It is no secret to those of us embedded in the oil and gas industry that 2020 has been a challenging time. In an industry dependent on energy supply and demand, COVID-19 has provided an unparalleled worldwide reduction in oil and gas demands, resulting in lower prices per barrel and greater reserves. Even with the beginnings of a rebound on our radar, we still have not yet crossed the threshold to a full recovery.
During economic downturns, there are several ways that a trusted seal supplier can help guide you through potential cost-saving measures for both short-term and long-term savings in equipment operation and repair. Now, more than ever, it is important to avoid costly mistakes, and finding a seal sourcing partner that you can trust is one way to do this.
Why Your Sourcing Partner Matters
While a solid sourcing partnership is valuable at all times, economic downturns are opportunities for your partners to come through for you. A question to ask is: Are you working with suppliers who are not only willing, but also able, to be resourceful and effective in helping you weather economic storms? Finding a partner who not only understands the economic climate, but is also able to help you avoid common missteps, can affect the speed at which you are able to recover. Here are three missteps that are often made when sourcing seals, and ways that a supplier should be able to provide relief.
Choosing Price Over Performance
In the best of economies, it is common to want to cut corners in regard to seal replacement costs – even more so when cash flow may be limited. However, some seal materials are more expensive for a reason, and the money you might be saving on an inferior seal could cost you more in the long run due to poor performance, equipment failures and costly downtime. With under-engineering a common pitfall in the oil and gas industry, knowing how to determine the best material to support your unique applications is critical. Working with a sealing expert with a deep knowledge of materials and the applications they are most suited for can save you time and money in the long run.
Another area in which an experienced sealing expert can be of service is in seal sourcing. Not all polymers are created equal, and many times the quality of the product is not found simply in the components used. There are myriad factors that affect the true quality of a seal. For example, you may purchase a seal made from top-of-the-line materials, but if it is not processed properly, the quality of the overall seal may be compromised. In this case, you may have paid top dollar, but receive subpar performance. Working with a sealing partner who is familiar with the brands, materials and processes related to developing a seal can help you make the most informed decision on the most cost-effective way to allocate your resources, making sure that the quality – not just the price point – is taken into consideration.
A second misstep that could be made in seal replacement is working with a partner who is not up-to-date on the latest American Petroleum Institute (API) requirements. Currently, the API has around 500 technical standards for processes and components. There have been four versions of the API standards released with an updated fifth edition currently in the works.
According to a 2014 Emerson Process Management Whitepaper, “Beyond Switches for Pump Monitoring: What Changed with API Standard 682,” the importance of strict adherence to API standards is threefold: circumventing unexpected costs/downtime, mitigating environmental incidents and injuries, and avoiding negative publicity. First, unanticipated failures due to poor seal selection can lead to unexpected oil rig downtime and other lost revenue that may not be recoverable. Secondly, environmental spills and other contamination, as well as the potential for injuries or even deaths, can occur with seal choices that do not meet API standards, leading to unexpected financial setbacks. Finally, continual environmental incidents and agency audits can lead to bad publicity – not to mention additional legal fees and fines.
Since not every in-house person responsible for purchasing new seals is expected to know the ins and outs of API standards, it is critical that your seal supplier is well-versed in understanding these requirements. Not only will this save you time and money in the long run, it ensures that your company maintains its reputation so that when the economy rights itself, recovery is the only battle you’re fighting.
Perhaps the best way to weather economic downturns is to manage your inventory planning. This can be the most important area in which a trusted sourcing partner can make an impact. Working with a team of engineering professionals that are actively involved in overseeing inventory demand forecasting can help you to know what your usual schedule for seal replacement is and how that may change in the near future.
Another consideration when proactively planning your inventory is how the current global economy may affect pricing. This often manifests in longer lead times. In the U.S., we have seen government furloughs affect transportation, which makes predicting arrival dates more difficult. Also, many products coming from overseas are subject to varying export regulations. Inventory planning can help mitigate these concerns.
Alongside lead times and delivery concerns, there is also the potential that the seals and other products that you need might not be available. With a higher demand for certain products and the production of these items down, costs will increase. Having a handle on what seals you need in advance of needing them will help you to avoid downtime and the higher costs of on-demand ordering.
Creative Problem Solving
Even with all these pieces in place, you still may need to get creative with new ways to maintain lower prices, avoid overspending and keep your equipment running at its highest capacity. That’s where a partnership shows its greatest value. Forming a relationship with a company that is willing to go the extra mile with creative solutions to keep your price point low and your deliverables available is imperative.
How do you find a trusted partner? First, determine the areas where you are most concerned. Ask potential partners about ways that they have supported other customers in similar situations and make sure their suggested solutions work for you. Finally, be transparent in what you need to accomplish. The extra time you spend now to vet your future partners is time well spent for both present and future cost efficiency.
For more information on H&D Distributors’ sealing solutions for the oil and gas industry, visit www.hddistributors.com/oil-gas.
Headline photo courtesy of H&D Distributors.