Point of View

Optimizing Energy & Resources Material Logistics Supply Chain

PoV-Article---ERL---Blog

Are oil and gas logistics really as robust as you need them to be?

The demand for offshore support vessels will soon be higher than the available supply. That's the conclusion of a report released early in 2023 [1].

The volume of new exploration since the war in Ukraine began, the growth of offshore renewables and the rising number of pipeline projects all threaten to cause logistics-asset shortages in the near future.

Unless there's rapid investment in new shipbuilding, helicopter procurement and more, it won't be possible to meet this growing demand with new capacity.

What should the oil and gas industry do to resolve this problem? Use new, AI-driven scheduling technologies. Not only can this increase fleet utilization, it can also help cut costs and emissions. 

What needs to change?

Oil and gas planners have mastered the art of materials-logistics efficiency, using the tools they have to hand. With as much precision as humanly possible, they can predict future capacity requirements.

They do this based on historical data and the judgement of experienced logistics planners — a precious resource given the specialism's ageing workforce. And they use this as the basis for their long-term logistics contracts.

But by its nature, such an approach is imperfect. Operations often face unplanned needs. This leads either to spot vessel hires, at higher-than-normal costs, or — even worse — to unplanned downtime. The absence of crucial parts or supplies is the single largest contributor to rig non-productive time.

To avoid this, many oil and gas companies with large offshore operations over-supply their sites with vessels and other logistics facilities. For example, a large national oil company (NOC) in the Middle East employs around 110 supply vessels for nine fields and over 120 offshore sites.

This can lead to the operator having in effect a dedicated supply ship for each rig, exploration vessel or offshore facility. Or it may have a dedicated number of vessels that operate within a field often moving cargo from one asset to another until replenishments arrive from supply bases.

The result of this over-supply is poor cost effectiveness. But it's less than the cost of significant, unplanned downtime for the facilities involved, so operators feel they have no choice but to swallow it.

The key phrase in this section so far, appeared at the very beginning: "using the tools they have to hand". The answer is to get new tools.

End-to-end, AI-driven logistics management

Most operators are still using a range of unconnected systems to manage their logistics contracts, their supplies ordering, their maintenance and upgrade schedules — and more. At best, this means using modern, intelligent tools, with the limitation that these are unable to speak to one another. At the worst, many operators still use spreadsheets for key tasks, leading to delays, inflexibility, poor communication between different functions — and worse.

Things don't have to be this way. With a modern logistics platform that uses artificial intelligence (AI) and both real-time and historical data, operators can achieve far greater cost efficiency, without sacrificing either flexibility or capacity.

Modern logistics platforms unify all relevant logistics functions, end-to-end, in a single pane of glass. At a glance, planners can see all the vessels, aircraft and other vehicles available to them. They can instantly access flight plans, routes, vessel supply schedules and other relevant data. They can see planned and forecast demand. And they have an instant overview of spare capacity at any given point.

This hugely simplifies logistics planning. By unifying all logistics functions in one place, it helps accelerate planning and decision making, prevent mismatches in demand and capacity, and reduces the time it takes planners to perform basic scheduling, freeing them for more value-added work.

On the other hand, such a platform can help manage real time disruptions to logistics operations. These can be due to unforeseen circumstances such as vessel or helicopter downtime, adverse weather etc. The platform gives the operations team the ability to quickly re-route or deploy available logistics assets in the most efficient way with all the permutations and combinations having been analysed by the system.

But even this is only the beginning of what a modern logistics platform can do. Using historical logistics and other relevant data, a market-leading platform can not only predict future capacity requirements with pinpoint precision. It can also optimise routes, schedules, vessel utilization rates and more, to help you achieve maximum efficiency.

With a modern materials logistics platform, you can:

    • Digitize and streamline current logistics workflows, to cut the time and overheads required to plan resupply schedules and increase efficiency.
    • Improve logistics planning with a single view of historical and real-time data as well as state-of-the-art demand forecasting.
    • Use data to optimize workflows as you digitize them, eliminating redundancy, increasing vessel utilization, and improving routes to reduce empty miles.
    • Use more accurate demand visibility to shift more cargo onto long-term, rather than spot, contract and negotiate better prices for those long-term contracts.
    • Improve fuel and energy efficiency — through improved vessel utilization, route optimization and more — to cut fuel costs, increase energy efficiency and reduce emissions.
    • Precisely match your warehouse and cargo-hold to current and future needs, eliminating redundancy and optimising cost and efficiency.

With the right platform, the right approach and the right partner, oil and gas operators can achieve significant cost and operational efficiencies, cut unplanned downtime, and shift more cargo without increasing available capacity.

At a time of tightening costs and restricted logistics availability, all of these benefits confer a vital competitive advantage. And by cutting emissions, the logistics team can help demonstrate sustainability — making a welcome contribution to meeting investor ESG requirements.

What next?

IBS Software is a leading SaaS solutions provider to the travel industry globally, managing mission-critical operations for customers in the logistics sector. Working with leading oil and gas providers to deploy the market-leading IBS iLogistics platform, our experts have helped clients achieve efficiencies of between 2% to 10% depending on the scale of their logistics and supply operations.

To speak to our experts about taking part in the trial, or to find out how IBS Software can help you improve cost efficiency, sustainability and cargo throughput in your logistics operations, get in touch today.

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