Digitizing data in the oil and gas industry can be seen as unimportant or unnecessary — you’ve never done it before. The old methods are working just fine. You have a system in place that seems to work and you don’t see a need to change. But, what if a company could get a better picture of how much they’re actually bringing in; or better yet, how much is going out?
Imagine running a company where it seems like the revenue and profits are being generated and even growing. The company is thriving. How would it feel to have the carpet ripped out from under you as you realize that in actuality, the company is losing way more than was realized because of a delay in reporting?
With the current technology situation at many oil and gas companies, they are practically flying blind on their financials — or at least so delayed on their analysis that they can’t do much to fix it.
By digitizing their data, oil and gas companies can have a more clear line of sight into their revenue and expenditures. This can also give them clarity around inefficiencies, help spot potential theft problems, and find new opportunities for growth.
For example, many companies are spending hours entering numbers from run tickets into their system after receiving physical forms. This opens up the opportunity for human error as well as a major delay in understanding final results. By implementing a system that automates this process, the team can validate information right then and there, giving them a real-time look at their volumes and revenue.
The right digital strategy for a company will fully depend on their size, budget, and total volume of product. Once an oil company exceeds about 200 wells, then it makes the most sense to implement some sort of data tracking system. Through the data automation process, a company is given a more clear path to growth, which would then open up the opportunity to automate more processes. Eventually, the infrastructure will function at an optimal level, data will be gathered immediately, and you can spot and fix issues before they become budget-busting expenses.
However, there is still an opportunity to automate even if an oil and gas company has fewer than 200 wells. It’s all about slowly building the systems in, usually beginning with the automation of the reporting when the truckers load the oil.
Applications are beginning to roll out for smaller companies to digitize without the investment requirements needed for a complete digital infrastructure. A company that has 150 – 180 wells is a little small to go fully digital, but these apps can help them get the ball rolling. More importantly, if they do start down this path, this beginning digital strategy can help them grow.
For companies in the 50 – 100 well range, it would be most beneficial to bring some of this reporting in-house, like measuring how and where production is done and how much is usually produced. By insourcing this effort, the company has more control over their own data and can start finding ways to reduce costs and create more efficient processes. And companies with under 50 wells, it’s probably best to continue outsourcing your data collection in order to have the most cost-effective process.
|# of Wells||Digitizing Process Stage|
|Up to 50||Outsource reporting|
|100-150||Develop initial digital processes (i.e. loading)|
|200+||Outsource IT and move to the cloud|
For small- and medium-sized businesses, especially those that are new and have already started their operations in the age of the cloud, it makes sense to move your applications and processes to the cloud. For one thing, you don’t have the legacy baggage of applications that are hosted in-house. Applications that you can run on your local servers can also be run on cloud servers.
You can easily transition to a cloud-first strategy and eliminate the need to build an IT competency and staff to manage those systems. You can instead adapt to the best practices and business processes brought by the cloud vendors and adapt to them, rather than making an in-house staff adapt to your system.
This makes you more flexible to change and doesn’t tie you to the old-style ERP vendors. You can find the applications that best serve your specific business functions and outsource the management and maintenance of those apps to your cloud service provider.
Data automation and a digital strategy can help large oil and gas companies identify problem areas, such as theft and loss, get a real-time picture of their production and revenue, and best of all, reduce the amount of time staffers are manually entering data into spreadsheets. If you would like to learn more, please contact us and ask to speak to one of our expert consultants.