Reducing Drilling Operations Cost Through Rental Inventory Management - A Case Study

In a regime of volatile oil prices, it has become increasingly important to plan and deliver cost effective wells safely. Typically, this is achieved by optimizing technical details in planning and execution phase; however, an often-overlooked area of optimization is the management of rental tool inventory and the associated logistics. This area is usually subject to cost overruns due to insufficient tracking of equipment from mobilization through its use at the rigsite, resulting in late demobilization and incurring of additional cost by operators. To completely eliminate these unwanted costs, a web/intranet based, equipment tracking solution which interfaced with the existing enterprise resource planning (ERP) platform (for contracting and procurement information) was designed and implemented by Addax Petroleum Nigeria to track and monitor the movement of rented equipment between service providers, logistics base and operations base. It ensured the effective tracking of rented equipment upon mobilization up till demobilization; this helped to prevent cost overruns for rented equipment during the drilling campaign. Daily reports and notifications were also provided to all key personnel on rented equipment status and it ensured a collaborative workspace for drilling team members to manage rented equipment movement internally. The rentals inventory tracking application (RITA™) software was deployed during a six-month drilling campaign in 2017/2018. It provided comprehensive tracking for equipment mobilized to the rig, eliminating cost overruns on rental equipment throughout the project and cost savings of circa $1,000,000 during the six-month drilling campaign.