The Upside of a Downward Oil Price Trend: Who is in the Sweet Spot?

Martin Richards

Martin Richards

EMC Corporation’s Enterprise Content Division Senior Director of Energy Industry Solutions

As I think about the ripple effect of oil prices on our varied stakeholders, one insight comes to mind – refineries are in the sweet spot. And we can all learn from their playbook as they maneuver the market.

Failing Oil PricesProfitability is traditionally housed in upstream areas of the energy market, which leaves the downstream end with little room to optimize. If anything, refineries are accustomed to slim margins and squeezing out efficiencies. But what happens to refineries when oil prices drop? Their cost of materials suddenly plummets, yet they keep on producing outputs  –  generating a welcome influx of profitability.

Certainly this varies by region and the refinery itself. I have seen firsthand, however, that a brownfield environment can reshape itself during market swings. Astute leaders are using the “upside” of the downward oil price trend to make infrastructure improvements and technology investments.

Refineries Taking Advantage

In the case of a U.S. refinery I know well, they made a strategic decision to aggressively implement new technologies with their new-found profits. What’s interesting is not only Continue reading

The Next Phase of Oil and Gas Infrastructure in North America

Martin Richards

Martin Richards

EMC Corporation’s Enterprise Content Division Senior Director of Energy Industry Solutions

We’ve been talking about the impact of the drop in oil prices over the past six months, and as we’ve discussed, the impact touches many different parts of an oil and gas company’s business, from the operational changes needed to maintain profitability to changes in how an oil and gas company invests in future grown. But there are also industry-wide impacts, as well, and in North America, lower oil prices have delayed the important debate over how to transport oil and gas from the new production facilities in the north to the existing refining capacity in the south.

IIG_EE_013The recent drop in oil demand has resulted in a subsequent drop in oil and gas production. While this has taken the pressure off the current infrastructure, this equilibrium will not last forever. When demand inevitably increases, so will the need for new midstream infrastructure capacity.

Balancing Infrastructure Needs and Environmental Concerns

Any expansion of midstream oil production capacity is inevitably surrounded by controversy and pressure from environmentalists. The public debate has centered around the Keystone Pipeline, designed to link the oil fields in Canada and North Dakota to refineries in Illinois and the Gulf Coast, but this is just one of a number of infrastructure projects that are waiting to be implemented.

From 2010 to 2013, capital spending on midstream infrastructure increased by 50-60% and reached $85 billion in 2014. The expected investment from now to 2025 is estimated at $1.15 trillion.

The challenge for the industry is how to build and maintain this new infrastructure while convincing the U.S. public and politicians that it is not presenting an additional environmental risk.

Electronic Infrastructure Monitoring

IIG_EE_023A recent article in the Wall Street Journal (May 6, 2015) suggested that technology has a key role to play in safely managing the new pipelines. Using cloud technology to monitor sensors built into the pipelines is a good example. This will allow faults in the pipes to be identified immediately, and it will accurately locate the position of a fault much more accurately to assist maintenance.

Clearly, another required technological advance will be the ability to electronically manage and distribute the documentation and processes relating to maintenance and operation of the pipeline. The ability, through cloud based sensing devices, to monitor and identify potential problems must be supported by effective maintenance for the overall system to operate within environmental standards.

Controlling Documentation, Too

One of the key requirements for an effective maintenance operation is to have the current, up-to-date documentation available to engineers when they are required to undertake a work order. EMC Documentum Asset Operations – based on the industry-leading EMC Documentum enterprise content management platform – is designed to manage operations and maintenance documentation and is in use today by many of the country’s leading energy providers, including pipeline operators.

Documentum Asset Operations is specifically designed to manage the as-built documentation relating to a particular asset, as well as the management of change processes needed to satisfy the regulatory standards. It also supports mobile field workers, allowing operators to access and read current asset documentation and to enter new asset information on mobile devices, such as iPads. Documentum Asset Operations Mobile records GPS locations and allows the operator to add photographs and bar code information. Information added within the mobile device is then fully synchronized to the corporate Documentum Asset Operations system of record.

By extending your information management strategy to include both electronic monitoring and document control, you are significantly improving your operational efficiency and ability to quickly react when maintenance is required.

How are you managing your information today? Is it electronic? Are you considering cloud and mobile technologies? Share your thoughts and let’s discuss below.

Managing Projects in Oil & Gas Has Never Been More Critical

Sean Baird

Sean Baird

Sean leads Energy and Engineering Industry solution marketing and market development for EMC’s Enterprise Content Division.

EMC recently commissioned IDC to research how oil & gas companies manage capital projects. In this week’s blog, we’ve asked Chris Niven to add some perspective to this research and the current state of the oil & gas industry.

Untitled-1Consider the complex challenges facing oil and gas companies today. Processes are changing as oil and gas companies drill and complete multiple wells on one well pad, technologies are advancing on all fronts, and the success of the company depends on operational and technological excellence in times of lower oil prices. Since Oil and gas companies are notorious for delivering projects behind schedule and over budget, increasing project performance is one key area that can make a difference whether a company is profitable or not.

