Creating the circular advantage for the oil and gas industry
Christopher Coldrick A , Rowan Fenn A and David Sahota AAccenture.
The APPEA Journal 56(2) 585-585 https://doi.org/10.1071/AJ15091
Published: 2016
Abstract
Maintenance, repair and operating (MRO) materials typically represent 15–20% of the operating costs for a mature oil and gas asset. Of this, a substantial proportion is comprised of high-value repairable equipment such as motors, compressors and pumps. This equipment is often at bottlenecks in the production process and so the impact of materials cost on profitability is magnified by the production ramifications of an outage. Effective management of this equipment is key to the sustainable, profitable operation of any oil and gas asset, and is key to improving the competitiveness of the Australian industry.
Oil and gas companies are adopting a variety of models to handle the repair process, with varying degrees of success. Challenges include:
-
poor materials availability and lack of traceability;
-
complex infield materials management processes resulting in costly wastages;
-
difficulty in managing consistency, suitability and specifications of repairs;
-
high cost for those undertaking the repairs; and,
-
correct allocation of responsibility and risk in the materials management process.
Developed in collaboration with Australian oil and gas operators, with input from case studies outside the oil and gas industry, this extended abstract discusses the roles and opportunities for the circular economy in helping companies to meet their sustainability and profitability targets. Using several real-life examples, it makes recommendations for vendors, service providers and operators that can have material impact on the profitability of the industry.
Chris Coldrick is the Managing Director responsible for Accenture’s resources industry supply chain practice, and brings more than 15 years of experience in supply chain transformation. Originally from the UK, Chris started his career in manufacturing and retail supply chain management, working with a number of the world’s leading companies in Europe before moving to Australia 10 years ago. Now based in Brisbane, Chris has been focused for the past few years on the supply chain challenges faced in mining, utilities, and oil and gas—both for capital projects and day-to-day operations. |
Rowan Fenn is a Senior Manager in Accenture Strategy and has worked with the world’s leading oil and gas companies, helping them to address both strategic and operational challenges. Most recently he has been working with industry participants to drive increased collaboration across the supply chain to reduce operational costs, drive productivity and improve the overall competitiveness of the industry. Rowan holds a BSc (biochemistry) and postgraduate degree in biotechnology from Rhodes University in South Africa, and is a CIMA Certified Business Accountant. |
David Sahota is a Consultant in Accenture Strategy, specialising in resources business strategy. David has more than six years of experience in the resources industry with particular focus on the mining and oil and gas industries. David is experienced in operational cost and business efficiency optimisation, strategic operating model design, and project financial analysis. David holds a Master’s of Finance (Quantitative Finance) degree from the University of London and a Bachelor of Engineering (Mining) from the University of New South Wales. |
References
Accenture, 2015a—Circular advantage: Innovative business models and technologies that create value. Accessed 15 February 2016. <https://www.accenture.com/us-en/insight-circular-advantage-innovative-business-models-value-growth.aspx>Accenture, 2015b—Ready or not? Creating a world-leading oil and gas industry in Australia. Accessed 15 February 2016. <https://www.accenture.com/us-en/insight-creating-world-leading-oil-gas-industry-australia.aspx>
Accenture, 2015c—Waste to Wealth: Creating advantage in a circular economy. Accessed 15 February 2016. <https://www.accenture.com/us-en/insight-creating-advantage-circular-economy.aspx>
APPEA, 2016—Australian LNG projects. Retrieved from Australian Petroleum Production & Exploration Association. Accessed 15 February 2016. <http://www.appea.com.au/oil-gas-explained/operation/australian-lng-projects/>
BP, 2015—BP Statistical Review of World Energy June 2015. Accessed 15 February 2016. <https://www.bp.com/content/dam/bp/pdf/energy-economics/statistical-review-2015/bp-statistical-review-of-world-energy-2015-full-report.pdf>
Goldman Sachs, 2015—The New Oil Order. Accessed 15 February 2016. <http://gov.alaska.gov/Walker_media/press_release_resources/20150924_goldman_new_oil.pdf>
International Energy Agency, 2015—World Energy Outlook 2015. Accessed 15 February 2016. <http://www.worldenergyoutlook.org/weo2015/>
Lacy, P., Rosenberg, D., Drewell, Q., and Rutqvist, J., 2013—5 Business Models That Are Driving The Circular Economy. Accessed 15 February 2016. <http://www.fastcoexist.com/1681904/5-business-models-that-are-driving-the-circular-economy>
S&P Dow Jones Indices, 2016—S&P/ASX 200 Energy (AUD). Accessed 15 February 2016. <http://au.spindices.com/indices/equity/sp-asx-200-energy-sector>
