Value-Added Engineering: The Oil and Gas Industry’s Answer to a Down Market
February 4, 2015

Oil and gas prices are falling in the U.S. due to a range of larger economic forces – including product oversupply and fluctuating demand – leaving many producers with some hard choices to make in the event of further revenue reductions. Among other risks in this changing market, operators now face lost profits, shifting facility needs and changes to their long-term site and production plans.

Left unchecked, this represents a significant and potentially long-term risk for operators, processors and the U.S. energy industry at large.

In the short term, oil and gas firms need to find ways to cut costs and optimize their existing production efforts, debottlenecking their systems to maximize available revenues from what they’re already producing, in order to maintain profitability until the market returns, all with an eye on future needs. Prices are falling now, but will certainly rise again in the future. Operators need to know that they can make adjustments to expenditures now without sacrificing future opportunities down the road.

Fortunately, value-added engineering can be part of the solution.

How? By helping energy operators cut costs and raise revenues in innovative ways. By leveraging proven approaches to midstream engineering to help with these pricing challenges, operators can retrofit existing facilities, better plan new installations, and ensure economic operation of sites in both current and future market conditions.

Cost reduction through process optimization: Existing systems can be improved by focusing on efficiency improvements, addressing product quality needs and eliminating redundancies. The overall goal of process optimization is to reduce the cost of production at existing sites and reduce long-term maintenance needs.

Revenue generation through de-bottlenecking: By bringing more to market, operators can increase potential revenues from existing sites by both increasing production and adding new products to the mix. Where is production currently being held back? Done right, engineered de-bottlenecking can allow operators to make more money with their existing resources.

Strategic site planning: Would shifting to prefab or modular facilities help with overall system efficiency and cost? This approach can be used for both retrofit applications as well as new builds, minimizing the cost of construction.

Pre-engineering to prepare for the eventual upturn: By taking market dynamics into account, operators can make better decisions and investments with their sites, preparing both for a changing market and a changing regulatory environment. Smart preparations made now with targeted engineering and regulatory awareness can, and will, pay dividends down the road.

Oil and gas firms cannot give up on existing assets due to market pressures, as it will cost more to get back into production mode later if they do. Maintaining readiness to return to market at higher production levels is key. The time is now to work more effectively to extract maximum productivity from existing facilities, by building value, maintaining flexibility and improving efficiency.

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