American Oil and Gas Reporter - November 2015 - 73

SpecialReport: Finance & Logistics

Solutions Optimize Oil Field Logistics
By Tim Beims

Energy makes the world go round,
but logistics keep it moving.
Behind every drop of oil delivered to
market is an intricate choreography of
logistical maneuverings that make it possible. Merely moving a drilling rig onto
a well site can require mobilizing a dozen
or more trucks, not to mention all the
materials that must be hauled on location
once it is rigged up, observes Steve
Martin, vice president of operations and
general manager for oil and gas solutions
at Ryder.
He notes the number of truck trips
during the completion phase can be in
the hundreds, and each well may require
moving 50 or more rail cars of proppant
halfway across the country. Logistics get
no less complicated after a well is placed
on production, with producers using different combinations of trucks, pipelines
and railroads to route their volumes to
the best available delivery points.
The key to improving logistical efficiencies is minding the details and zeroing
in on preplanning and coordination, suggests Martin. That is easier said than
done in most oil field activities, where
logistical challenges are compounded by
the sheer scope of transportation requirements associated with projects, the number
of participating contractors, highly timesensitive schedules, and inherent "x-factors" such as local terrain and weather
conditions, he allows.
"It is important to understand the activity that is happening in each operating
area and create a strong network to support
it. The solution can combine dedicated
core assets and for-hire fleets working
together to drive a more efficient supply
chain that is better planned, better coordinated, and highly optimized to achieve
sustainable productivity increases," he
remarks.
Producers can use dedicated carrier
networks to optimize their logistical strategies around specific activities, but also
across their entire organizations. "There
are opportunities on the individual pad
level to improve planning and timing of
material delivery for drilling and completing an asset more effectively," Martin
says. "In a broader context, however,
there also are opportunities at the company
level to better support all drilling, com-

pletion and production functions."
The critical point is for logistics
providers and operators to work collaboratively to plan, schedule and mobilize
transportation services to improve efficiency, Martin holds. "There are peaks
and valleys within each function," he
says. "One way to shave the peaks and
level the valleys is to work across the
various functions within a particular company's operating area, or even across
multiple companies within a given area,
using dedicated core carrier solutions
coupled with a transportation management
system control tower for visibility."
Categorizing Value Drivers
According to Martin, the value drivers
of leveraging regional dedicated carrier
networks can be broken into several categories, including upfront procurement,
shipment management and optimization,
transportation visibility, and standardization.
"Taking the time to develop a bid
package and optimize the carrier network
yields a 3-12 percent opportunity for improvement. Freight shipment optimization
and load planning creates another 3-10
percent improvement opportunity," he
says. "Better visibility of the logistics
chain also yields a certain amount of productivity and cost improvement, especially
for critical-need shipments. Another 1-5

percent savings is achievable on the back
end of the shipping process in financial
settlement and administration."
Summed, it can amount to significant
potential supply chain savings across an
organization's core operating areas while
providing general ledger account coding
so customers can assign the actual cost
of each move based on a work breakdown
structure at the individual well level,
Martin points out.
Although much of the optimization
effort involves drilling down to individual
well specifics, applying data analytics to
delineate broader "pain points" within
an operation can address root causes and
improve big-picture transportation management decisions.
"Optimizing logistics and eliminating
inefficiencies involves a fair degree of
analytics and data engineering," Martin
relates. "That gets to the real strength of
partnering with a dedicated fleet provider
with transportation optimization capabilities: The oil and gas company can do
what it does best, and so can the thirdparty logistics company."
Layered into logistical challenges are
job sites that are often remote and hard
to reach even under the most favorable
weather conditions. With drilling, completion and production operations carefully
scheduled to avoid downtime, no operator
wants equipment and crews sitting idle,

Producers can use dedicated carrier networks to optimize the logistics associated with
specific activities, such as drilling or completing individual well pads, as well as across
their entire organizations to improve the logistical efficiencies of all their business activities. A key component of enhancing transportation-related productivity in the oil field
is for operators to work collaboratively with third-party logistics companies to plan,
schedule and mobilize transportation services.

NOVEMBER 2015 73
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