By: RK Energy
In the summer of 2014, crude commodity prices were more than $100 a barrel. Since then, prices have dropped to $45 and stayed low for the last few years. While dozens of energy companies had to file for bankruptcy during the down turn, quite a few have made it through despite the low prices. What is the secret to their sustainability? The Denver Business Journal credits their survival to technology advancements, paying debt, cutting expenses and earning favorable margins at a lower cost per barrel.
Technology advancements significantly cut costs.
Technology advancements have cut drilling costs in half. Strategic companies are using the money saved on drilling to pay off debts and sell unneeded assets.
Private-equity investors are still keen on oil and gas.
Over $130 billion has been raised by investors, and due to the market’s high demand, they’re not going anywhere. They see the potential for big returns in the future.
New lending agreements negate the possibility of bankruptcy.
New lending agreements have fixed problems that popped up during the downturn. Companies can no longer receive cash advances before they reduce the value of their reserves or file for bankruptcy. Also, lists of assets used for collateral have expanded to include other property, company-owned bank accounts and underground reserves.
Through the adoption of advanced technologies and cutting expenses, many oil and gas companies in the Denver-Julesburg (D-J) Basin are expecting to pour over $2 billion into drilling in 2018, boosting output by 83{daeb8d662f58e4975bc93960761d671bdf0aa2ad049ea8a375d2717d280ef80b}, according to a recent Denver Post article. Even at $50 a barrel, the future is looking bright for the oil and gas industry.
RK Energy specializes in upstream and midstream production equipment, along with custom manufactured and skidded equipment for the oil and gas industry. We use advanced engineering, preconstruction and CAD modeling to fabricate skidded equipment for easy installation and maintenance in the field.
By: RK Energy
Excessive costs associated with maintaining oil and gas sites are risky, the smart solution is to rent equipment instead of purchase it.
Due to limited resources, profits can drop drastically because of the substantial up-front cost that comes with buying new equipment. Rental equipment is a great alternative that can also greatly reduce industry barriers allowing for multiple projects to occur simultaneously. In addition, many oil field and construction equipment suppliers rent out specialized equipment for individual needs and often streamline the process by delivering and installing it on site as well.
There are several hidden costs to owning oil and gas equipment.
Besides the decrease in value that comes with years of use, owners are also responsible for equipment repair, maintenance, transportation and more. Renting reduces these concerns and often allows renters the option to buy the equipment down the line. Ongoing maintenance costs are typically included with a rental which avoids unexpected expenses if a piece of equipment suddenly needs service.
During a downturn, companies focus on increasing production to remain competitive and profitable.
With an increase in production comes more exploration, projects and equipment to do the job. Renting equipment allows a business to have multiple on-going projects without tying up too much cash in equipment.
Companies should look beyond rental rates when deciding on a piece of equipment or rental company.
It’s important to understand the rental company’s ability to service and obtain parts quickly which can affect long-term savings and peace of mind. Customers should consider operating costs, emissions generation, increased performance and maintenance requirements as well.
Government regulations can also increase costs when purchasing equipment. Renting equipment ensures that operations are in compliance with regulations rather than having to invest in new equipment when a regulation changes.
Renting can help operators test out the latest technologies and models, gain equipment knowledge, obtain access to specialized or temporary-use equipment, analyze equipment before buying and avoid high start-up costs and maintenance.
By: RK Energy
Modular facilities and skidded equipment are manufactured and assembled indoors, at a fabrication facility, affording companies the opportunity to produce high-quality units while decreasing costs and often accelerating the project schedule. Organizations are increasingly innovating their construction and procurement processes by purchasing modular, mobile, prefabricated facilities and equipment.
Save Time and Money
Equipment is contained within a modular facility or skidded frame that allows it to be easily transported. Individual skids can house complete systems, or multiple skids may be combined to create larger modules. In cases where there are logistical constraints, large modules are split into multiple pre-assembled units that are interconnected at the site.
An Alternative to Traditional Construction
System parts can be shipped individually and installed on-site as needed. Because the systems are built off-site in a fabrication facility, improvements can be completed at the plant site simultaneously. Skidded process systems provide several advantages over traditional construction process systems:
Portability: Units are self-contained within frames, making it easier for them to be transported. Systems can be moved to another location as needed.
Space Saving: Custom frames allow equipment layering. All of the necessary equipment is able to fit into a smaller area.
Accessibility: Skids often contain a hallway in the center with the larger pieces of hardware placed around the periphery.
Better Organization: Skids are organized into one area at the site, making on-site connections easier.
Off-site Assembly: Skids are built in controlled conditions at a fabrication facility. Operations taking place at the plant are not affected by the new system fabrication.
Factory Acceptance Testing (FAT): Testing is completed before systems are shipped. Equipment is ready to be used immediately upon delivery reducing startup time.
Maintain Productivity: Skidded systems allow facilities to remain functioning while maintenance is being performed.
Quality Control: There is a higher level of responsibility and quality control when a single party is responsible for the construction and installation of skidded equipment.
If you are interested in learning more about the advantages of modular facilities and skid-mounted equipment or systems, or if you would like a free project consultation, please contact us at rkenergy@rkindustries.com.