|September 29, 2016
|September 2016 Issue
|Articles, Oilfield HUB
|Cost Efficiency, E&P, Oil & Gas Downturn, Oil & Gas Future, Oilfield HUB Service Package, S&S, The HUB Online Community
Recently I met with a couple of gentlemen that are seasoned oil and gas veterans. They described the state of the industry as the aforementioned Whack-A-Mole game. Oil and gas companies know they have to operate in a different manner today than they did four or five years ago. Oil prices are down and if a given employee/mole is still lucky enough to be able to look around the room they realize there are many open holes that other previously valued ‘moles’ used to occupy. When I described what we are doing here at Oilfield HUB to help companies ‘Thrive at $45’ by being more efficient, saving money on daily field data capture, and working with their supply chain network to maximize value, their response was: “Well that is great in theory”. Most companies realize that they need to make changes but very few of the players in the game want to stand up out of their hole and suggest those changes for fear that they will be the next mole to get whacked!! It’s more likely a scenario of keep your head down for as long as you can and hopefully the time on the clock runs out and you can live to fight another day.
When oil was $100 plus it really didn’t seem to matter. Ha… seems like so long ago. We could rest comfortably in our safe and secure burrows with little concern of having to come out and risk it all. But, the new reality is how to ‘Thrive at $45’. So what happens now?
Producing companies are in turbulent waters with this new reality and only the strong will survive. Cost control and efficiency is now the topic du jour and for good reason. We all have to do more with less which will undoubtedly test the mettle of all involved. The squeeze is on the service companies as producers are demanding better rates and getting them. A well that used to cost $5 million is now coming in at $3 million. There are precious little chunks of meat on this once mighty bone and the vultures are circling. The classic immediate response to constricting market forces is to pass the pressure on to the service companies instead of looking internally to see where we can improve.
But is driving costs down and putting the pinch on service companies really the answer? Is cheapest the best? How do you measure value, and how do you know you are getting the best value from your current service providers? There are horror stories galore about using inferior products and services that in the end just create more cost trying to fix the mistakes.
Oilfield HUB is built to deal with the vital information that is required to fully understand what your supplier can do for you based on your immediate need and what other services they may be able to utilize to impact your business in the future.
We work directly with service companies to understand their value proposition. We ask the question… Why You? We help rank the service type at the producer level to identify the go-to companies in each vital category. Then take it a step further by identifying the second, third and fourth alternative, thus building your depth chart so when someone goes down, the replacement company has been vetted and is ready to perform so your operation doesn’t suffer. All the information is centrally located and details can be shared on a common platform. Bid requests and ordering can be accomplished electronically and a legacy of that activity is captured for future requirements or analysis.
In our world it is not good enough to ask Who? We also want to help you understand… Who is next?
I personally spend most of my working day calling on and working with buyers to help them understand the value of better vendor management and communication. Our solution proposition is holistic in structure as we believe in looking at the full lifecycle of a well or project. We have a suite of products operators use to: select service companies, issue bids and orders, issue daily drilling field data reports and send end of well invoice verification. Our thinking is if you follow the money and streamline the process you will get better results. Most days I am surprised at the lack of organization the operators I work with have as far as vendor management is concerned. I just had coffee with the president of a small producer that admitted most of his vendor contact and information is either in his head or identified as a phone number in his phone. He does not have a backup for most categories if something fails. He needs our help. He is not alone.
The struggle is real and you can tell from reading posts on LinkedIn that some companies have figured out that things are different now and you have to adjust. Blackbird Energy seems to be one of those companies. President and CEO, Garth Braun understands that efficiency is the key to success and profit. I couldn’t agree more.
Why don’t we talk about it?