Common Challenges in the Oil and Gas Industry En

OIL, GAS & PETROCHEMICALS

7 common challenges in the oil & gas industry… and the one solution you can rely on to overcome them

7 common challenges in the oil & gas industry

SuPPLy CHAIn PLAnnInG & OPTIMIzATIOn 2


In the oil and gas industries, spreadsheets and point solutions reduce your ability to be competitive. These were never intended to solve – and cannot be used to manage – large, integrated and complex planning puzzles.

Traditional solutions also fail to address industry-specific challenges. Instead, they:

•Limit your visibility Point solutions and spreadsheets address isolated processes instead of treating the supply chain as an integrated whole.

•Delay the delivery of informationWith little or no integration between planning solutions and other systems, planners must wait for updates and revise plans manually.

•Limit your ability to react effectively to changeYour industry is dynamic. Change is constant. Traditional planning solutions may alert you when changes occur, but offer little support in helping you decide what to do next.

•Ignore your requirementsWhen planning solutions can’t incorporate all the rules, requirements and constraints that govern your operations, the burden of keeping track of everything falls to your planner. The likelihood of introducing errors increases.

Is your current planning system

solving problems? Or causing them?

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Identify the planning

gaps1. Allow you to optimize your supply chain, resource utilization and production schedules?

2. Generate plans to mitigate risk, provide the best return for capital expenditure, and minimize environmental damage?

3. Address all strategic, tactical and operational planning challenges?

4. Help you tackle industry-specific challenges such as fluctuating feed stock or product prices, changing legislation or the shortage of skilled workers?

5. Prepare you for all eventualities and minimize the impact of disruptions?

6. Support your planners with fast calculations, decision support, alerts and intuitive visualizations?

Does your current system:

A “no” to any of these questions indicates that your solution is not doing enough for you. More than three negative answers indicate that your system might be holding you back.

Read on to learn what a “yes” to all these questions could mean for your company.

Yes No








Yearly/Years ahead(Strategic planning, Annual delivery planning)

• Which reserves to develop • Project planning, budgets and forecasts • Equipment and workforce requirements

• Building of new production facilities • Annual delivery plans (ADP) • Plant maintenance

• Vessel purchasing and chartering • Pipeline building and leasing • Rail car purchasing and leasing

• Buying or selling refineries • Building or upgrading refineries • Turnaround planning

• Terminal and warehouse location • Network investments • Annual contracts

• Demand forecasting • Gas station location • Exchange agreements

• Project scheduling • Equipment requirements and maintenance • Staffing

• Production plans • Spot cargoes • ADP maintenance

• Cargo planning • Vessel chartering

• Feedstock purchase • Production rates

• Primary distribution planning • Secondary distribution planning

• Product sales and purchases • Component sales and purchases • Exchanges

Monthly/Months ahead(Supply planning, Sales and operations planning)

• Equipment utilization • Job assignment

• Production optimization • Well optimization

• Fleet management • Rail car and train assignation • Pipeline batching

• Crude blends • Unit operating parameters • Product blends

• Primary logistics scheduling

• Demand forecasting • Pricing

Daily/Hours ahead(Scheduling)

• Reassigning tasks • Production scheduling • Off-take coordination

• Jetty scheduling • Pipeline scheduling • Rail car scheduling

• Receiving and blending crudes • Operations scheduling • Blending and shipping products

• Truck routing • Inventory management

• Stock replenishment

Weekly/Days ahead (Production planning)

Exploration Production Transportation Refining & Petrochemicals Distribution Marketing

Planning solutions for all horizons SCP&O solutions make it possible for Oil & Gas companies to make the best decisions across all planning levels.








Challenge 1: The future is uncertain

You are about to enter a 20-year contract to supply LNG to China. You need an effective strategic plan. You have to predict trends for the next two decades, knowing that demand, prices, regulations and technology change from one period to the next. A false assumption could cost your company billions of dollars.

The Quintiq response: Scenario-based strategic planning.

You create and compare a range of scenarios, including possible production profiles, shipping costs and price forecasts. Armed with this knowledge, you negotiate a contract that guarantees an acceptable profit margin and is equipped with appropriate pricing safety valves to allow for price changes.

Evaluate multiple scenarios against your business objectives.

Challenge 2: The present is unpredictable, tooYou’re presented with a lucrative spot opportunity. You have just a few hours to decide whether you can accept it. This means looking at your existing cargo commitments. A 1:1 diversion provides the simplest solution to your problem, but it is perhaps not the most profitable. You need a quick, easy way to explore more complex configurations in order to free up capacity and maximize profits. The Quintiq response: Interactive shipping optimization.

