Today’s energy producers face a number of key challenges in their quest to achieve continuous improvement and operational efficiency goals. The need to lower costs and optimize processes is at an all-time high; the majority of senior engineers are set to retire over the next 10 years; and there is an ongoing need for better collaboration and cooperation amongst key industry players. Combined, these three forces are challenging energy companies to accelerate engineering excellence initiatives in order to maximize profitability by increasing revenue and lowering operating expenses. This will be critical to drive greater operational efficiency and foster continuous improvement within a dynamic and uncertain economic environment.
The “Big Three” Energy Challenges
The simple reduction in the price of oil over the last few months is pushing energy organizations to focus on reducing costs and optimizing processes. In essence, energy-related projects of enormous scale are generally difficult for organizations to wrap their minds around even when the business climate is favorable—let alone when it is challenging and unpredictable. This translates into a significant issue for producers, particularly when it comes to optimizing processes to extract at certain price points.
The “Big Crew Change”—where the majority of senior engineers will retire—will take place over the next 3-10 years and leave behind a large experiential void for new engineers to fill. The fact that so many experts are leaving the industry creates a great deal of pressure on up-and-coming engineers who must be able to harness the “tribal knowledge” of their predecessors. This isn’t an easy task, but it’s one that must be taken seriously and approached diligently to avoid a massive brain drain over the coming decade. Consider that a production engineering workforce handles the daily management of all oil and gas production operations. Their availability, skill, and experience directly correlate with corporate revenues and operating expenses, as well as personal safety and environmental performance.
Finally, the oil and gas industry needs to focus on collaboration and cooperation to operate more efficiently in today’s volatile business environment—both individually as companies and as an industry as a whole. But garnering the level of input and cooperation needed to create a valuable consortium amongst competitors isn’t always easy. To achieve this goal, energy companies need a mindset shift from “guarding the information” to sharing it with other companies. The circa-1980s cloak-and-dagger/industrial espionage days must be left in the past, replaced by greater levels of cooperation and a willingness to tackle industry, technical, human resource, economic, and related challenges for the greater good.
Getting Past the Obstacles to Success
To overcome the cost-reduction, crew change, and collaboration challenges that they are facing in today’s market, some energy producers are coming together to cooperate and collaborate in new ways. In Canada, for example, a consortium of oil and gas players have come together as a single, cooperating force to more efficiently scout certain territories, optimize operational costs, and extract at certain price points. The same efforts are helping these producers address the big crew change. By harnessing knowledge that one organization has gathered, for example, and sharing it amongst a consortium of key industry players, the looming “brain drain” can be more effectively assessed and addressed.
Technology is a great facilitator that can help producers tackle the larger issues standing before them while at the same time enhancing their own organizations’ operational efficiency, continuous improvement, benchmarking, and standardization processes. When assessing how to shore up the world’s failing pipeline infrastructures, for example, companies can go beyond the “just weld some plates to the outside of the pipeline” mentality and reshape their thinking to a more optimized and effective solution.
And, rather than using a conventional thick copper wire to move electricity to that welding torch, organizations can start to think differently about the role that lasers, optical fiber, and other modern technology can play in the process. This type of thinking literally breathes life into organizations and allows them to more efficiently and effectively solve problems.
Equipped with the ability to harness information and talent through an enterprise-wide approach to knowledge management and discovery, energy companies can drive operational efficiencies and enable continuous improvement. This foundation shifts the firms’ knowledge work and technical capability to more productive practices that support higher levels of organizational learning, reliability, and performance.
By thinking more critically, brainstorming more effectively, and collaborating more effectively, firms’ workers are able to create more ground-breaking and meaningful solutions to some of energy’s top challenges. Not only can this reduce costs and optimize processes efficiently to navigate through an uncertain economic environment. It also allows aligns them in support of operational excellence, which is welcome news to executives, the Board, and investors.