Oil producers must build long-term sustainability
CALGARY, March 16 2016 /CNW/ - Cost cutting continues in Canada's oil and gas sector, and companies across the board are trying to do more with less to help drive down the cost per barrel and remain competitive. According to a new EY report, there are a number of innovative ways companies can get value out of the oil they are producing.
"Quarterly financial results are highlighting the massive pressure the industry is under," says Lance Mortlock, EY's National Strategy Services Leader. "Innovative and strategic thinking about how to organize and execute the business through operational excellence is especially critical at times like this."
EY's report, Driving operational performance in oil and gas illustrates how operational excellence is a type of approach that addresses how to adjust leadership, principles, processes, systems and tools to improve key metrics, both on the capital and operating sides. It needs a multi-pronged approach from every angle of a business.
The key components of operational excellence are:
- Health, safety, environment and quality – a relentless pursuit to eliminate injuries and incidents for employees, contractors and the environment
- Integrated planning – the development of short- and medium-term operating plans that are incorporated into the long term strategy
- Operating model – how processes, people and systems are organized to achieve optimum efficiency
- Asset reliability and integrity – a deliberate focus on the life cycle of assets from design to decommissioning
- Cost efficiency – cost improvements are strategically addressed to highlight the hidden costs of inefficiency, and implement tools and technology to focus on increased output
- Supplier and contractors – agreements are structured so that objectives contribute positively to business performance
According to EY's survey, on average, more than 80% of large oil and gas companies have run operational excellence programs. Of those programs, 43% have improved health, safety and environment metrics, 43% see cost saving, and nearly one-third (29%) acknowledge they have improved asset uptime/availability and increased oil/gas production.
"A good operational excellence program delivers measureable results," says Mortlock. "Especially during difficult times, companies can see the direct value of their efforts. And at this stage of the game, any improvement pays huge dividends."
For more information and operational excellence, or EY's oil and gas sector services, visit EY Canada Oil & Gas.
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SOURCE EY (Ernst & Young)