The recent downturn in the oil and gas industry -- "the most severe in history" -- is forcing companies to unlock new operational efficiencies, according to Nigel Bell, senior manager of Digital and Operational Excellence for Hess Corp.
Nigel Bell, senior manager of Digital and Operational Exceellence for Hess Corp.
Adding that the "current way of working is not fit for the future," Bell said it is incumbent upon the industry to install a "next-generation operating model to bridge the gap between today's cost challenges and tomorrow's bright future."
Discussing the impact of digitization at the 2018 Oil and Gas Supply Chain and Procurement Summit held recently in Houston, Bell warned, "If we don't attack that, we won't be able to survive and thrive in this $500-per-barrel environment that we are planning for."
In addition to cost, Hess observed it is equally critical to identify the areas in which businesses are underperforming, including safety, quality and delivery.
"You can't manage what you can't see," he explained.
Bell stressed the necessity of engineering, operations and supply chain maintaining ongoing and reliable communication among their units.
"Nobody is really talking together because there's no common platform to share those insights," he said. "And then, more importantly, how do we codify that learning so that we become a learning organization and we don't repeat those failures down the road?"
Two avenues of transformation
Bell said Hess' approach to mitigating this challenge is via transformation, namely by implementing "two different kinds of avenues." The first is connectivity.
"We think there's tremendous importance put on connectivity in this 'next way' of working," he said. "So we've released Hess 360, a platform that's focused on connectivity of data, processes and people."
Bell said he believes Hess 360 will enable companies to make the transition to maintaining "a 360 view" across their businesses by putting themselves "literally in the middle of that equation."
"You have to connect the dots across the various systems that exist between stakeholders and suppliers and various operators within your space, because that's the only way to really maintain 360 visibility," Bell said. "We're trying to move toward this future state where all those key systems of records and data and the people that play a role in those processes are all sitting around the same virtual table, if you will."
Recognizing that driving integrated and coordinated execution across its former base of 4,000 suppliers "would be foolish," Hess has adopted a mantra of "fewer, deeper, longer and stronger."
"We're chasing consolidation of the supply base ⦠through creation of economies of scale," Bell said. "With the suppliers that make the cut and remain in our portfolio, we're focused on really integrating and collaborating with them through the democratizing of data and having data drive the discussions."
That requires the establishment of "trust and commitment -- something that has been absent in our industry," Bell said.
To better establish that trust and commitment, Hess has begun extending some of the remaining suppliers' contract durations.
"More importantly, they can establish faith that we can actually follow through on what we're planning to do," Bell said. "This is really around them releasing their data so we can have joint insights."
The second fork of the transformation avenue, Bell said, is "a different type of commercial model" where companies no longer "buy goods and services in the hopes of an outcome."
"Use your data to enable you to purchase outcomes," Bell said.
This "democratization of data" will strengthen companies by focusing on increasing margins and developing "win-win" outcomes, he concluded.
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