At the end of last year, IDC surveyed one hundred oil and gas professionals worldwide to evaluate the approaches organizations are taking and the areas of greatest opportunity. In this blog, I will highlight a couple of key findings, but please download the white paper to see the complete report. Continue reading

Objects are Closer than they Appear – New Content Management Cloud Data

JD de Haseth

JD de Haseth

Director, Marketing — Cloud Services in the Enterprise Content Division (ECD) at EMC Corporation
Director, Marketing -- WW Cloud Services @ EMC Enterprise Content Division

The time has finally arrived. After many years of planning and customer outreach, we can actually compare how our ideas around cloud delivery platforms have truly played out pragmatically for content management customers. We have new customer survey data, which I’ll share momentarily.

1024px-Car-SideMirrorOne of my main takeaways, having worked on EMC Enterprise Content Division teams to define and build cloud solutions, reminds me of car side view mirrors in the 1990s: “objects are closer than they appear”. Looking back on what’s different now when it comes to leveraging cloud as we manage and host customer environments in our data centers, most prominent is how customer question sets have changed.

In the early days, a mere 3-5 years ago for example, content management cloud prospects were plagued with fears. Customers were, at best, described as trepidatious. The cloud was perceived as a dark and stormy, shady object. Fears around cloud appeared larger than they really were.

Security has been, and always will be, a priority on the EMC side. Yet less and less are customers today allowing fears to hold them back from the many benefits gained by EMC cloud solutions and applications. Security features and functionality are addressed and inherent in the offerings, and the focus quickly moves onto realizing the ease of quickly delivering and rolling out content management solutions to users and, of course, Continue reading

Brownfield Projects Strategies Key Amidst Lower Oil Prices

Martin Richards

Martin Richards

EMC Corporation’s Enterprise Content Division Senior Director of Energy Industry Solutions

One of the main tenants of economic theory is that, during a recession, businesses focus on efficiency improvements rather than growth to grow profits and gain competitive advantage. This strategy also means that, when the recession ends, these organizations are leaner, fitter and better prepared to face the new – and different – challenges of a growing economy.

With the slumping price of oil, it is interesting to see these same strategies move to the forefront in the oil and gas industry today.

Major Investments Ruled The Day

For the past few years, with oil prices generally exceeding $100 per barrel, oil and gas companies have been running as fast as possible to develop new production facilities. The effect of this has been a primary focus on spending on large-scale capital projects across the globe. Because of the focus on investment in new projects, there has been a relative lack of focus and management attention on operations and maintenance of the existing production facilities.

oil refinery

With the price of oil dropping to $50 per barrel and many analysts predicting that these lower prices will last another two to three years, the oil companies have dramatically cut back on their investments in new large-scale projects. Capital projects that have been in planning for many years have been delayed or cancelled, just as the detailed design was due to start.

Shifting to Operational Focus

Instead of focusing on new investment, oil companies are focusing on maximizing the efficiency of the existing assets, leveraging recession-time economic theories. That means an increased focus on business operations and asset maintenance. However, spending on brownfield projects cannot simply stop without risking the productivity of the existing facilities and therefore affecting the bottom line of the company.

We are now seeing this behavior in many of our customers. While we are not necessarily seeing an increase in spending on brownfield projects, we do see widespread acknowledgement from the operations management within the industry that the brownfield projects are not effectively managed. And that makes sense: the money spent over the past few years in systems to support large-scale capital projects has not been replicated for brownfield projects.

Successful Brownfield Projects Strategies

As oil and gas companies look to better manage their brownfield projects, what should they be focused upon? We find five common attributes amongst our customers that are successfully managing their brownfield projects:

  • Getting control of and centralizing their current asset documentation and data. Because many plants were built decades ago, the information is captured on paper and stored in filing cabinets. Capturing this information electronically and, more importantly, organizing this information to support your critical operations processes is essential to success today and in the future.
  • Integrate documents and operations and maintenance data. Operational excellence requires more than just good document control; these documents must be well integrated with the business processes and systems that support these process.
  • CollabDesigning and implementing an effective Management of Change process for both documents and data. Even at plants that are several decades old – many would say especially at plants that are several decades old – change is a constant. It’s not enough to establish a baseline and live off of that information; successful organizations make sure that they are able to cope with changing information, both managing the change process and ensuring that the most current information is always available.
  • Extending the change processes outside of the organization to include partners. Given the number and global scope of contractors and suppliers that participate in brownfield projects, it’s critical to design both processes and systems that facilitate third-party organizations to share documents, comments, and participate in review and approval workflows.
  • Applying the same tools and processes for both large-scale capital projects and brownfield projects. EMC has developed solutions that enable organizations to follow industry best practices and keeping your projects on track. Successful customers are leveraging these same systems to successfully manage brownfield projects.

By focusing on these five areas should position oil and gas companies to not only increase their efficiencies and adapt to today’s low oil prices but also position them to manage their large-scale capital projects when the price of oil rebounds.

How are you focusing your business strategy in today’s oil and gas economy? Share your thoughts by commenting below.