The oilfield’s IT revolution is streamlining operations and connecting the field with the back office like never before. These connections are changing the corporate culture for the better.
by Paul Wiseman
For the better part of a century field personnel have been chastised and glared at, if not outright berated, by office personnel seeking tickets that need to be processed. Without those tickets client bills are delayed, as are payments to suppliers.
Even when the tickets came in it would take days to get them processed and approved, and for bills or payments to be issued. Only then did the sometimes 90-120-day wait for payment begin.
All of this has tended to create tension between departments, each of whom might think they were doing the other a favor in the process.
Starting in earnest with the downturn in 2015, many companies are turning to enterprise resource planning (ERP) software that directly connects field actions to the back office, eliminating the need for confrontations. In most ERP programs, field technicians enter data in preset fields at the job site. The software will not complete and send the ticket if the fields are not filled in correctly and completely.
From there it instantly appears in the accounting department’s database, from which they can generate invoices, reorder inventory, project revenue, and do so much more.
One can almost hear a line from The Lion King, as one of the characters announces, “…we shall rise to greet the dawning of a new era… in which lion and hyena come together, in a great and glorious future!” Only in this case the future really is glorious.
“This is changing the corporate culture,” said David Hunter, director of sales for Dallas-based Computer Business Solutions, Inc (CBSi). The company has just released ofsERP, a Microsoft NAV-based system for oilfield service companies.
“If you can get the tickets in the office immediately, you increase cash flow. All that removes the adversarial relationship between the field and the back office,” he continued.
Company Founder and President Dennis Smith says the downturn has forced smart companies to look for efficiencies in every area of the company. “The brighter ones are realizing, we’re doing everything we can to get the oil out of the ground from an engineering perspective, on a lower cost basis,” but they’re realizing that they are still losing money in the back office due to time-consuming manual procedures. This realization sends producers or service companies on the search for ERP software that will catch the back office up with the field in efficiency.
These systems that gather all information into one database, then tap that data for all types of reports, forecasts, maintenance schedules, employee evaluations, and more, have granted almost instant access to needed data across the entire company.
By bringing departments together and by streamlining all the data, Smith says end users are able to attract and keep better employees. “You’re not attracting people if you make them do so much manual stuff,” he said. If lists of equipment for one well have to be manually copied to a list for the next well instead of automatically imported through the database, employees get tired of the repetitive work. The best people may go elsewhere, Smith said.
He cited a case in which a new client had dealt with ongoing employee issues under the old manual system. “They were always afraid their accounting manager was going to quit,” and no one else would know the ins and outs of the manual system. Smith said his company’s software put an end to the internal problems by streamlining the processing and availability of all the firm’s data.
Joshua Crawford, founder of STEM Software, headquartered in Odessa, also notes the simplicity inherent in the IT revolution. “Our clients can go in and click on the well and see every ticket that was ever done on that well.” Companies still using a paper filing system “have rooms full of filing cabinets. If a customer wants something done right now, and it’s Friday night and they need to go find the information…two or three people—a secretary, the office manager, and the supervisor—are going up to the office to do all the research to get them the information. They can do it on our system in 30 seconds without having to call anybody.”
As much as this is about connecting department to department, the IT revolution is also about connecting man to machine, says Zedi Solutions’ Adin Nand. Nand, in the company’s Houston office, is manager, Customer Solutions Engineering, for Zedi, a Canada-based oilfield service company with offices in locations around the world, including Midland.
Collecting all the data is one thing, but without a filter the end user is in danger of becoming Hitchcock’s The Man Who Knew Too Much. “Any company in IoT [Internet of Things] who wants to be successful has to be able to display [data] in reports, trends, KPIs, [and] tables, [as well as] export for investors, people that can look at it in real time from a maintenance perspective. We call that the human to machine interface, the HMI. That’s very important.”
Because the industrial internet of things (IIoT) includes “smart” machines, Nand noted that systems can track the frequency at which machines break down. This allows technicians to create preventive maintenance schedules that reduce the likelihood of failures leading to costly downtime. IIoT systems are there “to empower someone to do something more efficiently,” Nand said.
As Nand pointed out, reporting functions are not limited to internal access—they can include investors. Or, as Smith said, they can include potential investors. Investors are usually looking either for new technology or new geographical locations. While there may be a number of potential investment targets that meet those parameters, investors will make their final decisions based on what they see in a company’s books—and if those books are in a clearly organized format.
“With those two things being equal, the best way [companies seeking investors] can help themselves is by getting rid of Quickbooks and spreadsheets” and switching to ERP software that provides the dashboards and reports investors need.
It is no secret that the downturn of 2015 and 2016 forced operators and service companies alike to closely inspect every aspect of business in order to save every penny possible in operating costs. And for operators, to boost production by every drop they could get. That forced many—some kicking and screaming—into the digital age with remote monitoring and control, streamlining of invoicing, and all the efficiencies inherent in the hardware and software now available.
No longer can businesses afford the luxury of not tracking the location of their equipment. Joshua Crawford recalls, “I’ve been in an office where a guy came in and said, ‘Hey boss, that bulldozer you bought last week? We have no idea where it’s at.’ And [the boss] would literally say, ‘Just go buy another one.’” Since 2015, “Those days are over.”
In truth, payroll is always one of the highest costs of doing business, and it may be in that realm that the greatest savings have come. Crawford has seen office staffs reduced by more than half due to technology—and believes that those staffs can stay small even assuming a return to boom times. This is simply the way of the future.
“They’re going to try to do as much as is efficient with the staff that they have without having to add more overhead…. The lean and efficient oilfield is the future.” Automation, he said, is the direction the oilfield is headed. Nand agrees and believes that this changeover will take about five years for the oil business and for industry in general, reducing staffing needs even further.
There may be more than economic realities in play in that future. Since the end of 2016, as oil companies began in earnest to hire or re-hire employees, there have been numerous reports of difficulties in finding qualified people. After being laid off in 2015 or 2016—many for the umpteenth time—large numbers of qualified people have left the industry. So operators and service companies alike are left with the reality that they must do more with fewer people in order to simply get the basic job done.
Hiring and retaining the best employees; making those employees more efficient; allowing them to accomplish many formerly complex tasks with the touch of a screen in their smart phone from home: for those who remain in the oil and gas business, “business as usual” has become much simpler.
With IIoT and automation in general, says Crawford, “We’re allowing people to be family men again. We’re allowing them to put family first, church first, change their priorities—but still have a close hand on their business’s day-to-day operations.”
In that scenario, everybody gets along better.
Paul Wiseman is a freelance writer in Midland.