Tag Archives: oil and gas

The 3 Main Oil and Gas Trends In 2019

Over the last few years, the oil and gas industry has faced numerous shifts and fluctuations, along with extreme price volatility. Technology, new energy policies, and trade agreements continue to affect the industry. The industry should expect to see even more transformation in 2019 and beyond. We have collected some valuable insights from the energy industry forecast and highlighted the main oil and gas trends in 2019 and beyond.  

Natural gas demand will increase

In fact, natural gas consumption is growing almost 3 times faster than oil consumption. Lately, companies have been promoting natural gas as a suitable and less polluting alternative. For now, natural gas accounts for 25 percent of the overall energy consumption. Also, experts forecast a 1 percent market growth until 2050.

The shift towards renewable energy sources

Many industries have experienced a huge shift because of sustainable and environmental movements. Oil and gas are considered one of the most harmful industries, however, the green shift has made its impact here too. One of the major oil and gas trends is switching to renewable energy sources. International Energy Agency (IEA) states that the renewable energy industry is anticipated to increase 13 percent until 2021, while the overall global demand for low carbon energy sources has jumped 85 percent. Large energy companies seek partners who will help them adjust to the industry shift and implement sustainable practices.

Technology impact

Innovations are making a substantial impact on the energy sector. In the oil and gas industry, digitalization works in the form of processes optimization, secured payments, advanced analytics, operational efficiency, and sales. According to Worldwide Oil and Gas 2018 Predictions, nearly 75 percent of oil and gas companies will deploy at least one innovation. Ultimately, big data, cloud services, IoT (Internet of Things) and software will drive efficient solutions into the energy sector over the next few years.

Bottom line

Presumably, innovations and sustainable fuel are not the only game-changers in the industry. Traditional factors, like OPEC output, oil supply and demand, changes in energy policy, and workforce challenges are making the largest impact on the industry. However, the oil and gas sector is surely going to adapt to the changing economic environment.

PLS Logistics provides efficient supply chain solutions to oil and gas companies. Learn more about our Oil and Gas services and get a free quote now!

How Oil And Gas Companies Can Save On Logistics

Just like every other industry, oil and gas supply chains are changing. However, these changes do not necessarily mean that energy supply chains are getting simpler. Despite all of the new technologies and advanced practices entering the sector, oil and gas companies still struggle with optimizing logistics and saving on transportation costs. The complex nature of oil and gas supply chains makes it difficult to manage processes, especially to maintain an efficient budget.

However, even such a complicated machine as an oil and gas supply chain is manageable when using the right solutions. Here at PLS Logistics, we have more than 27 years of experience in managing oil and gas supply chains, as well as logistics for many other heavy industrial areas. PLS has a few tips and tricks that can help you save costs on transportation within your supply chain.

How can oil and gas companies save on transportation?

Internal processes analysis

Before implementing any new strategies and solutions, you have to analyze your current processes and define errors. It may be difficult to adequately access operational efficiency within the company on your own, so it may be beneficial to hire an external analyst to make an accurate assessment. It is critical to figure out any waste spends and inefficiencies in the supply chain to proceed with setting up new cost-effective approaches.

Use a Transportation Management System

The transportation management system (TMS) is an automated tool to manage and streamline shipments. The TMS lets you increase visibility into your supply chain processes. It lets you gain transparency and valuable insights, and rethink internal processes in the supply chain. Additionally, an advanced TMS lets companies define gaps, capture negative spending tendencies, and track new savings opportunities. A TMS keeps all of the data together in one place, to simplify the analysis and interpret information. Supply chain transparency is extremely important to oil and gas companies. A TMS lets you track key metrics, see inconsistencies between rates and final bills, and compare data reports. It has the capability to drive savings through load optimization, freight consolidation, eliminating back hauls, and decrease extra miles.

Analytics and strategic planning

The truth about supply chain optimization is that it is mostly based on well-organized, planned operations. After a thorough analysis and usage of a TMS, your team will be capable of forecasting new approaches and eliminating unnecessary processes. The more your planning is based on accurate data interpretation, the more efficient it will be in practice.

Bottom line

To sum it up, oil and gas companies have possibilities to drive substantial cost savings within their supply chain. When using a robust TMS in combination with the proper analysis, you figure out new efficient approaches that enhance productivity and mitigate unnecessary costs.

Learn more about our Oil and Gas logistics services!

