Here are five strategies oil field service and equipment companies are exploring to adjust to the changing environment. The products that this industry makes support many other vital industries like the. The shale gas production has its own peculiarities, and is a problem of very recent development. Supply chain management involves providing maximum satisfaction to end users consumers, in other words, delivering the right product to the right person at the right time while still maximizing profits. Four areas of consideration can help shape the discussion and lead key players to. Clairsville oh and washington pa is a leading provider of flame resistant fr clothing, gloves, and more. Feb 25, 2020 the terms upstream and downstream oil and gas production refer to an oil or gas companys location in the supply chain. To conclude, the supply chain of the oil and gas industry is a complex and a highly technical sector that generates enough revenue for the government and seeks to bring development and improve living standards. The following sections present a macro level analysis of the main factors and key actors which influence inve stments in the two value chains. The ukcs upstream supply chain collaboration survey asked british and dutch operators and suppliers about their experiences working alongside. Based on the theory of scm creating an optimized supply chain. Too big to be scaleable, the industry has always been segmented along its supply chain into an upstream, refining, and downstream part. A study of sustainability in the oil and gas supply chain.
Creating the integrated value chain for downstream oil. Meanwhile, another trend understood to exist in the bulk gases supply chain is increased interest in small. Oil and gas have become among the most prized commodities globally. Creating the integrated value chain for downstream oil 1 background energy, utilities and chemicals the way we see it figure 1.
Oil production includes drilling, extraction, and recovery of oil from underground. This paper aims to provide valuable insights into the global trends impacting the supply chain and procurement functions of the upstream oil and gas sector, and looks at ways to position. Supply chain solutions another supply chain solution that can help the oil and gas company in pricing negotiations is the use of the shouldcost model, and in addition, the total cost of ownership tco model. Companies in the oil and gas supply chain have gone from boom to bust in the past two years. Maintaining best practice in procurement and supply chain management is a core requirement for those operating in the global oil and gas industry. Optimal supply chain management in oil, gas and power. Criticality of competency in oil and gas operations. Vision 2040 global scenarios for the oil and gas industry 5 how to read the study few areas of the economy are as volatile literally and figuratively as the oil and gas sector. In 2016, natural gas surpassed coal as the leading source of electricity in the u. By developing the local content, the sector could employ a lot of people to improve living standards in the along the supply chain. A supply chain strategy has been developed which sets the framework for change and provides clear direction to achieve the best overall outcome from the ukcs. Pdf supply chain management in the petroleum industry contains various challenges, specifically in the logistics area, that are not present in most other industries. Pdf supply chain innovations in the oil and gas industry.
Many of the small bulk oxygen tanks seen at medical facilities are filled by mini bulk trucks, while these are also used to supply nitrogen for fracking in oil fields. However, to date, these technologies have been primarily focused on improving time to first oil and improving the effectiveness of hydrocarbon extraction, rather than above ground operational performance and endtoend integration. Jun 10, 2016 the supply chain of the oil and gas industry in ghana ghanas oil and gas industry is operational within three sectors. A strong supply chain is essential to establish the uk as the go to centre globally for offshore mature basin, subsea and decommissioning solutions. Here the challenges center around the fact that as traditional oilfields left. The overall aim is to develop an empirical model of sustainable supply chain characteristics that improves resource utilisation, profit maximization and competitiveness in the oil and gas industry.
Natural gas heats our homes, powers our businesses, supplies our factories and beyond. Excel at advanced materials management materials management challenges are common in oil and gas production. Pdf perspectives in oil and gas supply chain management. In general, natural gas compressor stations are designed with more than a single compressor unit. The oil and gas industry is involved in a global supply chain that includes domestic and international transportation, ordering and inventory visibility and control, materials handling, import.
The operator must successfully manage the supply chain for producing the oil and gas. Now, as the industry faces the likelihood of a longterm lowprice environment, procurement teams need to look beyond shortterm tactics and take a more proactive and strategic stance within their organizationsfor example, working further upstream in project design and collaborating with the engineering and design teams to reduce complexity before it is locked into longterm procurement. How oilfield services consolidation transforms the value chain. Oil and gas supply influences and is influenced by the global economy and geopolitics. Each unit has the capacity to individually meet the majority of contracted natural gas demand. Other oil and gas companies can use similar innovations to streamline and optimize their own supply chains. Benefits of a smarter solution the paper is designed to provide a unique supply chain focused view into this tremendously dynamic global industry. Icmr, international conference on manufacturing research, university of greenwich, september 2017, uk.
