How much more does gas cost since the latest political crises in North Africa and the Middle East? 19 cents, the second largest one-week increase since 1990, according to the U.S. Energy Information Administration. (Sidebar: Libya’s oil production has gone from 1.6 million barrels of oil a day to 850,000 and Brega (the second largest port) has effectively stopped all exports.) The trickle-down effect means that not only consumers, but oil-dependent industries will feel the impact of this latest spike. What can these industries do to offset the impact and stabilize their energy costs before, during, and after a shock like this? They can act, rather than react, by investing in technologies that enable them better reduce the in-house costs associated with oil and gas production and/or consumption.
Energy Efficiency, the Other Energy Source
Oil and gas are part of a larger energy complex that includes electricity, renewable energy, and reclaimed energy. Insiders expect dependent industries to experience increases when their existing energy contracts expire, as providers adjust their pricing to absorb their increased costs. The U.S. and Canada have set ambitious goals for energy independence, as reflected in the International Energy Agency’s 2012 prediction that, by 2017, the U.S. will overtake Saudi Arabia and Russia as the top oil producer.
In the meanwhile, oil and gas insiders point to a (perhaps) less ambitious but more immediate solution: improving oil and gas asset management. One of the tools that oil and gas managers can use to accomplish this is implementing an enterprise asset management (EAM) system or computerized maintenance management software (CMMS).
CMMS Can Extend the Lifecycle of Old and New Assets
To optimize the lifecycle of older assets, oil and gas managers must first ascertain that they are able to operate safely and at peak efficiency. Disasters such as the BP Gulf Oil Spill of 2010 (which was directly linked to inadequate preventive maintenance), can and must be averted through rigorous PM. In addition to environmental concerns, CMMS/EAM solutions can improve overall operational efficiency (OOE) of oil and gas facilities, which is essential to reducing operating costs and minimizing fluctuations in oil and gas prices.
CMMS/EAM Solutions Support Longer Lifecycles of All Assets Through:
- Providing a centralized database of asset detail (e.g., purchase date, description, location, inspection history, work order outcome, vendor information, times repaired, cost, parts used, etc.).
- Automating work management processes (e.g., work requests work orders), and,
- Improving documentation (such as, contracts, blueprints, manuals, and schematics).
Surprisingly, newer assets are more vulnerable to premature failure or retirement in their first months due to errors during installation or inadequate planning. Through CMMS/EAM reports which can track all actions taken with assets (from installation to implementation), oil and gas asset managers can better monitor the maintenance for these assets, and take the necessary actions to support their optimal utilization.
Through this kind of proper preventive maintenance, the lifecycle of old and new assets can be significantly extended, thereby reducing replacement costs, and positively benefiting the facility’s ROI. The alternative to proactively maintaining one’s assets in this way is incontestably going to manifest as higher energy costs (which can be devastating for facilities with narrow profit margins). Proactive maintenance programs are one solution to managing the current volatility of oil production in the Middle East and other oil producing regions.