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The importance of operational excellence in the petroleum industry

In recent times “operational excellence” has gone from being viewed as management theory to a tangible business advantage that could be transformative for organisations in the petroleum industry. A survey of professionals carried out by Petrotechnics found that 90% felt achieving operational excellence was important to the success of their business. But how is operational excellence manifested and what are the likely benefits?

What is operational excellence?

The Petrotechnics survey defined operational excellence as seeking out the best possible – or world-class – performance within the business. “It requires everyone from the boardroom to the front line to consistently make the most effective operational decisions based on an integrated view of operational reality [that takes into account] risk, cost and productivity.” As an approach, operational excellence is becoming increasingly crucial to the petroleum industry – 80% recognised that it had become important internally over the past two years.

The benefits of operational excellence

There are a number of motivating factors for integrating operational excellence into a petroleum industry business, including:

  • Reducing operational and major accident hazard risk
  • Achieving greater cost efficiencies
  • Optimising maintenance programmes
  • Increasing HSE performance

For many businesses that achieve greater levels of operational excellence, these goals can become a reality. Ernst & Young analysis established that achieving operational excellence could increase oil and gas production by 29%. It also found that, where operational excellence is achieved, there is a 43% reduction in safety incidents and costs can be reduced by almost half. So, there are some clear and quantifiable benefits to investing in operational excellence.

Why operational excellence is possible now

Technology is the key change that has made operational excellence possible in a way that wasn’t the case a decade ago. There are many ways that integrating technology tools can help an organisation to achieve operational excellence, such as:

  • Using technology tools that provide a global operations perspective in real time to enable more effective decision making
  • Integrating the use of predictive or prescriptive analytics to support operations, such as 3-D visualisations
  • Avoiding siloed decision-making with technology tools that create links between planning, maintenance and operations functions so that risk, productivity and cost are viewed in the same way by everyone across an organisation

However, it is also clear that while technology has a crucial role to play in achieving operational excellence, the right results are also very much about people. As the above definition indicates, operational excellence is something that is achieved by a combination of effort from the “boardroom to the front line.” Technology is an important tool for businesses looking to achieve operational excellence outcomes, such as reducing the number of critical incidents or improving results, but it is still just a tool in the hands of everyone within the business.

Operational excellence is important for businesses in the petroleum industry looking for greater cost efficiency, improved maintenance and better managed risk. In the right hands it is a transformative tool for both growth and performance. Excellence is central to everything we do here at Euro Petroleum Consultants. Get in touch to discuss our consultancy and events offering in this field on 020 7357 8394.