06 Mar Running a tight ship: 6 ways Standardization in Oil and Gas Is Reducing Costs and Increasing Efficiency

standardization in oil and gas

Industries are constantly looking for new ways to drive profits and cut costs. See what 6 things company executives think are key for driving growth with standardization in Oil and Gas industry.

Executives in the oil and gas industry are notoriously good at choosing and strategizing capital projects. But they often battle to streamline the financing for project investments. These companies cannot rely solely on their massive projects to propel them to lucrative profits. Having a portfolio of small and medium scale projects, which can be executed more quickly and efficiently than major operations, usually helps support production growth and diversify company risks. The larger the portfolio of small and mid-sized projects, the better. But these benefits don’t just happen.

Because these projects can get overwhelming and disorganized, operations and processes – including supply chain and management practices – need to be highly standardized for maximized efficiency. This speeds up development time, keeps costs mild, and protects the advantages these projects bring. Above all, execution must be near flawless if these portfolio projects are going to be profitable. That is why standardization in oil and gas is quickly becoming a necessity.

Execution and standardization in Oil and Gas portfolio projects

Because these types of off-set projects have traditionally taken more than a year from start to finish, the industry is moving toward mass standardization for cranking out more of these projects. If you take it from the interviews of several industry CEO’s and executives, the only way to make this strategy work is with rapid replication and standardization.

During an Economist Intelligence Unit research project, industry executives who were interviewed demonstrated what they found to be important during these projects. Here is a paraphrase of the executives’ statements:

1) Having experienced project managers

Executives need to spend their focus on the implementation of the larger, more important projects. This means that the project manager oversees nearly all of the project execution. It is crucial that there is expertise immediately available so that problems and concerns do not hold up progress.

2) Creating a more intimate relationship with contractors and work groups

The more parties that are involved, the higher the likelihood of miscommunication and disagreement. But with more parties also comes the higher probability that there are synergies and opportunities to integrate between activities. If these contractors and work teams have open lines of communication and transparency, the project can benefit from cost savings and workflow efficiencies.

3)  Replicating proven and rigid project roadmaps and management processes

This is simple. When the process is clear, management and execution becomes easy. There’s no need to reinvent the wheel at every job site. More standardization of processes from site to site increases the probability of successful project and reduces risk in your portfolio.

4) Using a template to tightly execute the supply chain

The same methodologies from other industries where advanced quantitative analysis is used for supply chain management can apply to Oil and Gas industry. Retained knowledge from previous projects can be a game-changer when timing bulk orders for parts and materials.

5) Don’t lose site of the bigger picture

There are many outside factors that affect the trajectory of project. Things such as fiscal policies, community concerns, and environmental regulations can wreak havoc on even the best-designed and most efficient project. The project process must be flexible and able to adapt to the needs of a rapidly changing business environment.

6) Implement a plan to actively learn from mistake and improve

James van Merkensteijn, senior vice-president of strategy and business development for Statoil, says “It isn’t just running one project through the capital value process; it’s making sure you’ve got the right learning and experience from previous projects and making sure the institutional knowledge is applied in the right places…Through experience, each new project should benefit from the one before… You’ve got to corral that knowledge if you want to develop things quickly.”

Being able to roadmap projects and document what new processes or experiments increased efficiencies is crucial for the usability and scalability of best practices.


You’re done! But don’t stop now. See how Treeveo can help you better execute road-mapping, retain more knowledge from previous projects, and have a more precise precise project management experience. 


Image: Jonny

Adam Highfill

Leader and Entrepreneur at heart. Lover of travel and activity. Bachelor of Finance. Master of International Business.

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