Expanding Your Oil & Gas Carrier Network

The oil and gas sector is one of those industries where partners need to gain extreme credibility to maintain sustainable working relationships. Energy supply chains are complex and look like knotted webs instead of a linear chain. There are multiple processes involved, remote sites, safety regulations and hazardous materials that all demand precise management and control.

Most of the oil and gas companies tend to work with the same narrow circle of carriers for years. However, the industry is expanding with more and more new drilling and mining locations appearing throughout the country. Considering the monstrous size of the energy sector, a single shipping operation may involve around a hundred trucks and combinations with other transportation modes.

Another major challenge in transporting energy assets is the demand for specialized vehicles. Moving rigs and drill pipes of extremely large sizes and shapes requires a wide network of reliable flatbed carriers. While there’ s the never-ending tight capacity on the truck market, the flatbed capacity can be even tighter.

Many oil and gas companies are afraid to outsource their freight management and expand their carrier network due to the complexity of building trusted relationships. However, stretching your carrier base can significantly benefit your business.

First of all, you’ll never be short of capacity. Oil and gas cannot survive delays and disruptions, so random rejection can cause a lot of stress and money loss. It’s always better to play it safe and have few alternatives available to you.

Switching to using a logistics company can also help increase your efficiency if your old carrier relationship lacks trust or suffer from disruptions.

And finally, constantly communicating with an enormous number of carriers on your own can be time-consuming and very stressful. Partnering with a reliable third-party logistics provider can help in that case. A good 3PL will not only manage your freight but will also take the hassle of communication and tracking by providing freight brokerage and track & trace services.

Here at PLS Logistics Services, we have more than 25 years of experience in serving mining and industrial companies. If you need expert consulting on your oil and gas supply chain and transportation, contact us now with any questions you have!

Learn more about Oil and Gas shipping services! 

How Oil and Gas Companies Can Benefit from 3PL

Unlike any other industry, oil and gas supply chains are incredibly complex. Supplying every operation with heavy equipment, rigs, pipes, and hazardous materials requires extreme organization and strategy. Transporting such materials in such large volume demands using multiple modes, high capacity, special vehicles, and strict regulatory compliance. Therefore, there are many benefits of using a 3PL for oil and gas companies.

outsourcing oil and gas

So, oil and gas supply chains cannot survive any delays, disruptions or poor management. Every mistake and missed deadline can cost a company thousands of dollars. the mismanagement of such global processes can cause worldwide issues because the entire world is highly dependent on energy supplies.

Read How to Optimize Your Oil and Gas Supply Chain

Handling logistics for oil and gas companies by yourself is an expensive and inefficient approach, which often lacks visibility. Since transportation is a large branch of the energy business, it requires tons of time, efforts and enormous responsibility. Just one rig site may involve equipment from 80 different carriers. Also, most of the drilling sites are located in inaccessible areas, it’s hard to imagine the volume of responsibility and costs involved in the process.

That’s why many companies apply customized shipping solutions to their supply chains by outsourcing logistics operations to third-party logistics providers, or 3PLs. Outsourcing offers many benefits to energy companies:

Customized solutions

Finding the right transportation mode and providing necessary equipment is crucial for on-time delivery. 3PLs partner with a wide range of experienced carriers and have a variety of options to offer for your shipping needs. Flatbed trucking, casing and tubing deliveries, rig site delivery, combining transportation modes, warehousing, freight management, and hotshot services – all of these options fall under 3PLs expertise.

Read Do I Need Logistics Help for Mining, Oil & Gas Operations?

Safety

Unlike many other industries, safety is a top priority for the oil and gas sector due to its specific nature. Cutting costs on safety compliance is unacceptable, and 3PLs consider this factor while managing your supply chain. Logistics experts will provide assistance with regulatory compliance and ensure the transportation runs smoothly.

Technology and visibility

Due to its complexity and time-sensitivity, oil and gas logistics operations require increased visibility. Multiple processes mean lots of data that needs to be stored and systematized efficiently. 3PLs leverage advanced transportation management systems (TMS), which give complete visibility into the supply chain and reports at all times.

Read Transportation Management in the Oil & Gas Industry

When choosing a 3PL for oil and gas logistics solutions, consider the experience they have in your sector. While technology and a variety of carriers are important, understanding the specifics of oil and gas industry challenges is a key feature to look for.

Learn more about Oil and Gas shipping services! 

How Digitization Impacts Oil and Gas Industry

It is hard to imagine how the oil and gas industry operates with all its complex, critical processes involved. And it’s even harder to think of all the challenges it faces in the modern, ever-changing world. The oil and gas sector is experiencing major shifts and transformations, and it’s all because of digitization.

