Over the past decade, new technologies and intrepid entrepreneurs have shaken up North America’s oil and gas industry. This change isn’t through. In fact, all the signs are that disruption to the sector is only just getting started.
Across the region, operators, service companies, and technology providers are increasingly building intelligence into machinery, materials, and processes, adding “brains” to the “brawn” that powered the shale revolution. The challenge now is not to produce the most oil and gas the fastest, but to produce the right amount, from the right wells and at the lowest cost.
However, even as these changes deliver efficiency gains, oil and gas businesses are being challenged by their shareholders to go even further and enable the Holy Grail of sustained, profitable and predictable growth.
Deliver value through sales and operation planning
By learning lessons from manufacturing, oil and gas companies can rapidly increase value for shareholders.
Manufacturing companies adopted sales and operation planning (S&OP) to better adapt to changes in demand and commodity prices. S&OP helps finance and operations reach agreement on the most profitable path forward in fast-changing conditions. S&OP can be applied to oil and gas to improve asset intimacy and the capital planning and allocation decisions it drives.
Through integrated reconciliation, using quality current data, capital can be reallocated in time to make a difference on earnings, and analysts’ expectations can be managed.
More specifically, translating Sales and Operation planning (S&OP) for oil and gas companies requires:
- a single version of truth
- real-time insights on sales and demand
- a level of comfort with forecasts
- bridging petro-technical and Enterprise Resource Planning (ERP)
Digital technology is introducing radical transparency to the E&P industry by generating and integrating many streams of information. Organizations now need to use this information to increase focus.
Operators should look to integrate financial and supply chain data with operational and petrotechnical information and business processes—in effect bringing the field and boardroom together. Doing so, operators will be able to build digital projects that help them achieve the right production volumes, from the right wells, at the lowest cost per barrel of oil equivalent to generate predictable returns.