The thesis titled current issues in the supply chain management in the gas and oil industry is aimed to study and provide a clear idea of todays supply chain optimization, development of the industry, new operational challenges, environment risk concerns and example of the worst disaster in the petroleum industry. Oil and gas slowing economic expansion is crimping demand growth for crude oil, although its likely to grow around 1. These factors make the oil and gas supply chain even more complex to manage. Rethinking the upstream supply chain 4 6 elements to capturing future value 5 take your organization from reactive to collaborative 8 enablers to a stronger supply chain 10 how can kpmg help you. In an effort to manage their supply chain and reduce costs, oil marketing. The evolution of supply chain management in the petroleum. This is a thesis about procurement process in the oil and gas industry in nigeria with specific stress on agip nigerian agip energy and natural resource. Improving supply chain operations for the capital intensive oil and gas industry requires explicit consideration for tradeoffs and risks. Opec continues to constrain supply even as overall production keeps rising, possibly ahead of. Other supply chain elements include material handling, importexport facilities, and the distribution of refined energy products from points of origin to market.
The petroleum industry traditionally had prices decided by the government of india. Mar 11, 2016 oil and gas companies operate in dynamic and complex environments where they face constant challenges, especially in terms of supply and demand. Supply chain management of the oil transport finding an optimal method to optimize the scm in oil depot and distribution. Api has created supply chain models for both oil and natural gas to communicate, in the simplest terms, how the industry works. Adopting a more strategic approach to procurement in oil. A strong supply chain is paramount to the success of tullow as a whole. Modern bulk gas supply chains chart industries, inc. Is blockchains future in oil and gas transformative or.
Jul 21, 2017 supply chain solutions another supply chain solution that can help the oil and gas company in pricing negotiations is the use of the shouldcost model, and in addition, the total cost of ownership tco model. The growth results largely from a significant increase in onshore crude oil production, particularly from shale and other tight formations, which has been spurred by technological advances. These components include chemicals, spares, consumables, original equipment manufacturer oem services, outsourced services, outsourced manpower, inventory management. Download pdf version the path oil and gas travels from extraction to end consumer is in a state of transformation. Our goal is to raise the level of awareness around the oil supply. An intensive 5 day training course global procurement and. Along its supply chain, oil passes through different legal frameworks as it moves from one country to another. A study of sustainability in the oil and gas supply chain core. They suggest that this discrepancy exists because current inventory methods miss emissions that. Companies in the oil and gas industry are usually divided into one of three. He is also sourcing and procurement lead for accenture s north america oil and gas practice. Environmental protection agency inventory estimate. The oil and natural gas supply chains can be complicated and sometimes obscure systems to many who rely on their products and services. When scaled up nationally, our facilitybased estimate of 2015 supply chain emissions is.
A dhl whitepaper titled building the smarter energy supply chain summarizes the situation well emphasis mine. During production, crude oil is produced on both land and at sea. Effective supply chain market intelligence helps oil and gas companies deal with strategic supply chain challenges such as constrained capacity, infrastructure and volatile markets. The evolution of supply chain management in the petroleum industry the oil industry is evolving rapidly, from the upstream to the downstream. Whether youre importing refined goods, or producing domestically there are specific risks that if not addressed could impact your product quality, brand, or bottom line. Pdf challenges in supply chain management in upstream. The research will be exploring the downstream segment of the oil and gas industry. Master of engineering in logistics massachusetts institute of. Today, there are many opportunities for the coordination of activities across the supply chain even in the ever complex oil and gas sector.
The oil and gas industry play a critical role in driving the global economy. Api has created supply chain models for both oil and natural gas to communicate, in the simplest terms, how the industry works from the identification of resources to the end user. Operations are changing at every link in the supply chain, as companies adopt new and emerging technologies, digitize their enterprises, and streamline processes. Five strategies to transform the oil and gas supply chain. To do business with shell, wmbes must understand how the oil and gas supply chain works. Supplier diversity manager debra stewart tells you everything you need to know. Cem dogan is a managing director in accenture s resources operating group, with a focus in supply chain management.
