Founding Executive Director – Dovewell Oilfield Services Limited – Nigeria-Accra.
For any organization to operate efficiently and effectively, it must be managed properly. The oil and gas industry is massive and a key factor in some of the world’s largest economies; thus, operations management plays a crucial role in coordinating this large and complicated sector. Operations management in the oil and gas industry is concerned with all processes involved in transforming crude oil and natural gas into usable products. Given the importance of operations management for this and other industries, it would be beneficial to understand what it is and how it operates.
What Does Operations Management Entail?
Most of the world’s industrialized economies rely heavily on oil and gas to supply their industrial needs. In oil and gas exploration and production, operations management identifies all actions required to plan, develop, coordinate and enhance the field development process. This includes logistical and business environment operations in addition to oil and gas exploration and field development.
Petroleum and natural gas are non-renewable energy sources. Oil, commonly known as petroleum, is a subterranean liquid mixture that, when refined, may be used to create gasoline, diesel and several other products. As with any other industry that deals with goods and services, the oil and gas industry has distinct processes from raw materials to final products.
Operations Management Responsibilities
In the oil and gas industry, operations management activities begin with planning, strategizing, estimating, coordinating and bringing together resources and schedules to maximize project performance and quality. After this peripheral phase, operations management oversees the fieldwork and provides oversight. Fieldwork in oil and gas begins with a search. Here, field specialists search and investigate various regions for the presence of raw petroleum resources. These professionals do a study to identify the natural minerals. This procedure is referred to as exploration.
Operations management’s next step, following the completion of this research, is to supervise the drilling process. This portion of the process is performed by specialized drilling companies. Following this, the raw ingredients are polished into valuable goods. Under continued direction, oil and gas are transformed from their natural state into finished products suitable for various applications. This phase is known as the production phase.
A 2009 publication by UNDP shows how collective planning can be viewed as a way of establishing organizational objectives by defining procedures. Making sure these procedures correctly utilize implementation, arrangements and resource allocation will ensure the achievement of an organization’s objectives. According to one encyclopedia entry, aggregate planning is the process by which an organization develops, analyses and maintains a preliminary and estimated schedule for all of its operations. The plan should include sales projections, production levels, inventory levels, customer backlogs, etc.
Therefore, aggregate planning can be understood as the planning process that incorporates all aspects of organizational operations (internal and external elements) into the organization’s overall operations. When an organization lacks an effective plan, it is comparable to someone who wishes to construct a structure without a blueprint. Without the plan, it will be very difficult to depict the exact layout of the structure, its cost, the duration of its construction, the resources required and whether the project’s finishing will satisfy the owner’s specifications. Thus, planning supports the organization in defining its needs, the project to be undertaken and the necessary tactics to attain success.
Maintenance is important to all organizations, but oil and gas businesses appear to be particularly reliant on it due to the sophistication of their drilling and gas flaring technology and the necessity to retain human skills through training. According to a paper by Rommert Dekker, in the early 1960s, researchers focused heavily on maintenance optimization by concentrating on design and execution.
A paper that quotes Boschian, Rezg and Chelbi describes the well-known models as “block replacement models.” These arose during the so-called age period, and the time duration of the maintenance activities is exclusively determined by the age of the system. In addition, for block-type models pertaining to maintenance time, the procedure must be defined in advance. Consequently, oil and gas firms are expected to take preventative measures by limiting the scope of their operations that involve gas emissions as well as to engage in constant planning and evaluation as well as routine maintenance of their equipment in order to prevent any situation that could result in methane emissions.
The expansion of the oil and gas industry into new geographical locations and environments is one of the sector’s challenges. While technology presents new prospects for income development, such as deep-water drilling, it also increases the complexity and risk of business operations.
The oil and gas industry as a whole is responsible for addressing these obstacles, but it especially falls on operations management.
Since operations management is responsible for planning and implementing oil exploration and production, it must ensure that the project’s equipment is in excellent condition. Therefore, when partnering with oilfield services, these facilities must adhere to the following best practices.
• Operations management should always assess and plan for the hazards associated with exploring new regions.
• Know what competitive advantage your competitors have over you. Know their best practices and who their customers are.
• Promote the organization’s accomplishments. Let the market know how you have improved.
The best practices to make sure operations management help prevent inefficiencies or errors include: reducing waste by producing on demand, improving workflow and controlling and fixing the root causes that affect cost and performance negatively. Some specific ways that operations management can improve logistics and coordination is by focusing on order-to-delivery lead time and planning accordingly. Make sure to examine transportation and redesign for cost/time efficiencies, customer satisfaction and quality of product and service.