Profit hunting in the brave new world of oil & gas
Until 2014, the oil and gas industry enjoyed high oil prices, high levels of activity and wages.
Margins were high and demand was even higher. Since 2018, however, most operators have made cuts in just about every aspect of their investments, headcounts, projects and maintenance activities. The price per barrel is also now less than half of what it used to be prior to 2014.
Even before the Covid-19 crisis, many oil and gas watchers were predicting a transformative year for the industry, with consolidation through mergers and acquisitions widely expected, as well as on-going transformations in supply and distribution through the adoption of digital technologies. While Covid-19 has thrown a grenade into the workings and predictions of all industries, it’s become more essential than ever to find ways to optimize existing services and ensure business continuity.
It’s a well-worn word but efficiency will become essential to the future viability of any oil and gas organization. However, efficiency doesn’t just mean cutting costs. It means doing the best you can with what you already have, and this is where an intelligent field service strategy can help.
Equipment in the field will need to be running at optimum levels to ensure a good return on investment. This equipment also needs to be running as and when it is needed, with limited, or better still, no downtime, if things go wrong. It’s also important for every organization to understand the performance and state of any equipment, giving a better insight into when it is reaching end of life and may need replacing.
Working on the frontline of equipment performance, field service teams have the ability to obtain this level of intelligence and deliver this level of service - but is it really possible with manual-intensive, paper-based ticketing processes? Do existing methods for managing service engineers ensure there is complete visibility of service contracts and warranty entitlements, as well as track routine equipment maintenance, any repair jobs including parts ordering, billing and job invoicing?
If this is all being done manually, it is inefficient. There will be understandable gaps in equipment status and repair work could be costly with multiple journeys to inspect equipment, order parts, collect parts and then return to complete the work. How can an organization be efficient and realize its potential if it lacks intelligence on its assets?
The answer lies in technology and a different approach to service strategy. Field service management tools can deliver huge benefits to oil and gas service maintenance, such as automatically tracking routine maintenance of rig and pressure equipment, quote and invoice customers quickly and accurately, track contract entitlements and perform depot repair/RMAs and deliver a 90% reduction in time to invoice, helping cash flow.
But technology alone is not enough. Oil and gas businesses need to think differently, take a service-led approach to not just managing field service teams and equipment better, but to also understand growth opportunities and potential new revenue streams. That’s where servitization comes into its own. Oil and gas organizations are embracing servitization and leveraging technology to increase profit margins and core service offerings. A well-oiled, digital field service management strategy not only improves business continuity, but also keeps the lights on for longer for all aspects of an oil and gas value chain. And most importantly, it can also provide opportunities for new service delivery models.
According to a Forrester study, entitled From Grease To Code: What Drives Digital Service Transformation, “as-a-service businesses and predictive maintenance models will contribute most of the revenue within five years. Offering assets on subscription, enabling preventative maintenance and shifting to as-a-service delivery models are seen as critical for improving customer experience.”
It’s an interesting point. While predictive maintenance - using IoT sensors to deliver real-time data to enable automated analytics to foresee problems before they occur – and subscription models are exciting forward steps for service, they are only made possible through digital field service solutions.
Field service management and asset management software tools are the foundation for future opportunity within field service, and indeed across entire organizations. The ability to invoice quickly and accurately as the job is completed should see a significant reduction in invoice times. This should go some way to improving cashflow. Ultimately, it is the knowledge of assets and quick and efficient management of those assets that will determine the future viability of oil and gas businesses in this difficult time.
For more information on energy digital topics - please take a look at the latest edition of Energy Digital Magazine.
Form Energy receives funding power for iron-air batteries
Form Energy believes it has cracked the conundrum of commercialising grid storage through iron-air batteries - and some of the biggest names in industry are backing its potential.
The startup recently announced the battery chemistry of its first commercial product and a $200 million Series D financing round led by ArcelorMittal’s XCarb innovation fund. Founded in 2017, Form Energy is backed by investors Eni Next LLC, MIT’s The Engine, Breakthrough Energy Ventures, Prelude Ventures, Capricorn Investment Group and Macquarie Capital.
While solar and wind resources are the lowest marginal cost sources of electricity, the grid faces a challenge: how to manage the multi-day variability of renewable energy, even in periods of multi-day weather events, without sacrificing energy reliability or affordability.
Moreover, while Lithium-ion batteries are well suited to fast bursts of energy production, they run out of energy after just a few hours. Iron-air batteries, however, are predicted to have theoretical energy densities of more than 1,200 Wh/kg according to Renaissance of the iron-air battery (phys.org)
The active components of Form Energy's iron-air battery system are some of the cheapest, and most abundant materials: iron, water, and air. Iron-air batteries are the best solution to balance the multi-day variability of renewable energy due to their extremely low cost, safety, durability, and global scalability.
It claims its first commercial product is a rechargeable iron-air battery capable of delivering electricity for 100 hours at system costs competitive with conventional power plants and at less than 1/10th the cost of lithium-ion and can be optimised to store electricity for 100 hours at system costs competitive with legacy power plants.
"This product is our first step to tackling the biggest barrier to deep decarbonisation: making renewable energy available when and where it’s needed, even during multiple days of extreme weather, grid outages, or periods of low renewable generation," it states.
Mateo Jaramillo, CEO and Co-founder of Form Energy, said it conducted a broad review of available technologies and has reinvented the iron-air battery to optimise it for multi-day energy storage for the electric grid. "With this technology, we are tackling the biggest barrier to deep decarbonization: making renewable energy available when and where it’s needed, even during multiple days of extreme weather or grid outages," he said.
Form Energy and ArcelorMittal are working jointly on the development of iron materials which ArcelorMittal would non-exclusively supply for Form’s battery systems. Form Energy intends to source the iron domestically and manufacture the battery systems near where they will be sited. Form Energy’s first project is with Minnesota-based utility Great River Energy, located near the heart of the American Iron Range.
Greg Ludkovsky, Global Head of Research and Development at ArcelorMittal, believes Form Energy is at the leading edge of developments in the long-duration, grid-scale battery storage space. "The multi-day energy storage technology they have developed holds exciting potential to overcome the issue of intermittent supply of renewable energy."
Investors in Form Energy's November 2020 round included Energy Impact Partners, NGP Energy Technology Partners III, and Temasek.
In May 2020, it signed a contract with Minnesota-based utility Great River Energy to jointly deploy a 1MW / 150MWh pilot project to be located in Cambridge, MN. Great River Energy is Minnesota's second-largest electric utility and the fifth largest generation and transmission cooperative in the US.
Last week Helena and Energy Vault announced a strategic partnership to identify additional opportunities for Energy Vault’s waste remediation technologies as the company begins deployment of its energy storage system worldwide. It received new investment from Saudi Aramco Energy Ventures (SAEV) in June.
Maoneng has revealed more details of its proposed 240MWp / 480MWh Battery Energy Storage System (BESS) on Victoria’s Mornington Peninsula in Australia (click here).
The BESS represents hundreds of millions of dollars of investment that will improve electricity grid reliability and network stability by drawing energy from the grid during off-peak periods for battery storage, and dispatching energy to the grid during peak periods.