Oil Companies Turn To IT To Shave Costs, Boost EfficiencyOil Companies Turn To IT To Shave Costs, Boost Efficiency

Valero also is attacking the data problem at its source by improving collection methods. At its 18 refineries, operators use probes attached to Windows CE handheld devices to get readings on temperature and vibration levels of hundreds of pumps and compressors. The handhelds also are used to scan radio-frequency identification tags attached to each component. Data is transmitted wirelessly to Valero's SAP system, where engineers use it along with predictive analysis software to schedule maintenance.

Similarly, IBM Global Services' petroleum industry group is developing a long-distance monitoring system for Shell. It's putting sensors on the pumps that bring oil to the surface at wells in the Gulf of Mexico. The sensors, like those used to monitor car engine overheating, will track pump pressure, flow, and temperature and feed data to an intranet that can send wireless alerts to engineers' handheld devices and remote PCs to warn them about problems, such as sand clogging a pump.

In another kind of data collection effort, ConocoPhillips, the sixth largest U.S. corporation, with $166.7 billion in revenue last year, is looking for ways to retain the knowledge of its workers as many of them prepare to retire. Industry experts predict that as many as half of oil industry analysts will retire in the next 10 years. "There's going to be this great crew change over time," says Marty Schoenthaler, ConocoPhillips' global information services general manager. "And if we're not careful and don't capture that knowledge and have processes to share and enable it effectively, we could find ourselves in places we don't want to be."

ConocoPhillips' global workforce uses Microsoft's SharePoint software to share knowledge, with features such as threaded discussions and alerts. Employees must be able to find out whether someone already has tried a strategy elsewhere. "If we could capture what our team--what our company--already knows, we would reduce so much cost," Schoenthaler says.

Small But Useful
Investments in IT needn't be massive to prove useful. Giant Industries, a U.S. oil refiner and distributor with $3.6 billion in revenue last year, is rolling out a system based on Microsoft .Net Web services that tracks the costs of various grades of crude oil, as well as wholesale and retail prices of the products Giant sells. The system uses algorithms developed in-house to determine the optimum prices the company should pay for crude and at what prices it should sell its own product.

The system cost only $140,000 to deploy, yet it's critical to Giant's success, CIO Jeff Perry says. "From a mission-critical standpoint, pricing is obviously one of the bigger hitters," he says.

Giant plans to roll out in the next few months a $500,000 dispatch system that uses global positioning satellite technology to route tanker trucks. Drivers using wireless handheld devices report the amount of fuel remaining in their tankers, and dispatchers route them to a service station that needs the gasoline. The system does more than just locate where drivers are. "It tells you where they're making stops, what their idle time is--all of the good things you need to know about the drivers' habits--as well as being able to manage them so they're not stopping off at a restaurant when they shouldn't be," Perry says.

Whether it's monitoring truck drivers' snack breaks or determining the exact location of a big drilling operation, IT is playing a role in controlling costs and increasing efficiency in oil exploration, production, and distribution. Let that be a small consolation next time you fill it up.