an attempt to handle this problem, a common mistake among business owners is to focus on cutting their maintenance budget. Unfortunately, this route tends to produce short-term relief with long term consequences.
Rather, efficient and proactive maintenance strategies when well-implemented is a better option and can help offset the higher costs of new drilling techniques.
Comprehensive and timely asset management is a must as the risks of poorly-maintained assets are too high and they include:
- Accelerated depreciation of costly assets.
- Wasted work hours.
- Slowed or halted production.
- Poor quality and reliability of products.
- Missed production and delivery quotas and deadlines.
- Revenue loss.
- Workers’ injuries or worse.
There are several modern maintenance strategies and tools you can use, such as predictive maintenance , IIoT technology, and mobile maintenance software, that will help optimize operations, keep production assets dependable, and reduce unexpected shutdowns.
However, whatever maintenance strategy is implemented, it is important to procure equipment that is designed to function in the operating environment, especially where there is high corrosion risk. This will help reduce asset replacement rates and ensure better functionality of the equipment over its expected lifespan.
4) Availability of Talen
According to a study conducted by Accenture Strategy, the oil and gas industry is headed for an impending shortfall in talent supply by the year 2025. The areas that will be hardest hit include petrotechnical professionals (PTPs) in the drilling, production, and maintenance disciplines.
The study further shows that many of these professionals were laid off in past down markets. Getting them to return when business improves would not be easy and their skills may be obsolete by then. What about employing new talent? Well, millennials and recent college graduates apparently don’t find the oil industry attractive.
The implications of this shortfall for maintenance teams are far reaching because specialized skills are usually required to operate and maintain most of the equipment in this industry, especially the critical assets. Additionally, it can take several years to sufficiently train new entrants to handle these maintenance roles.
To manage this situation, companies can look to outsourcing by partnering with specialist contractors to provide skilled external labor. They could also work to make their operations more digital and thereby hope to attract a younger workforce.
5) Improving Safety
There is hardly any industry that is completely risk-free but oil installations are distinctly notorious for safety problems. Nations are concerned about this fact and to help ensure maximum protection of workers, there are many regulations that oil and gas businesses must comply with. For example, the EU introduced directives in 2013 aimed at enforcing the highest safety standards for oil and gas companies. These regulations also seek to protect aquatic ecosystems and coastal environments against pollution.
Again, proactive maintenance helps here because maintenance and safety are inseparable. The goal is to deliver a twofold benefit: protect the person performing the maintenance activity and protect the equipment being maintained.
To prevent safety lapses that can easily escalate into catastrophic incidents, common issues maintenance managers should guard against are:
- Using assets well past their lifespan without adequate monitoring.
- Cutting maintenance budget, laying off maintenance staff.
- Poor maintenance planning and execution.
- Inadequate staff training, poor enforcement of safety compliance.
- Human error that usually results in severe consequences in this industry.
- Persistently unsafe work procedures.
- Inadequate documentation of operating procedures.
- Continuous pressure to fulfill production quotas.
Safety is a big deal in the oil sector. Fortunately, companies are aware of this and they are always working to keep employees safe. They can go further by ensuring that operating procedures are clear and that safety instructions are thorough and well understood.
The old model of quick-fixes such as maintenance budget cutting and staff layoffs are proving counter-productive. Instead, the future of the oil and gas industry will depend on operators that can survive the industry’s highly volatile nature and still achieve operational excellence in all areas of business, including maintenance.