Why digitization matters to oil and gas?

The Internet of Things (IoT), artificial intelligence, blockchain, and big data are all terms that are prevalent among many industries, and the energy industry is no exception. More and more companies are seeking innovative, data-driven solutions for production efficiency and workforce stimulation. Technology today is the main efficiency booster in oil and gas, which can reduce costs and escalate decision making. Although it is not clear enough for some businesses how exactly digitization transforms into financial profit, the right application of technology can take the company’s performance to an entirely new level.

How digitization benefits oil and gas companies?

Digitization opens a vast variety of benefits for oil and gas companies.

  • Improving the performance of oil and gas assets and equipment. With the help of connected devices like IoT (Internet of Things), remote condition monitoring of well-site equipment is possible. Sensor technology lets companies track and gather data about equipment usage and maintenance. This data analysis, consequently, gives the potential to define waste operations and optimize production. Reviewing equipment can also mitigate its failure, and therefore contribute to better safety and health conditions for site workers.
  • Faster decision making. The energy industry is very complex and requires useful, well-thought decisions to be made on a daily basis. In such a huge industry, it’s hard to make accurate predictions and choices. Big data analysis is believed to be a key solution for decision making in the oil and gas industry. The concept behind this technology is simply gathering large volumes of data, sorting it properly and making an advanced analysis. Conclusions give companies invaluable insights, lets experts make decent forecasts and defines gaps in business models.
  • Reducing costs. All the technologies mentioned above can significantly cut your operational costs. As the usage of IoT and big data lets companies detect gaps and anomalies in the production, the elimination or reformation of waste processes will lead to cost savings. Also, innovations bring improved efficiency, which results in more profit.
  • Attracting the workforce. Recruiting is one of the most underestimated benefits of digitization. Oil and gas companies constantly struggle to attract young, tech-savvy talents to the industry, and digitization is a very promising solution for the issue. The 2018 Global Energy Talent Index (GETI) report stated that opportunities for remote and flexible jobs are in-demand for young employees and 48 percent of respondents referred it as an attractive feature of job in the oil and gas sector. Apart from the flexibility and new workplaces, digitization can offer employees possibilities for growth and development.

Final thoughts

Digitization is believed to transform the oil and gas industry in many ways. It can impact every stage of production, boost efficiency, reduce costs and make the sector more attractive for a young and talented workforce. Oil and gas companies should pay more attention to technology-enabled solutions in order to develop their brand image and improve performance.

If you need help with the transportation of oil and gas equipment, assets or materials, check our Oil and Gas Services page or contact us now!

Market Update: Dangerously Low Fuel Costs

oil-gas-freight-shipping.jpgThe sharp and sustained decline in the price of oil has had far-reaching consequences across the U.S. economy. There are numerous factors that have caused oil prices to drop. And now, with excess oil supply, the effects are all-encompassing, with positive and negative impacts on carriers and shippers.

Low Oil Prices are Good for Some, Bad for Others

Some industries benefit from lower oil prices, and some are hurt. The energy industry is in a deep depression, and the industrial and manufacturing industries are following in its footsteps. Industries closer to the consumer, such as retailers, are taking advantage of lower shipping costs and higher levels of consumer spending. Consumers benefit from low fuel costs, too.

Transportation, as a fuel-intensive industry, has immediate, short-term benefits of lower operating costs, and is generally considered to be aided by low fuel costs. However, this doesn’t tell the whole story, and the transportation industry, like many others, is seeing lower revenues.

The Downsides of Low Fuel Costs

While it’s true that carriers, especially trucking firms, see lower operating costs due to lower fuel costs, it does not translate into higher revenues or profits. Fuel surcharge is typically a source of revenue for carriers, and now they must lower it significantly to stay competitive. Overall line-haul rates are lower too, further shrinking carriers’ margins.

The serious driver shortage in the over-the-road (OTR) industry exacerbates these problems. As drivers leave the industry, carriers must pay more to recruit new ones, and pay their existing drivers a higher salary to retain them. These additional costs eat up profit margins.

Low priced oil affects freight volume, which can hurt trucking companies. For example, flatbed carriers are being hit the hardest by current oil prices. The almost universal shutdown of oil drilling sites in North America, and resulting pain felt by steel manufacturers, mining companies and equipment manufacturers, has led to severely decreased flatbed freight tonnage. Demand for flatbed services is now just above recession levels in 2009.

