Five Mistakes in Logistics of Oil and Gas (And How to Correct them)

Abstract

Do logistics play a vital role in Oil and Gas Sector? Are they at risk? Transportation Industry for the suppliers to the Oil and Gas (O&G) industry are experiencing challenges in today’s economy growth.The increase in shale oil and gas extraction projects has triggered spectacular growth in USA specially if we say about the global stake then in North American drilling projects have increased, but with this growth comes transportation challenges as suppliers of pipe, chemicals, drilling equipment, water, mud, and other materials have to move products to and from an expanding number of drilling sites, many of them in remote locations. All at a time when fuel costs are rising and transportation carrier capacity is reducing.Many of the O&G sector suppliers are adapting slowly to these logistical challenges. As a result, it is estimated that their freight costs are inflated by 15–30% (according to the report of PLS Freight company). For a company with $250 million in annual O&G sector revenue, that equates to as much as $3.9 million companies are incurring loss every year.As we know every problem has a solution.The good news is there are steps that companies can follow now to significantly reduce their current spend on upstream and midstream freight moves. But that may mean changing practices and seeking help from outside experts.

Keywords:Logistics, oil and gas (O&G) industry, transportation, shale gas, shale oil

Cite this Article

Sitanshu Tiwari, Kartik Parolia, Arvind Yellanki, Ps Prashanti. Five Mistakes in Logistics of Oil and Gas (And how to correct them);Journal of Offshore Structure and Technology. 2016; 3(1): 40–43p.