Oil, Gas Players Adjust Aim Toward $2.5T Moving Target
In 2017 the oil and gas industry spent nearly $2.5 trillion worldwide to comply with various health, safety, environmental and, increasingly, anti-corruption benchmarks, according to the global staffing and information technology (IT) consulting firm DISYS.
Changes occur frequently within the broad area of oil and gas compliance, and this dynamic regulatory environment has prompted energy companies to reassess how they meet these myriad demands, JJ Foster, vice president of Transformation at DISYS, told Rigzone.
“As the pace of regulatory change quickens in the energy space, we’re seeing oil and gas clients take a step back and prioritize regulatory requirements via ‘hybrid governance models,’” said Foster. “Many are in a place where they can acknowledge that it’s virtually impossible to achieve and maintain 100-percent compliance in all areas at all times so they are focusing on high-risk areas and building sustainability plans around areas that are most important to control.”
Does that mean companies are neglecting lower-risk areas of compliance?
No, said Foster. He pointed out that oil and gas firms “can adapt by having robust and flexible systems and processes that allow them to change as regulations change.” One resource that companies are increasingly using to support their less urgent compliance goals is automation, he noted.
“We’re seeing companies utilizing digital automation to passively monitor lower-priority regulatory areas in an effort to maintain awareness while still getting the most productivity out of lean times,” Foster explained.
In addition, Foster said that oil and gas companies are increasingly relying on outsourcing/staffing firms to ensure that contingent labor meets safety training and compliance standards.
“Assurances that a temporary consultant workforce can seamlessly integrate into the culture of safety compliance present reduced risk to augmenting staff with outside resources,” Foster said. “This trend is evidenced by the recent launch of the Safety Standard of Excellence certification offered by the American Staffing Association.”
In Good Times and In Bad
Not only can lean economic times put a strain on an oil and gas company’s compliance plan, but also growth periods, said Foster.
“Recovery can have its own challenges as oil and gas companies rush to take advantage of the boom,” Foster explained. “Rising barrel prices drive additional exploration and expansion, putting increasing demands on already strained compliance resources within suppliers. Especially after a period of retraction, oil and gas companies will have reduced expenditures on compliance-related solutions and services in factor of those that generate revenue and profit.”
According to Foster, installing “robust” compliance-tracking systems during growth periods helps companies to best deploy their human resources through all stages of the business cycle. He said that specific systems that can maintain a steady level of compliance during good times and bad include:
- Large-scale enterprise resource planning (ERP)
- Big Data
- Automated safety monitoring
“Without these types of solutions, it becomes very difficult to rehire or build compliance solutions quickly to address recovery periods,” Foster concluded.
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