How to navigate a changing chemical, oil and gas landscape

Automation & Power World's theme was “Harnessing the power of change.” The chemical, oil and gas industry can relate.

Who would have guessed even six months ago that we would be looking at $50 a barrel oil prices?

But in keeping with the conference theme, the change in oil prices can provide some benefits to companies in certain industries, according to the panelists who spoke on the topic of “Fueling the world” in the Chemical, Oil and Gas industry forum on Tuesday, March 3.

As Sandy Vasser, I&E Manager for ExxonMobil, pointed out, oil and gas companies don’t wait for lean times to make improvements to their operations, but there is a lot more focus from the C-suite to do so when the cost of oil is down.

One common theme from all the panelists on how they are dealing with changing times is to simplify. Whether that comes from increasing standardization of electrical equipment and systems, as Vasser presented, or a move to use more modular components in construction projects, as discussed by John Dempsey, Senior Vice President and Project Director at Fluor, the move away from custom products and processes helps reduce project cost and risk.

“We don’t do things the way we did 20 years ago,” Vasser said. “It’s no longer acceptable to solve a problem by adding equipment.”

So, how can you fix problems without adding in more equipment? By turning to your software systems, rather than the hardware. And here is where automation systems can help, as Larry O’Brien of the ARC Advisory Group noted. The upstream sector in particular is helping drive the evolution of automation systems, he said, as it requires more modular, decentralized automation than tends to be used in downstream facilities. Plus, upstream isn’t as burdened with its installed base for automation systems as downstream is, which put this sector in an excellent position to take advantage of the latest automation technologies.

Automation can also help mitigate the effects of the “great crew change,” which O’Brien says the industry has not felt the full effect of yet. The shortage of qualified operators, and the high wages paid to operators in the field now, are increasing the demand for services like remote operations, predictive maintenance, cloud computing, concurrent engineering and others that can be addressed by automation.

Workforce issues were cited as one of the top concerns among companies in the chemical, oil and gas industry by Rick Dolezal, Vice President of Life Cycle Services at ABB. His group conducts a survey of customers during each Automation & Power World event and asks, “What keeps you up at night?” He shared the results of the most recent (2013) survey, as well as the increase and decline in importance among the top concerns over the past five years.

While an aging workforce and attracting and retaining top talent have unsurprisingly increased in importance, there were some surprises in the results. For example, the environmental impact of operations has declined in importance among those surveyed, but for a positive reason. Many companies have already put measures in place to manage their environmental impact, and they’re finding these measures effective. In general, companies are less worried about their long-term business survival than they were five years ago, so they now are taking a longer view when making decisions about new projects and ongoing operations.

Taking that long view is vital to managing the current price volatility as well as any changes the future may present. As O’Brien said when discussing the impact of current oil prices on the industry, “The sky isn’t falling. It’s definitely having an impact, but it’s not the end of the world.”