How has Hurricane Harvey impacted the United States energy sector?
Hurricane Harvey has had a devastating effect on the Texas Gulf Coast and for millions of people life will never be the same again - but on a wider scale it has also had a huge impact on the United States energy sector.
The oil and gas industry has been heavily disrupted with dozens of platforms shut down and evacuated, whilst plants and refineries have also been closed.
"Because it is a slow-moving storm, it (Harvey) is dropping massive amounts of water on the region. As a result of the flooding, a large amount of refining capacity is offline meaning that gasoline production is severely curtailed," William O'Loughlin, investment analyst at Rivkin Securities, told Reuters.
The US Bureau of Safety and Environmental Enforcement estimated that platforms accounting for about 22 percent of oil production and 23 percent of natural gas output in the Gulf had been shut down, although some have now reopened.
Around a third of US refining capacity sits in low-lying areas along the Texas and Louisiana coast, so the markets have also been affected with US gasoline futures reaching a two-year high of $1.7799 a gallon.
According to an analyst from FX Pro: "Although the full impact of the storm's damage is yet to be determined, the markets expect the impact will be felt globally and affect energy markets for many weeks."
The US Dollar also sank to its lowest level in almost a-year-and-a-half today with the storm being blamed as being negative for economic growth.
Analysts from Goldman Sachs, speaking to the Financial Times, said: "Information on the extent of the damages incurred by the oil and gas infrastructure remains limited at this point. Nonetheless, data available so far points to sizeably larger refining than production disruptions.
"Should these levels of outages remain in place, and using past hurricanes as proxies for the impact on oil demand, we roughly estimate that the impact of Harvey on the US oil market would be to increase domestic crude availability by 1.4 million barrels per day while removing 615-785 kilobarrels per day of gasoline and 700 kilobarrels per day of distillate supplies.
"Larger refinery outages would increase these long crude and short product impacts.”
Nobody is sure how much of an impact this is going to have yet but what is quite clear is that it’s certainly going to have an impact on the US and probably globally as well.
Robin Mills, writing in The National, suggested: “This hurricane is an important test of a transformed US oil industry. It is an opportunity to fix vulnerabilities that it reveals – the exposure of shale oil wells, refineries and the Houston energy complex.
"And it is a warning of the confluence of a warming climate, higher seas and more coastal energy infrastructure. Katrina was largely a US domestic disaster, but the ripples of future hurricanes will spread further into global oil and gas markets."
5 Mins With ... Travis Parigi, CEO of LiquidFrameworks
ServiceMax, a leader in asset-centric field service management, has bought LiquidFrameworks, the mobile field operations management solutions company, specialising in the energy industry, from Luminate Capital Partners, a private equity firm. The acquisition enables ServiceMax to expand its field service management solutions to meet the unique challenges of the energy sector. Travis Parigi, CEO of LiquidFrameworks, reflects on the mutual benefits from the deal and how oilfield service providers can transform their legacy field operations management processes to digital systems
Briefly outline how the LiquidFrameworks acquisition benefits both companies?
Both companies are focused on providing solutions to a common business problem, field service management for enterprise organisations, using a common technology platform, Salesforce. There are rich opportunities across both companies to leverage people, knowledge and many years of domain and technical expertise that will undoubtedly benefit the combined product suite.
LiquidFrameworks will continue to support its customers through this combination with ServiceMax, further extending its competitive differentiation across the field service management landscape. On the other hand, this acquisition will better position ServiceMax to meet the demand for digital service execution in this industry while expanding its product portfolio and go-to-market channels.
How can oilfield service providers transform their legacy field operations management processes to digital systems?
Moving from legacy, paper-based systems often siloed in various departments to a digital process can be done in phases across one or more product lines on a location-by-location basis. We find that companies achieve the best results by leveraging the FieldFX product suite as the platform to deliver the most domain-specific functionality to their user base as quickly as possible yielding high ROI through increased cash flow, revenue recapture, invoice accuracy and labor reduction.
Companies often start by modeling the complexities and mechanics of their global price books and customer-specific price books using the FieldFX CPQ engine. As the foundation for all transactions the Price Books are used throughout the logical next steps of rolling out digital processes for Quoting, Scheduling, Ticketing, Timecards and Invoicing. Asset Management plays an important role as a common thread found throughout all of the modules and processes.
Field Technicians are responsible for delivering service to the customer along with operating new digital systems - anything more specific, which systems or new technologies (eg AI/ML) should they be targeting?
In the oil and gas industry the field technician or field engineer is responsible for leading the crew that delivers the service such as an open hole wireline job or a casing job or a pressure pumping service performed on location for the customer at the well site in the case of the upstream oil and gas industry.
In the case of the downstream industry, the service might be a hydro-blasting job to clean a heat exchanger at a refinery.
In either case, the field engineer must safely and effectively complete the complex and often times dangerous service for the customer during which time they must also complete various business process to track the work being executed in order that the back office can accurately invoice for the service. The FieldFX Mobile product from LiquidFrameworks enables the field engineer to track the required information for both operational data and financial data in a manner that is fast, effective and easy.
Does the post-COVID landscape provide a new start for digital field service management? What should be companies' immediate priorities?
With the recent layoffs and the workforce getting younger, the oil and gas industry is at the cusp of transformation. The oil and gas industry has been slowly digitising for many years now, but with the pandemic, this push has accelerated a pivot and implemented new ways of working.
When it comes implementing digital field service management, companies need to have a vision of totality across the organisation but be nimble and agile about taking bite-size chunks to effect change – take the highest return on investment items and divide them up and down into the service line and geography level – for the highest probability of success.