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The latest turmoil across North Africa and the Middle East has raised oil prices yet again. Even though we all know that the price of gas at the pump should not be affected yet, it is. In fact, according to the US Energy Information Administration, regular grade gasoline increased 19 cents per gallon for the second largest one-week increase since 1990.

This also means energy dependent industries can expect a significant increase in energy cost soon or as their current energy contracts run out. One result of the foreign revolutions is that we will see more domestic oil and gas exploration and production in order to potentially offset an “unstable oil supply”. For the Oil and Gas Industry, meeting the new production goals may require bringing older equipment back online or purchasing new assets for production.

The Need for Better Oil and Gas Asset Management

Without oil and gas, manufacturing, energy plants as well as a host of other industries would quickly come to a halt. When you add the current depressed economic state into the mix, it is critical that supplies be affordable to minimize inflationary concerns. Keeping oil and gas production affordable may be obtained through better asset and maintenance management using EAM CMMS software.

Using EAM CMMS software gives oil and gas asset managers the tools they need to provide the best pro active maintenance management possible. By keeping assets in great working order they will be more energy efficient, have less downtime, require fewer emergency repairs and result in lower labor costs. EAM CMMS software also enables oil and gas asset managers to determine which older assets can be returned safely into production as well as which assets will need to be replaced.

Bringing Older Assets Online

One of the challenges of bringing older assets back into production is making sure they still are able to operate at safely as well as at optimal efficiencies. Safety is critical to avoid disasters such as the BP Gulf Oil Spill and potential threats to the nation’s waterways. Efficiency is necessary to maintain lower operating costs and keep oil and gas products at reasonable levels.

An EAM CMMS software solution enables oil and gas asset managers to know the location, condition and maintenance history of all assets. This is accomplished by:

  • Creating a database of asset detail including date purchased, description, location, vendor information, inspection history, # times repaired, work order outcome, cost, parts used, and so on.
  • Automating work management processes such as work request and work orders.
  • Enables maintenance management to schedule inspections, preventive maintenance and repairs on assets to be brought back online.
  • Better document management including blueprints, manuals, schematics, contracts.

Bringing older assets back online is easier when you have a reasonable idea what to expect based upon the assets maintenance history as well as confidence that corrosion or neglect will not cause unexpected problems.

New Asset Maintenance Management

Some assets are beyond repair and need replacement and others assets may need to be purchased to take advantage of newer technology. In either case all new assets should be added to the EAM CMMS database so that the appropriate maintenance activities can be scheduled and recorded.

New assets have a tendency to fail more often during the first few months due to installation errors, misuse, or poor planning. Using an EAM CMMS solution makes sure that the management reports contain the needed information for asset managers to make sure that new assets are being cared for properly as well as determine the effectiveness of new equipment.

Like older assets, newer equipment has a useful lifecycle that can be extended when proper preventive maintenance (includes predictive maintenance) is applied. The longer the asset life-cycle, the lower the capital budget requirements to replace them.

Can Oil and Gas Lead the Way?

Libya’s oil production has dropped from 1.6 million barrels of oil per day to 850,000 and Brega (2nd largest port) has effectively stopped all exports. As US oil companies begin to make adjustments, they have the opportunity to put in place quality EAM CMMS asset management programs so that the turmoil impact from other parts of the world is not compounded by unnecessary costs.

The Challenge to Other Industries

The reason for our Nation’s dependence on oil and gas as well as my personal opinions are beyond the scope of this article. What is accurate however, is that all industries could do a better job of managing and maintaining their assets. Well maintained equipment lasts longer, will run better and is almost always more energy efficient.

“…on average, manufacturers spend almost four times as much on energy as they do on MRO capital equipment and services.”
Source: David Berger, PlantServices.com

Organizations that have not maintained their assets either as a result of the current economic crisis or through a lack of asset management visibility are going to have higher energy costs. Sharp increases in utility expenses can devastate an already narrow profit margin.

The need to have a pro active maintenance operations has never been stronger.