The hard truth is that the oil and gas industry has found itself in the middle of a unique pairing of crises: COVID-19 and the great oil crash of 2020. The oil price war has caused prices to plummet, and it’s certainly the cause of panic throughout the industry. Earlier this week, on March 30th, U.S. crude finished at an 18-year low of $20.09 per barrel. And even with gas prices falling below $2 per gallon, the average American isn’t buying; they’re shacked up in the safe confines of their homes to avoid getting sick. Top it all off with a massive oncoming global recession due to the COVID-19 outbreak and many in the oil and gas industry are afraid to see what tomorrow brings.
Now more than ever, oil and gas leaders need to curb costs and build resilience in the face of uncertainty. With interest at an all-time high, let’s talk about how your oil and gas company can reduce costs.
Invest In AI-Powered Predictive Maintenance
Back when the price of a barrel of oil was high, there wasn’t necessarily a need to abandon traditional maintenance methods so long as profit margins remained wide. During these trying times, that’s no longer true. One of the biggest sources of lost revenue is unscheduled downtime when a critical asset goes kaput. A critical asset failure on an offshore production platform can wind up costing a company $3 million in a single day. This is catastrophic even when markets are stable; imagine if this happened to your company today as the world’s gone haywire. AI-powered predictive maintenance lets you plan ahead so asset failures don’t catch you (and your wallet) off guard.
As we discussed in a previous blog, AI-powered predictive maintenance analyzes data from sensors placed on an asset. Over time, it continuously learns and refines itself in order to analyze patterns and flag impending failures far ahead of time—we’re talking days or weeks in advance. But how cost-effective is it compared to other maintenance methods? Let’s break down the numbers.
Annual costs of maintenance approaches, as reported by the Electric Power Research Institute:
- Scheduled maintenance: $24/horsepower
- Reactive maintenance: $17/horsepower—though this is without taking into account the additional costs of safety hazards or operational damage from an asset failure
- Predictive maintenance: $9/horsepower, including no hidden costs or dangers
That’s a stark difference that can wind up saving you tens of millions of dollars throughout the year, not to mention protecting your offshore employees from serious injury.
Eliminate Invisible Lost Time with Natural Language Processing
Non-productive time is a great enemy of oil and gas operations, but invisible lost time (ILT) can be even more devastating to your bottom line if the proper processes aren’t in place. Invisible lost time refers to small tasks and inefficiencies that are too short on their own to be recorded, but that in aggregate eat up time throughout the day, leading to nonproductivity and thus threatening your profit margins.
But just as AI-powered predictive maintenance can minimize unscheduled downtime, natural language processing automates processes—such as analyzing information contained within rig activity logs—so offshore rigs can maximize production. By analyzing rig activity logs, natural language processing can help give operators better insight into what’s happening on their rigs, including where time and resources aren’t being spent well. This technology can do so faster and more accurately than humans, ensuring fewer errors when sorting through the data. Note that this doesn’t eliminate the need for human operators; technology and humans working together is what brings big productivity gains, especially in times like now.
The oil and gas industry has been slow to adopt AI technologies, but unprecedented times call for swift actions, and that means turning to innovation and technology to come out strong on the other side. AI isn’t a fancy new toy to save for the good times; it’s the critical tool your operations need to see them through this downturn.