To even consider setting up a drilling rig in a remote oil or gas field in places as diverse as Iraq or Uganda takes much planning from an operating company’s point of view.
While the historic high oil prices of recent times has seen many oilfield operators keen to spud new wells, even in the most remote areas, planning to bring such equipment to the field can perhaps be low on the list of priorities during such price environments.
Herein lies the challenge for logistics companies focusing on the industry, according to Steve Harley, global president for Energy at DHL. He says that actually getting the opportunity to engage with international, national oil companies and drilling firms to consider potential challenges at an early stage of their logistics operations should be a priority.
“The logistics is not always thought of at the earlier stages of a project where it becomes more of a focus on engineering than logistics, but we do like to try and get involved at an early stage,” explains Harley.
Much of DHL’s oil and gas related business comes from the upstream sector, with about 70 per cent of the growth being seen in emerging markets such as China, Vietnam and Australia. The energy arm of the German shipping company does, however, serve the downstream segment of the market where fuel distribution is an upcoming area of growth.
There are other considerations to be made once logistics providers like DHL get involved in working with their energy clients, such as the remoteness of oil- and gas-field locations where equipment and machinery must be delivered.
“We have to get involved in route surveys and the construction of roads, getting ships to go through and being able to access very difficult ports and terminals in remote places where quite often there aren’t scheduled vessels going. So we have to establish how to get vessels there at a reasonable cost,” says Harley, a 20-year veteran of the oil and gas logistics business, who spends most of his time on transiting between the world’s major energy hubs.
The ‘personnel’ touch
Volatile materials and environments are part and parcel of the nature of the work involved in oil and gas exploration and production. Once the human beings are involved in the mix, it is quite easy for matters to become considerably more complicated.
“Knowing the culture in these areas, where extra care needs to be taken and providing tools to the people travelling to these areas is essential in O&G travel,” says Dubai-based Amanda Claassens, head of Middle East Region, Wings Travel Management, which specialises in offshore travel for oil and gas industry personnel around the world. “Having people on the ground, ready to help at a moment’s notice, is crucial to serving this industry.”
“Because of this extra challenge within the oil and gas industry, providing travel and transportation to this genre is unlike any other corporate travel – it’s complex. It’s a specialty that is developed over time. As the oil and gas industry grows exponentially into more emerging markets, having a specialist travel advisor is becoming a necessity for these companies.”
Claassens highlights how it is critical for oil and gas companies to have full capability to track the movement of their personnel at any given time. Technology is key to achieving full transparency in the movement of both people and equipment in this mission-critical industry. As a travel management company, Wings focuses on achieving uniform travel management and tracking systems for its diverse array of industry clients.
“It should be seamless from one region to the next as to the quality of customer service these companies receive from their travel provider,” explains Claassens.
DHL’s Harley also believes that bringing transparency across its entire supply chain network is a boon for its customer base, regardless of their industry segment. As a service company to the international oil and gas industry, DHL must inevitably follow and over the years the company’s supply chain network solutions footprint has grown exponentially and more diversely.
“I think a greater diversity of supply means that there is a wider range of countries that we would be working in and the changes also affect East Africa of course where there have been big finds of gas: Mozambique, Tanzania and oil in Uganda. We would look at our approach to those countries too as being a significant change and a significant development for the industry.”
He describes how diversity on this level naturally calls for an increased demand for integration logistics solutions or an end-to-end solution from logistics providers.
Gaining visibility of step-by-step solutions from the procurement stage right through to delivery to warehouses or job sites is now the norm for respectable logistics providers.
“The ability to handle that entire supply chain and all elements of that, providing visibility for that supply chain is, I think a big change for us, the scope is broadening of the service we need to provide,” explains Harley.
DHL’s Energy segment is manned by a specialised global workforce numbering at least 500 if not in the thousands according to Harley.
With the advent of the US-led shale gas revolution, logistics providers have to adjust their services to meet this changing and growing dynamic in the global market space. Although much of the Middle East and North Africa region is yet to experience a shale boom on the scale of the United States, it is certainly a major development, claims Harley, and one to look out for and prepare for.
“From a logistics point of view it also means that we need to look at new solutions which would be supporting shale gas operations, that is a key trend but overall there’s growing demand for energy products and surveys indicate that by 2030, that’s still going to increase and probably increase by between 35 and 40 per cent over the next 15 to 20 years.”
Harley rather hopefully adds: “There’s big growth and the significance for us is the fact that it means that we may enter new projects in the Middle East and certain parts of the Middle East where there has not been a lot of work done over the last 5 to 10 years may start producing more oil. Iraq of course being one example and we would see ourselves getting involved in those countries where that may happen.”