Four essential ingredients for oilfield service providers

Flexibility to adjust operations in the oilfield sector is crucial for surviving in such a competitive industry. Customer experience, prompt invoicing and meeting contractual obligations are all vital.

By Marne Martin February 16, 2021

Providing excellent service for an industry as volatile as the oilfield sector is no mean feat. The demand for service activity constantly fluctuates in response to changing oil prices. Having the flexibility to adjust operations to varying work demand is crucial for surviving in such a competitive industry. Customer experience, prompt invoicing and meeting contractual obligations are all vital.

Capital projects account for 35% of international oil companies’ cash flow. The challenge for international oil companies is ensuring these projects are managed and run efficiently, said John England, Deloitte vice chairman and oil and gas leader. Oil and gas companies rely on oilfield service providers for these projects, so as a result, service providers who can respond to the changing demand time and again will triumph over the competition. But the main obstacle stopping oilfield service providers from progressing is software. The current software is underperforming and does not have the capacity to accommodate new ways of working and additional data streams. There are four ways software applications can improve processes creating a better customer experience for oil and gas organizations.

1. Software to keep you in the know

During a spike in demand it is difficult for oil and gas companies to retain staff because they are now competing with numerous other organizations. When staff leave for another company, they take with them the knowledge, data and expertise on billable work as this information is manually recorded on paper. This means oilfield service providers need to find a way to capture data on the entire lifecycle of the contract, service, customer and individual asset. Otherwise, the data you need to service your customers could walk out the front door whenever a competitor offers more money.

Enterprise service solutions are the key to avoiding such a situation. These platforms must create a transactional record of what work has been performed for each customer and how this job contributes to an overall contract. This data must be available to workers that may not have been involved in performing the initial work so they can understand what has been done, what is billable and what is required by each customer and project. If a site or asset is being visited multiple times, a crew chief should be able to retrieve the previous two or three work orders for a customer before engaging in work with them. The chief can then disseminate detail to the crew more quickly.

Collaboration is an added benefit of modern enterprise software. Platforms are now embedded with social collaboration tools to allow employees to add “sticky notes” to any record in the system. These tools are designed to capture unstructured interaction and domain expertise that is difficult to document. For example, a threaded discussion about diagnostics for a heat exchange unit can be attached to the equipment object, preserving the insights of a talented technician who may have already left the company.

With the right enterprise application, the question will become not so much how to avoid loss of customer- and project-related data but rather how best to view it in a way that helps newer employees come to understand the customer, their equipment, the contract deliverables and the related job requirements, ultimately providing a more seamless experience for your customer and your crew.

2. Invoices without the delay

In the oil and gas industry, companies aim to be “bill ready,” which means an invoice can be issued as soon as work has been completed or after work has been approved by management without much interference from contractors or managers. Manual, paper-based processes are still widespread among service organizations to monitor completed work against service contracts. In some cases, there may be no formalized contract of work signed with a customer. That means the generation of contracts, quotes and work orders for specific projects and invoices can become ad hoc, created manually or in separate, siloed standalone software.

The distinct lack of traceability and accountability in this process makes it difficult for service organizations to make certain completed work is invoiced. The employees or contractors sent to complete a work order are the only ones who possess the knowledge and data on what work was completed, and how much expenses were as they relate to time, parts, travel, equipment rentals etc. Yet the crew chief charged with completing a work order on-site cannot be expected to complete the final billing process without this information. Likewise, it can be an accounting challenge to track down the lead on each crew and ensure paperwork is turned in so work can be invoiced. Oftentimes, this results in a two- to three-month turn on invoices, which does not help the cash flow of a growing oilfield services company and only serves to frustrate the customers they are contracted to.

Oilfield service providers can now benefit from enterprise software solutions that are tailored to their working environment. It is relatively easy to generate an automatic invoice once the crew chief signals a billable service has been performed or a billable part or consumable used. The system should also include other processes, including customer sign-off on work, customer-specific pricing, comparison with existing contracts and warranties to ensure work is billable, and confirmation that contract deliverables are met. This all results in better cash flow, lower days outstanding, and fewer invoice disputes – bringing a contractor closer to their customer.

3. Prioritize technology that helps rather than hinders

A number of disruptive technologies are becoming more widely available to organizations in the oil and gas industry to help take the industry to the next level. Equipment sensors to automate service via the Internet of Things (IoT) and artificial intelligence (AI) to manage customer interactions, dynamic inventories and schedule technicians are two technologies oilfield service providers can capitalize on in the coming year.

Implementing these technologies into your organization’s operations will put you ahead of the competition, and with an improved customer experience gaining and maintaining clients will be much easier. When oil prices drop, these technologies can also help oilfield service companies complete more work with fewer people, and on the flip side, allows them to scale up during peak times as oil prices rise.

A complementary enterprise software is required for these technologies to be successfully integrated into the organization’s processes. Flexible enterprise software allows service providers to adapt to new business processes and technologies alike, enabling them to price, sell and deliver on aftermarket service. As customers contract more for outcomes rather than discrete equipment (i.e. hours of operation, resources extracted, etc.), oilfield service providers require software agile enough to price and support these contracts.

4. Mobile asset management – breadcrumbing with reliability maintenance

Oilfield service providers manage a large number of assets to either be rented or used on-site. When dealing with thousands of assets, it’s easy for trucks, backhoes, workover trucks, seismic equipment, instrument air systems and more to be misplaced or lost. Lost equipment can easily account for millions of dollars in time and resources.

Breadcrumbing a location is a tactic to keep track of a vehicle, asset or piece of equipment that is making multiple stops on a daily or multi-day route. Tracking the movement and location of equipment in this way requires a high degree of integration between the equipment object, projects, and service management. GPS must complement existing mobile order functionality for breadcrumbing to work. Mobile work order software can oversee and record the completion of each service event. This means enterprise software needs to be able to open the equipment record through a simple web service and pull in GPS data in the context of an overall project.

There would also be a need for reliability-centered maintenance to be integrated into the system so you can determine whether a given service call must be completed before a piece of equipment comes back to the yard or depot. If it is not mission critical, that service could be completed a few days later with no need to dispatch a crew or technician. On the other hand, if the asset is currently in the yard but is due for service after only a few more weeks or duty cycles, it may make sense to do a specific maintenance activity early if it is about to be deployed on a customer site for a period of months.

Adapting to succeed

Strict service-based contracts, large asset volumes and the volatile nature of the industry makes profit margins uncertain. Success in this sector requires organizations to be flexible so they can adjust to spikes in client demand, as well as manage their own assets, staff and business goals.

Original content can be found at Oil and Gas Engineering.

Author Bio: Marne Martin, president of the IFS Service Management Business Unit.