Flatbed trucking companies may experience the worst side effects of low priced oil, but all of the transportation industry is being hurt one way or another. Despite all of these issues, we may only be beginning to see how badly the transportation industry will be hurt by oil prices.

The Prolonged Consequences of Low Oil Prices

Within the next few years, there will be an oil price spike. History tells us that the longer oil prices stay low, the sharper the price will spike. Members of OPEC are confident this will happen – with U.S. shale producers and others around the world scaling back on production, the glut of oil supply will be rapidly used up, leading to a shortage for demand. Then, it’s predicted that prices will more than double in a short time.

This price spike will cause higher fuel costs, leading to lower consumer spending levels, which means less freight tonnage and revenue for freight carriers.

The spike in oil prices is predicted to happen around 2018. Around this time, carriers will be making operational changes to comply with new regulations, as well as investing in newer, more fuel-efficient equipment to replace their aging fleets. The driver shortage is expected to get even worse by 2018, and carriers will be financially stressed trying to retain their current drivers while spending more than ever on driver recruitment.

Freight tonnage, fuel, and operating costs are shockingly similar to the 2008 market for freight carriers. In the first six months of 2008, 1,908 trucking companies closed their doors. While the future spike in oil prices may not cause quite as many carrier shutdowns, carriers will be under serious pressure to streamline operations and protect already razor-thin margins for the foreseeable future.

Higher fuel costs lead to higher freight rates, but with the challenges trucking companies will face, it’s doubtful they will be able to turn the spike into meaningful profit. With the anticipated sky high freight rates, many small carriers will go out of business, a large portion of freight tonnage will shift to rail and other modes, furthering the damage done to OTR trucking revenue. You can expect everyday products, like a head of lettuce, to rise in price or experience an altered supply chain focused on local sourcing and warehousing, once again eating at trucking companies profits.

Low carrier revenues are bad for shippers too. With the obstacles carriers will face, they will be continually raising rates to break even. This inflates logistics costs for shippers, shrinking their profit margins and likely causing increased product prices. This makes it more difficult to stay competitive in the market place, especially for small carriers, and can have compounding effects throughout a shipper’s organization – altered supply chains, staff reductions and/or lost market share.

What Can Shippers Do?

Shippers will feel the pain when fuel costs rise to similar rates seen in 2014. The best way to avoid paying top dollar for fuel surcharges is to work with a 3PL. 3PLs have large carrier networks which give them leverage to negotiate lower-than-market average fuel surcharges and lower base rates.

For industrial and manufacturing companies, now is a great time to find a transportation partner. When times are tough, 3PLs find creative solutions to save money on transportation. When times are good, as they should be when oil production picks up, and steel and other mining and drilling equipment is in demand, 3PLs provide surge capacity, help manage the complexities of high freight volume, and use powerful technology to optimize freight moves based on speed and safety.

Want to learn more? Keep reading: Do I Need Logistics Help for Mining, Oil & Gas Operations?

Oil and Gas Companies: Expand Freight Networks Now

oil-gas-freight-shippingTransportation plays a critical role in the economics of oil and gas development, and vice versa.  The need to ship Shale Gas creates a high demand for motor freight.

Today, many oil and gas industry suppliers lean heavily on the same set of core carriers.  For obvious reasons, shippers trust carriers that have been reliable in the past.  However, as the industry grows into new geographic regions, this strategy leaves companies short on capacity in an already historic year of capacity shortages.

This is where freight brokers can provide assistance.  Transportation requirements in the oil and gas industry can be unique and complex.  Stricter safety standards and the need for specialized equipment limit the number of qualified carriers, making it harder for suppliers to quickly and economically get freight to project sites.

PLS Logistics has extensive experience in the oil and gas sector. Full-service flatbed trucking and specialized equipment transportation of equipment and materials to rig locations, storage yards and job sites both on and off-highway is our Energy Service team’s specialty. We can transport any Oilfield equipment or supplies, including a casing, tubing, and line pipe as well as production equipment, tanks or exploration, and development equipment. Our team of experts can handle large over-dimensional shipments requiring permitting and escort service as well as Hot Shot services needing to be expedited to a location.

Benefits of working with PLS include:

  • Dedicated industry experts who constantly monitor and analyze industry trends
  • Capacity when and where you need it
  • Saving time by letting someone else take care of your transportation needs
  • No stressing over tricky first/last mile shipping
  • Saving money with better rate shopping and backhaul pricing

Learn more about Oil and Gas shipping services!