Your planning solution generates a revised plan based on real-time information and your specific business key performance indicators (KPIs). You’re now able to decide immediately whether or not to accept the spot opportunity.

Arrive at swift decisions on whether you can accept lucrative spot opportunities.

Perfect-fit planning in

action








Challenge 4: It’s time for a new schedule

A serious malfunction forces an unexpected refinery unit shutdown. You need a workable alternative schedule. You don’t have time to think about how these changes will impact processes up and down your supply chain. All you can do is solve the problem in front of you. The consequences will have to be dealt with later.

The Quintiq response: Interactive refinery optimization.

Your refinery-wide model helps you determine short-term adjustments to the crude feed mix, unit operating parameters and product blend recipes. You’re able to take into account nominated feedstock receipts and product shipments, enabling you to reduce the effect of disruptions along the supply chain.

Minimize the impact of disruptions.

Challenge 5: Is the price right?

You have the opportunity to purchase a distressed crude cargo at a fixed price. Should you purchase the cargo and how much should you pay? You only have minutes to make this multi-million-dollar decision.

The Quintiq response: Supply and distribution planning. Within a few seconds the system will tell you whether:

•Youhavethecapacitytoreceiveandstorethe crude cargo•Youhavetherefiningcapacitytoprocessit•Thereisdemandfortheadditionalproductscreated•Itwillhaveanegativeimpactonrefineryyields and margins

You make a decision, confident that it is the right one.

Remove risk from snap decisions.

Challenge 3: Last-minute requests

A compressor has malfunctioned on a customer’s oil rigs in the Gulf of Mexico. You receive an urgent request for a fully equipped crew to carry out emergency maintenance. The race against time begins. The planner needs to know quickly if qualified field service engineers are available, where the required equipment is located, and how quickly the engineers can be mobilized to the emergency area, based on current assignments and their present locations.

The Quintiq response: Disruption management and dispatching.

Your planning solution gives you a complete overview of all available resources, including a list of employees scored according to criteria such as skills, experience, availability and current location. An intuitive interface enables you to form a crew, pair them to the right equipment and create an optimal plan that satisfies all constraints and requirements.

Get real-time decision support.








Challenge 7: The domino effect

A vessel is stuck in port waiting for a replacement part. The consequences of this delay extend far beyond one trip and can potentially be very costly. Delays on future voyages could result in heavy penalties. You’ll be late on a delivery to a customer whom you want to keep happy. Sailing faster and paying more for fuel doesn’t solve all your problems. Should you charter another vessel instead? All your options come with a downside.

The Quintiq response: KPI-based planning.

Your company’s key performance indicators (KPIs) once merely measured reported performance. Now they drive your decision-making process. Your KPIs are updated in real time so you can instantly see the consequences of every decision. KPIs that measure the plan also drive the optimization. Soon you have a new plan that you can execute with confidence.

Make decisions that advance your business goals.

Challenge 6: A stroke of good – but disruptive – luck

Unexpected supply problems for a competitor lead to much higher demand for your fuel products. This is bad news for your competitor but potentially great news for you. How can you best take advantage of this opportunity?

The Quintiq response: Integrated primary and secondary distribution planning and scheduling.

You look over inventory forecasts at the refineries and terminals, and make any necessary revisions to your production plans. Once you update the new demand forecast for each product grade at each location, your solution determines the best way to supply additional products to your new customers.

Respond quickly and effectively to changes in demand.

Strengthen your competitive advantageTo overcome your business challenges, you need more than a traditional planning and scheduling point solution. You need an integrated decision-support system that covers the entire value chain across all time horizons. The system must enable planners to understand a situation and take action quickly and effectively. It must integrate smoothly with business systems and processes. It must also enable collaboration throughout the enterprise and with supply chain partners and customers.








About QuintiqQuintiq's revolutionary supply chain planning and optimization (SCP&O) platform enables enterprises to improve efficiency at every stage of the supply chain journey. It powers end-to-end planning and optimization of personnel, resources, and processes in a single planning environment, across all planning horizons. Many of the world's largest and most successful enterprises rely on Quintiq to achieve their business goals, strengthen their competitive advantage and create new revenue streams.

Established in 1997 and growing rapidly, Quintiq has a global presence with dual headquarters in theNetherlands and the USA, a global development center in Malaysia, and offices around the world. Quintiq's software is in use in over 80 countries worldwide.

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Common Challenges in the Oil and Gas Industry En