Rig operations are one of the most difficult on-field jobs. Highly remote locations, 24x7x365 operations under extreme weather conditions, huge costly equipments, rapid movement of stores items, in-time inventory management, risky nature of operations, timely preventive and breakdown maintenance; all these challenges make it a challenging arena in the global industry. Taking care of manpower’s movement, their timely care and training is a major critical task by itself.
Oil and natural gas drilling rigs can be used not only to identify geological reservoirs but also to create holes that allow the extraction of oil or natural gas from those reservoirs. Drilling rigs can be small and portable, such as those used in mineral exploration drilling, water wells and environmental investigations. They can be huge, capable of drilling through thousands of metres of the Earth‘s crust. Large “mud pumps” circulate drilling mud (slurry) through the drill bit and up the casing annulus, for cooling and removing the “cuttings” while a well is drilled. Hoists in the rig can lift hundreds of tons of pipe. Other equipment can force acid or sand into reservoirs to facilitate extraction of the oil or natural gas; and in remote locations there can be permanent living accommodation and catering for crews (which may be more than a hundred). Marine rigs may operate many hundreds of miles or kilometres distant from the supply base with infrequent crew rotation or cycle.
Considering the multi-location set up of rig operators and complex nature of job, one requires an ERP that is specifically designed for their systems which needs to be lean and alert, giving timely information and right MIS reports for prompt action. It also needs to be simple as users on location may not be too computer savvy or well educated. Simplicity can be an important plus point for an ERP dedicated to this industry segment.
Major operational modules that have specific needs, are Warehouse Management, Procurement, HR and Payroll, Finance (AP, AR/Cash management), and Assets Management. Other important features that an ERP working in Rigs must have are –
On-line/Off-line flexibility – Pre-condition of an ERP for Rig operations is that it should be on-line as far as possible running on a light weight client machine directly or work off-line in difficult terrain where telecom is weak. Thus, it should take care of data replication as and when required,between HO and remote Rig locations or stores. It uses very low bandwidth, that too without any third party middle-tier like Citrix server.
Stores Management should take care of multiple rigs, multiple stores, issue and return of parts, consumables and other store material, transfer of various items to different rig locations. ERP should maintain Store receipts on Rigs can be directly from Central store or through Freight and forwarding agencies. Stock reconciliation, Inter-rig transfers, keeping track of inventory levels at a glance not only at one location but across various locations, flagging an item that requires certification, verification of stocks at various locations on-line are a few of more important features of inventory management.
Procurement can be domestic or from overseas locations. Services purchase are an important element of procurement process. Partial shipment and foreclosure of Requisitions are important to-have features. A good inventory costing system would require it to be tightly integrated with stores and procurement costs with purchase bill integration with inventory and accounts. Purchase budgets are important element to control cost overruns. There can be an on-line budgetary dashboard for monitoring it.
Human Resource and Payroll (HRMS) module should not only generate salaries and payslips but also take care of Training, Skills enhancement, Recruitment, Leave management and Attendance system including highly flexible shift management and interface with any kind of ARS like swipe cards or biometric systems. System needs to take care of visa related issues, air tickets and other administration related issues in HR department.
Asset Management is one of the most crucial areas that needs keen attention in rig operations as huge values are locked in these assets. Rig operation related machinery and equipments cost millions. Their breakdown can result in shut-down of the operations. Any mismanagement of these assets at far flung locations can result in loss of assets, non-performance due to lack of maintenance. ERP should not only maintains inventory of assets and fixed assets registers including user defined depreciation and valuation; it should also takes care of equipment maintenance with preventive maintenance schedules, break-down maintenance both in-house and from third parties. A flexible hierarchy to pin an asset to a location or sub-location or a sub-sub-location, etc. becomes an important tool to put and locate an asset. Assets register is tightly linked to Purchase, Inventory and Finance. A well maintained Asset Management System is a major step towards safety of equipment and people. Infact, this can be called the heart of managing operations.
Finance module should be multi-currency, multi-location and multi-branch as most of the good Rig operators operate in such environment. Thus, inter-branch transactions with internal auto-JVs for automatic reconciliation between branches is an important part of ERP.
ERP should allow consolidation of accounts of select or all locations. Considering the importance of budgeting and costing, this needs to be an important part of the Finance module. Since, Rig operators require submission of accounting reports in international formats, IFRS compliance as well as XBLR reporting are important for a good ERP in this segment.
A highly parameterized Work Flow management system is a good tool to have for operations that are located in remote areas. This brings in huge improvement in productivity and turnaround time for inventory.
Eastern Software Systems has developed a custom-built version of its ERP ebizframe specifically for Rig operations. This is tightly linked to integrated web-portal for on-line interaction with employees working in remote locations. It is easily extendible to e-procurement and Supply Chain Management (SRM). For more details, please write to us at: firstname.lastname@example.org and we will establish contact with you.
About the Author:
Ratan Sharda is Chief Consultant with Eastern Software Systems (ESS) and has been associated with ESS for 10+ years. He has a rich industry experience of 33+ years of which 21+ years have been in IT. He is a Post Graduate Alumini of St. Xavier’s College, Mumbai and has written and edited several books on social and management topics. To check his LinkedIn Profile, please click here and to connect with him on Facebook, please click here