North Sea Oil Cuts Spell Need For Innovation

The news of over 5,000 North Sea jobs cuts since the decline in oil price was not only extremely worrying, but also the clearest indicator yet that the old way of doing things is no longer the pathway to future success.

The estimates come amid fears of stagnation in oil prices, leading Oil and Gas UK to suggest that the figure, which covers the drop from $115 in June 2014 to $63 in May 2015, may even be a conservative estimate. Meanwhile, Unite also warned that the extent of the cuts could compromise the safety of remaining employees.

All in all, the situation underlines the need for change. Whether technology adoption has stalled previously because of company culture, fear of failure or a misguided belief that things will go back to the halcyon days on their own, it’s time for an industry that has pioneered engineering innovation to revisit its operational cost base.

Embracing new technology can not only streamline existing processes, but also improve efficiency and prevent revenue leakage.

“$60 barrel price”

When Deidrie Michie, chief executive of Oil & Gas UK, warned of the need to stay safe, competitive and sustainable in a world of $60 oil she essentially highlighted the tough decisions facing oil and gas bosses today. The oil price volatility of the few days and weeks is tightening the screw on efficiency and productivity even more.

A reliance on rudimentary paper-based technology for managing operations remains one of the biggest causes of issues that drain money unnecessarily.

The results are excessive Days Sales Outstanding, non-productive time, inventory leakage and lost billable hours.

In the era of the sub $60 barrel, it is simply unsustainable to allow these long-running issues to persist.

Moreover, the ability to step up production when recovery does start to occur will be extremely difficult for any business that has shed workforce and failed to improve efficiency accordingly.

The future is mobile

Suffice to say, downsizing does not solve the root cause of inefficient operations. Instead, disjointed operations become harder to manage and more susceptible to error, while the ability to plan for future upturns in price is greatly compromised. For that reason, the current barrel price could be seen as opportunity to transform efficiency as well as just cutting back staff numbers.

Mobile operations represent one of the most effective ways for businesses to address age-old problems that leaked money even when barrel prices were soaring. Mobility in the oilfield, using applications on smart phones or industrial handhelds, can:

• Free up cash by sending customers accurate invoices on the same day as the work is completed. • Ensure higher equipment utilisation and increased revenue through removing the delay and error in paper-based processes • Result in more efficient (and better motivated) staff who can spend more time managing customers, work and equipment and less time completing and chasing paperwork.

If the recent drop in oil price has one positive impact, it should be that it focuses the minds of bosses faced with tough calls on how to grow the business in today’s era of enforced belt-tightening.

Change is needed, and the technology exists to deliver a more efficient oilfield.

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