BSI’S SERVICES COVER THE ENERGY VALUE CHAIN
We provide planning, solution development, and project management services that allow operators to increase production levels and accelerate project schedules.
In addition to our core solutions, we offer these solutions for energy companies:
PROJECT VIABILITY ASSESSMENT
Due to long investment cycles, such as for refineries, decision-making must account for a high degree of uncertainty. Moreover, demand varies over time as demographics and economic conditions change, and equipment and service prices change over extended capital and construction timeframes. BSI deploys proven financial and risk management tools to support capital investment decision-making.
TECHNOLOGY COST-BENEFIT ANALYSIS
New Technologies, such as RFID downhole, have little or no cost or benefit history, and can take a long time to gain acceptance because of an industry predisposition toward proven solutions. BSI’s highly-qualified economists address complex issues involving sophisticated costing and indirect benefit assessment methods to support decisions with broad impact, such as technology selection.
EQUIPMENT LIFECYCLE COSTING
Initial cost is rarely the most reliable indicator of lifecycle cost for capital-intensive and highly engineered equipment and systems such as steam turbines. Moreover, small improvements in reliability can be extremely valuable if they increase operating efficiency or reduce downtime. BSI combines advanced economic methodologies and engineering expertise to help you make the best long-term technology and vendor choices.
PRODUCT OR SOLUTION “SHOULD-COST” ANALYSIS
The prohibitive cost of downtime, for example on rigs, makes reliability imperative: the opportunity cost of a rig often exceeds the cost of the equipment. BSI uses its seven-step methodology to derive how much products, services, and solutions should cost.
STRUCTURING GAIN-SHARING AGREEMENTS
Bundled pricing of solutions that involve both products and services are often priced on a per-unit-of-output basis rather than a simple upfront cost. This can align both parties on the benefits, but should the benefits then be split between the buyer and the seller, and if so, how? BSI has 20 years of experience in structuring gain-sharing agreements.
NEGOTIATING FRAMEWORK AGREEMENTS
Partnerships, for example technology alliances in produced water treatment, should yield far more than cost reduction and should result in enhanced innovation and a more agile response to changing market and regulatory conditions. Long-term partnerships should combine the best of both parties’ strengths and achieve dramatic results. BSI brings to bear its proprietary optimization models to determine the optimal number of suppliers and contract term, and its industry experience to help negotiate fruitful long-term partnerships.
EVALUATING BUNDLED AGREEMENT PROPOSALS
The interrelationship between components, such as in a smart grid, requires a systems view, but it can be difficult to compare system bids if they are different on many dimensions. BSI uses its proprietary market intelligence and cost and price benchmarks to credibly evaluate bundled bids.
OPTIMIZING INVENTORY LEVELS
The value of inventory depends on the urgency of the need (for example, it is worth more if an offshore rig is down), complicating the issue of how many spares are optimal, where they should be located, and how much they are worth. BSI’s inventory management optimization aligns processes, systems, and data to ensure inventory is available at the right time and place.
In addition to broad supply chain problems, our work addresses highly specific engineered materials and services such as:
- API Pumps
- Blow-Out Preventers
- Detection Systems
- Downhole Tools
- Drill Bits
- Drilling Services
- Drilling Fluids
- Flow Meters
- Gas Turbines
- Heat Transfer Equipment
- Membranes and Membrane Systems
- Oil & Gas Production Chemicals
- Oil Country Tubular Goods (OCTG)
- Pipeline Drones
- Pressure Vessels
- Spill Control Systems
- Steam Turbines
- Surface Equipment
Below are some examples of publicly-disclosed relationships that are representative of the successes that we have previously helped to facilitate (although it should be clear that BSI does not claim direct credit for all of the examples below).
FEATURED BSI ARTICLES ON OIL AND GAS
The Oil Price Bullwhip: Problem, Cost, Response
The bullwhip effect costs oil and gas producers and their supply chain partners $2 billion per year – the equivalent of a “bullwhip tax” that adds 10% to the cost of every barrel of oil produced. Oil and gas producers, refiners, equipment suppliers, and component manufacturers can take steps to mitigate the cost.Please click here to download this article from the Oil and Gas Journal.
Value-Based Positioning in the Oil and Gas Supply Chain
Existing methods for dealing with complex pricing are limited. Buyers have attempted to simplify the “buy,” both for administrative ease and for price leverage. They have tried auctions, OEM service contracts, framework agreements, Lump Sum Turnkey (LSTK) contracts, and Build-Own-Operate (BOO) concessions. Each method has its strengths, but few reflect the true cost or value of the wide variety of complex items and services offered. As a result, the industry has moved toward the “lowest common denominator,” which commoditizes many items and services. Unfortunately, nobody wants low-price, low-value products. The industry has a unique opportunity to add value to the top line by structuring pricing in terms of solutions rather than products.Please click here to request a copy of this presentation.
Energy Price Volatility and How to Avoid it Through Better Contracting
Oil price shocks cause extended supply chain disruptions, resulting in inefficiencies at producers, refiners, equipment OEMs, and component suppliers. Oil companies pay higher equipment prices than they otherwise would. Equipment OEMs make excessive capacity investments that are underutilized when the market turns down. And component suppliers are left holding excess inventory when the bubbles burst.Please click here to download our article, which offers tips for structuring long-term contracts that minimize these costs.
Carbon Capture and Sequestration: A Formula for Economic Viability
Carbon capture and sequestration, or carbon capture and storage (CCS), drastically reduces carbon dioxide emissions from power plants and industrial factories, and can increase oil production by up to 20% when used in conjunction with Enhanced Oil Recovery (EOR). Therefore, investor interest in carbon capture is strong. However, the economic viability of CCS depends to a large extent on the existing application of EOR. This article summarizes current applications of EOR that may be of interest to those seeking to deploy CCS solutions.Please click here to request this article.
RFID In Offshore Drilling
One of the emerging sweet spots is asset management where the cost of error and subsequent redeployment is very high, and the tagging of drill pipe at Petrobras is a good example. Offshore oil rigs are a good testing ground for managing inventory of high-value assets in remote environments, controlling remote devices (intelligent automation), and for tracking in mission-critical and safety-critical environments.Please click here for the article.