There are considerable advantages to contracting pipeline applications such as leak detection as a service, rather than the conventional practice of buying these applications outright. The low price of oil over the last two years makes the service options particularly tempting in order to avoid the capital normally expended to acquire essential applications.
Continuously improved
Contracting pipeline applications as a service reduces the risk of being stuck with a poorly performing system for years. Only vendors who are confident that their systems can satisfy clients enough to assure service contract renewal will dare to compete. Contracting pipeline leak detection as a service assures that a pipeline operator has applications that are more modern, better-maintained and continuously improved. This becomes more important as stakeholders and regulators now expect pipeline operators to continuously improve their leak detection systems. The overall goal will always be to detect leaks faster and with more certainty; facilitating quicker shutdown of a leaking pipeline.
Some pipeline operators quickly regret their purchase of a leak detection system when the vendor fails to deliver the promised performance. With their capital budget exhausted from purchasing a leak detection system that failed to meet expectations, they are stuck defending their choice to management for a decade.
More options
There is value in leasing pipeline applications and getting the maintenance, upgrades, and ongoing improvements included in the service. Users can avoid the risk of paying hundreds of thousands of dollars for a system that may or may not work. Contracting applications as a service offers users more options to keep the best, most current technologies on their pipelines. They can easily cancel a service that dissatisfies them. Configuring, installing, and tuning a leak detection system requires considerable investment, and it takes several years to recover the investment. Only vendors who can deliver applications that will keep a customer happy for years will offer a service.
Advantages of pipeline applications as a service
Reduce the risk of being stuck with a bad system
- Contracting a service provides the operator with the option to cancel it if the operator is dissatisfied with the system’s performance. Only vendors who are truly confident in the ability of their systems to meet expectations will even offer pipeline applications as a service.
Keeps your system up-to-date, and evolves to your changing needs
- Paying for the applications as a service ensures that you always have the most current technology. Pipeline applications, leak detection, in particular, can become obsolete quite quickly, and the ability to receive upgrades and better systems reduces this risk. Contracting the application as a service will shift much of the financial burden of obsolescence to the software vendor.
More money available to improve the supporting components vital to good leak detection
- All too frequently once the project capital is spent on the leak detection software there are insufficient funds left to add supporting components, such as instruments, and communications needed to optimize the leak detection software. These essential improvements are left wanting until the next budget is released. On the other hand, if the software is contracted as a service there will be more funds available to ensure that the vital supporting components are upgraded to support the leak detection system.
Buying the service improves maintenance support
- Buying a service rather than a system assures that the vendor will maintain and optimize the software. The vendor will maintain the system, knowing that a failing service will quickly be canceled.
A path to the continuous improvement sought in best practice documents such as API 1175
- API 1175 was written to satisfy the PHMSA ruling and introduces the expectation that leak detection systems will be tested, maintained, and continuously improved. Regulators around the world will look to this standard when they audit, and judge pipeline operators. This element can be included in the service agreement.
Helps cash flow
- Historically low oil prices make these tough economic times for oil producers. The option to acquire pipeline applications as a service reduces the capital costs of a pipeline start-up and defers much of the spending over time. Contracting pipeline applications as a service assures the pipeline owner of more predictable monthly expenses.
Conclusion
Acquiring pipeline applications as a service is not a business model often seen in the energy industry. However, the rapidly increasing ebb and flow in the fortunes of the energy industry, and the acceleration in technological advances call for change. Expect everything to change, including how you acquire your pipeline applications. It is difficult to see a downside to acquiring pipeline applications software as a service. Only vendors who believe they can deliver on expectations offer the service. These vendors will be motivated, knowing that poor service can be canceled. Buying applications as a service eliminates the large capital costs, and much of the risk associated with buying pipeline applications, such as pipeline leak detection. Contracting pipeline leak detection as a service assures that the system will be better, more current, optimized, and continuously improving.