The Rundown:
- Even an hour of downtime can cost businesses thousands of dollars
- Downtime can reduce workforce safety and decrease team productivity
- Avoiding downtime is crucial for jobsite safety, productivity, and efficiency
Downtime can be devastating for any business, but it is especially damaging at remote oil and gas jobsites. Some estimates indicate that companies in these industries lose between 38 and 49 million dollars each year due to unplanned downtime, with offshore rigs losing up to 1 million dollars per hour.
However, the cost of downtime at oil and gas sites extends beyond financial considerations. Safety issues and reduced worker productivity are also real concerns businesses face when dealing with unexpected downtime.
Adding the Cost of Operational Downtime
Operational disruption at oil and gas sites costs more than the loss of revenue during the hours operations are down. The real costs can include:
Financial Loss Totals
An hour of downtime can result in losses of over $500,000 from lost production alone. Offshore platforms often have nearly a month of downtime per year.
Operational Costs
Over the course of a 14-hour breakdown, a typical offshore company may incur up to $ 28 million in direct costs (lost revenue), as well as costs and expenses related to repairs and crew standby.
Safety Hazards
Downtime can also lead to safety hazards to your workforce and reduced productivity for the entire team. This can be especially true when you’re talking about communication failure on remote sites.
Hidden Costs
Additional costs that may increase the total include idle labor, emergency repair expenses, and missed important production targets.
Avoiding the Cost of Downtime
The key to avoiding downtime costs on oil and gas sites is to ensure equipment and communication lines remain in good working order. That means:
Implement a Maintenance Schedule
Performing data-driven routine maintenance on any owned equipment can reduce unplanned downtime by up to 36%. This may include using newer technologies, such as IoT and AI, to analyze equipment temperatures and vibrations and identify problems before they become critical.
Monitor Your Systems
Real-time monitoring provides immediate, up-to-date alerts to detect issues in machinery before they lead to full system failure. This can lead to much less downtime, since maintenance can be performed during planned off-hours.
Train Your Workforce
Make sure operators are fully trained and knowledgeable on troubleshooting, especially on night and weekend shifts when regular maintenance workers may be less available. Ensure they can perform very basic maintenance tasks as well.
Invest in Rugged Equipment
You will have less downtime if you use equipment that is designed for harsh environments. This is particularly important for teams in rugged and remote locations. Using top-of-the-line, well-maintained equipment can help ensure it runs longer.
Renting to Avoid Operational Disruption in Oil and Gas Sites
One way project managers and business owners can reduce downtime costs at oil and gas sites is by renting equipment whenever possible. This can be especially beneficial for jobs in remote areas where repair services, parts, and other infrastructure are limited. The benefits of renting can include:
Lower Up-Front Costs
Renting equipment is significantly cheaper up front than buying the same equipment. This is especially important for crews with limited capital, since it keeps more cash flow available for other operations.
More Predictable Costs
Jobsite solution rentals can help businesses budget more accurately and track costs. Whereas equipment you own may wear out or require unexpected maintenance, rented equipment will have similar upfront monthly costs with no additional overhead.
Maintenance is Done
When you rent equipment, the maintenance is completed for you. Most service providers have well-maintained fleets with up-to-date equipment and the latest technologies and safety configurations. If a problem does arise, they are also responsible for repairs and replacements when needed, taking those costs off your plate.
Turnkey Operations
Many service providers offer turnkey operations with multiple types of jobsite equipment offered by the same company. This allows you to maintain a single point of contact vs several, and removes a lot of mental labor from the business.
Removing Logistics
Service providers who work with remote industries often provide full logistics, meaning you won’t have to figure out the costs of accessing and setting up equipment on your site. It’s all included in the same price point.
Reliable Service
When dealing with a reputable service provider, you’ll experience fewer issues without having to perform the maintenance yourself.
This includes equipment for satellite internet and on-site communications, reducing remote-site connectivity issues. This will be especially true with companies that offer multiple lines of communication, such as radios and broadband service.
Up-to-Date Safety Features
Most service providers maintain a fleet that is up to date in safety features to remain compliant. Doing this with equipment you purchase yourself can add up over time, as safety requirements are constantly changing.
This leaves you choosing between upgrading your equipment regularly or making it work as long as possible with what you have.
Choosing the Right Equipment or Rental Company
When buying your own equipment, it’s important to check for warranties and troubleshooting support if you run into any issues. Find out what aspects are guaranteed and what the process is like if you run into any issues.
Rental equipment is often the most economical way to avoid downtime costs in the oil and gas industry. Just make sure you go with a reputable company that is willing to provide a detailed SLA before moving forward.
EnerStar Solutions provides turnkey solutions for a range of jobsite needs in the oil and gas industries. Contact our team to learn more about accommodations, lighting, matting, water and sewer, Starlink Internet, and more.