Growth in the number of wells, horizontal drilling, a move toward multiwell pads and the deployment of 24. Our goal is to raise the level of awareness around the oil. The redundancy of components and the resiliency of the system design inhibit traditional chokepoints in the natural gas supply chain. This rapid growth followed by market decline has led oil and gas companies to finally face reality i. He has 27 years of consulting experiences in supply chain management, operations and business strategy. How important is supply chain in the oil and gas industry. Pdf organizations in the oil and gas industry often deal with a variety of logistic challenges. The ripple effects of missteps in oil and gas supply chains can be significant, with the potential to harm corporate reputations, strain trade relationships, and cause environmental damage. Five strategies to transform the oil and gas supply chain mckinsey. Supply chain management oil and gas training courses in. The study begins with an introduction to the basic background of the petroleum, natural.
The outbound supply chain the supply chain associated with taking away the oil and gas produced by the field. The role of the oga supply chain team is to promote and strengthen the supply chain and exports and focus on developing a strong and competitive uk based oil and gas sector. Supplychain management in the oil industry e3s web of. Pdf in this globalization era, petroleum companies are one of the dynamic supply chain entities, which require a dynamic process of. The us natural gas supply chain is inherently resilient as a result of its design, which incorporates rapid response capabilities with automatic response triggers. For example, take inventory control in the natural gas business. Contents executive summary 3 what this white paper covers 3. Planning and optimising of petroleum industry supply chain. Now, with oil prices at historic lows, it is time to evaluate the supply chain, and procurement techniques and costs.
Aug 08, 2014 the outbound supply chain the supply chain associated with taking away the oil and gas produced by the field. The oil and gas industry is one of the worlds most advanced user of technology. They are seeking companies who offer a partnership and can complement their business, rather than just procuring a product or service. An effective value chain helps in mitigating the risk, managing the warehouse inventory strategy, monitoring the logistics and transportation, controlling the supply and demand, and ensuring the best. Best practices in oil and gas supply chain and procurement.
Is blockchains future in oil and gas transformative or transient. Considerable amounts of the greenhouse gas methane leak from the u. Oil companies should aggressively use information technology to integrate suppliers and customers. Production ep, gas and power, oil products, chemicals, and other industry. The future of supply chain management in the downstream core. Overview the first step in the oil supply chain is production. A direct focus will be placed on the company phillips 66. Producing and consuming countries have set up international organizations to address energy, business and climate issues that require concerted governmental action. Doc procurement process in the oil and gas industry in.
Whether you are an international supplier looking for opportunities across the countries in which we operate, or a local supplier, we are interested in hearing from you. Its important to know your supply chain story to ensure the safety of your oil and gas products. Used in fracking operations, ceramic proppant is heavy and dense, so transportation represents one of the largest costs, relative to the overall value of the product. The terms upstream and downstream oil and gas production refer to an oil or gas companys location in the supply chain. The findings show that challenges facing supply chain management in the oil marketing companies in kenya occur in one or more of the supply chain components. Title examining the impact of supply chain integration on. Supply chain market intelligence is key to any industry and more so for the dynamic oil and gas industry. Supplieroperator relationships are now so very crucial since the drop in oil prices is causing real monetary concern across the industry. Pdf supply chain management in the petroleum industry. The report starts with an introduction to the country nigeria itself. Challenges facing supply chain management in the oil.
Supplychain management issues in the oil and gas industry. With the help of software optimizing a process of supply chain of oil depot. Optimization of process between oil depot and gas station. Oil and gas companies need to focus not only on their product supply chains, but.
Strategic planning, design and development of the shale gas. Over the past 24 months, companies in the oil and gas supply chain have gone from boom to bust. The value chain for offshore oil and gas and the value chain for offshore wind are both part of the global market for energy. The author was amazingly able to write this book so technical managers and engineers would be able to use it as a reference and guide to understand various supply strategies, while supply chain professionals would find it as a comprehensive resourceful guide to most oil and gas activities, including tools for managing risks and for defining well balanced supply strategies. Pdf supplychain management issues in the oil and gas. The oil and gas industry operates through a global supply chain that includes domestic and international transport, trading, shipping, ordering, and inventory visibility and control. In the former, the total acquisition cost for a particular equipment or service is arrived at by taking into account the design cost.
The terms upstream, midstream and downstream are often used to refer to the major sectors or operational components of the petroleum industry. Introduction the petroleum industry plays an important role in the economic development of the country performance of its supply chain has become very important 2. Strategic supply chain and procurement best practices in oil. In their case study of british aerospace bae systems.