In the current oil price environment, cost management is quickly becoming a crucial component in the oil and gas production process. You’ll need to explore innovative ways to cut costs rather than simply relying on traditional methods. If you can’t adapt to the ever-changing market circumstances, you’ll risk failure. Here are strategies that your company can implement to optimize your production process and cut costs:
Make the most of automation
Automation can significantly speed up your operations, lower production costs, and boost workplace productivity. You should invest in a portfolio of software and machinery that can ensure that your operations run smoothly. Take, for example, downhole tools that can help maintain a continuous flow of oil from a reservoir, carry out workover operations, and optimize production levels. Portfolio optimization software can also reduce repetitive entries and also provide your employees with quick access to data. This can reduce training costs, manual data entry, and the risk of errors.
Communicate with your vendors
Regardless of how long you’ve used the services of your vendor, if their operational costs are too high, you’ll have to adjust accordingly. Think about whether you truly need a particular vendor and if it would be more cost-efficient to complete that certain task in-house. You can also canvass for prices to see if you can get the same quality (or better) service for a more economical rate. Talk to your contractors and staff as well to see if you can agree on a better deal with them.
Train your employees
Mistakes can be costly and even dangerous when it comes to errors made in the oil production industry. Although your employees are still prone to human errors, you can reduce the risk of this happening by properly training them and making sure they understand their roles perfectly. Implementing a thorough and exhaustive training program will ensure that your employees are doing their jobs to the fullest of their potential. They’ll not only be more efficient, but they’ll also be more confident and less likely to make a potentially costly mistake.
Assign Key Performance Indicators (KPIs) for your team
By setting goals in the form of KPIs, you’ll be able to keep your team accountable and motivated. Keeping track of everyone’s actions and spending habits will help keep your expenditures in line. This is a cost-saving initiative that will help you control expenses and save money.
Evaluate your expenditures
If you want to achieve sustainable cost reductions for the long-term, you’ll need to do a complete and thorough investigation of every cost that your operation incurs. This will reveal which expenditures are truly required and which ones are not. The quantity and usage of consumables are often overlooked, so scrutinizing these details will reveal what you can adjust in this area. You can also assess your staff and various departments such as Finance and HR. You might find that these branches are inefficient or severely overstaffed. In this case, you may even choose to outsource several jobs to save on costs.
These practical tips can help you lower your production costs while optimizing your production process. As oil prices enter a new and uncertain territory, these strategies will become more and more important to your business.