How ERP Improves Oil and Gas Project Planning

Quite a few university programs teach subjects related to oil and gas production. Admittedly, not every college has such curricula, but enough do that specialized academic preparation is not uncommon in the industry.

Likewise, there’s enough money in the oil and gas industry that many software vendors have created large software packages just to manage projects for those companies—in particular, large exploration and production companies. Indeed, large companies need a large tool to manage all the different places in which they work.

Small and midsize producers have to make do with the tools they have or add a small tool that handles projects without much expense. To be as effective as possible, the tool should integrate with the company’s enterprise resource planning (ERP) system.

To plan projects effectively, companies of all sizes need experience. No one is going to walk in off the street and be able to get a well producing. Although a good project management application is necessary for tending to the day-to-day tasks on the project, the financial aspects are kept in the ERP system.

ERP Stores Value

For the small producer, planning often takes place in the project manager’s head, and then is transferred to a spreadsheet. This process may work fine for one project, but even small producers run a couple of projects at once. Coordinating internal and contract resources between projects is vital to minimizing costs. That type of resource allocation and planning are at the heart of what ERP software does.

Most of the costs of an oil and gas project occur close to the time of production, but many small expenses are incurred during the early phases of a project. Obviously, the company has to pay these expenses and properly allocate them to future production. That’s done in the ERP system.

Perhaps more applicable to oil and gas projects than to other projects is risk. Evaluation against plans need to be built into the project at many different points. This evaluation usually requires financial information about project expenses—information that is not typically kept inside the project manager’s spreadsheet but rather in the ERP system.

One Idea

One particular combination of software is worth noting here. Microsoft makes the most widely used project management application in the world: Microsoft Project. Microsoft is also one of the biggest ERP vendors. Combining the ability to run projects with data fields tied to the ERP database is a powerful combination for the oil and gas producer.

Small and midsize oil producers can run a unified Microsoft ERP solution that Microsoft partners have tailored to the oil and gas industry. Using the deep skills and knowledge that these people have in combining data fields between applications, the small and midsize oil and gas firm can get a project management tool that rivals what large producers use—at a fraction of the cost and a fraction of the complexity of the larger project management tools.

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