Costs under pressure
The low oil prices of recent years have encouraged oil companies to put all their operating costs under greater scrutiny. The sector has achieved significant efficiency and productivity gains so far. Bob Dudley, CEO of oil major BP, told at a conference last year that his company has reduced the cost of production in the North Sea by half, from $30 to $15 a barrel, for example.
There’s still more work to do, however. BP says it wants to cut its North Sea production costs by a further 20 percent over the next two years. Despite the recent rise in the oil price, there is always the risk that low-cost producers in the OPEC group and elsewhere will increase production, putting the recovery into reverse.
Improvements to logistics processes could have an important role to play as the offshore sector looks for its next wave of productivity improvements, says Steve Harley, President, Energy, DHL. He sees considerable scope for the oil and gas industry to adopt strategies that have proved highly effective in other sectors.
The first of those is finding ways overcome the fragmentation that characterizes many of today’s offshore logistics processes. “It’s fair to say that marine experts are not supply chain experts, and supply chain experts cannot replace marine experts,” he notes. “But the contribution of both can be strengthened with better end-to-end planning and integration.”
Companies can pursue opportunities to integrate across their different activities, as well as along supply chains. Frequently, says Harley, the same organization will use different vessel fleets to support construction projects, operations and drilling activities. “By standardizing on a multipurpose vessel, offshore companies can increase vessel utilization and reduce subcontractor numbers, fleet size and marine logistics costs.”