Optimizing the Supply Chain in Unconventional Oil and Gas

In recent years Unconventional Shale Plays have presented a number of unique challenges to designing, implementing and maintaining effective supply chain operations. At the heart of this is the sheer volume of variation in activities and transactions required within and between the various stakeholders and operators throughout the life of the asset. Some examples of the challenges and variation Unconventional operations can expect include:

  • The remote locations and geographical spread of the plays introduce daunting logistical challenges. There is often little existing infrastructure. Securing permits and ROW to build access roads, pipelines, flow lines, trunk lines and facilities requires coordination, cooperation and negotiation with landowners, communities and regulatory bodies.

  • The need for integration between stakeholders and operators intensifies once the land is acquired and the planning and execution of the facility builds and the drilling and completions activities takes center stage. The inputs to this process are abundant and diverse. The rig schedule is key, based on various analytics and aimed to derive the most value from the field in the least time. The coordination of suppliers of materials, equipment and personnel must be managed to optimize crew utilization, employ just-in-time (JIT) inventories, and limit trucking miles and environmental and safety risks.

  • The move towards multi-well pads creates yet more complexity. Spacing scenarios are in play and considerations around what simultaneous operations (SIMOPS) can occur (including surface and sub surface locations) within certain parameters must be built into the plans. Efficiencies in material flow are hindered by congestion and require coordination of inventory levels and the number of mobile sites and warehouses to be positioned for just in time delivery. Transactional business processes also face heightened challenges. The Requisition to Pay process must keep pace with operational requirements and the volume of transactions handled on a daily basis. This requires robust policies and procedures strictly adhered to throughout the organization. Often in these hard to reach places, numerous ‘Mom and Pop’ vendors are set up with varying quality standards for materials and on-time delivery, as well as payment terms and conditions. At a minimum this means it can be difficult to take advantage of centralizing spend, at its worst, it can mean that process safety risk is increased by not knowing if safety critical parts are truly up to the specifications one’s company requires. Enabling technologies are available for many of these processes but require heavy training regimens in both headquarters and field locations, and the involvement of vendors and partners.


The next blog post in this series will examine how many operators are making great strides in optimizing their supply chain in Unconventional Oil and Gas.

Julie Gray

Julie is a senior management consulting professional with over 15 years of operational excellence experience working with the Fortune 1000, across a wide range of industry sectors in North America, Africa, the Caribbean, South America and Europe. Julie has worked with multiple clients to achieve sustainable and transformational improvements in their businesses.