Creating Resilience

Energy, Oil & Gas: Fueling a changing landscape

Sector perspectives in Facilities Management Procurement

April 27, 2023 5 Minute Read


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Following a period of inflation and labor challenges—coupled with extreme energy price swings—there has never been a greater need for measured, forward-thinking facilities management (FM) procurement, particularly among enterprises in the energy, oil and gas (EOG) industries.

Safety first in a volatile environment

Safety is a priority in this sector—often requiring a greater level of scrutiny than in other industries. Refineries, petrochemical plants, pipelines and offshore oil rigs are extremely hazardous environments, meaning safety has to be ingrained into all operational practices, including those of any FM providers and their contractor partners.

The energy, oil and gas sector has a high degree of unpredictability as well. Periods of prosperity can quickly shift to severe downturns, with price peaks and troughs. Cost management is always top of mind, given the market volatility and constant need for capital investments to upgrade aging infrastructure.

Plus, many businesses in this sector are undergoing significant transformations, from legacy hydrocarbon-intensive businesses to what some now describe as integrated energy companies with an increasing focus on solar, wind and other renewables.

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A smoother road for EOG companies

Flexibility and agility are crucial for EOG companies dealing with volatility.

Sudden spikes in energy prices directly affect procurement strategies. With suppliers and other businesses in the energy, oil and gas sector working closely together, partners can alleviate some of these pressures (like inflation, product and material shortages and labor shortages) to benefit all parties.

Enterprises in this sector have highly diverse and geographically dispersed real estate portfolios, and consolidation has increased as a response to inflation and anticipated market diversification. Many are shedding smaller sites from their portfolios or leveraging sale-leaseback structures for larger properties to free up capital, reduce operating expenses and strengthen company balance sheets.

Labor shortages have posed further challenges, second only to inflation, as companies grapple with materials costs and supply chain disruptions, resulting in longer lead times. Enterprises and their partners are adopting technology solutions—for example, using sensors to determine space utilization and precise cleaning requirements.

ESG: measuring the move to renewables

With emissions playing a major role in the energy sector, companies have prioritized offsetting their carbon footprints. Many have pledged to be net neutral or carbon-free between 2030 and 2050. Accurate measurement of carbon emissions is a key first step for achieving these targets, and while enterprises are now responsible for reporting on emissions across their value chain (Scope 3), suppliers are increasingly taking responsibility for measuring and improving their results.

The changing environmental landscape and attention to ESG initiatives create an opportunity for FM procurement leaders to demonstrate leadership in achieving emissions reductions. Scope 3 emissions reporting, greener sourcing and vetted supplier networks that align with ESG criteria are just a few of the ways FM procurement teams can deliver desired outcomes for their organizations.

Essential operations in this industry will continue to evolve with the move to renewables. This will be especially prominent across retail sites, with increasing demand for electric vehicle charging facilities.

EV charging projects have become prevalent in the EOG industry as clients add EV charging capability to their retail sites alongside traditional carbon-based fuels, providing consumers the flexibility they want.

Procurement and real estate alignment

Companies with decentralized real estate and procurement organizations often perform FM at the region or site level, leaving operational decisions to individual managers. These can include vendor selection and contracting, work order management and delegation of repair or replacement decisions to a local or regional level. Limited visibility across sites in these models can further increase expenses.

Alternatively, a centralized platform for procuring services allows for greater alignment and decision-making portfolio-wide to drive cost savings at scale. Taking a top-down approach and adopting standards across multiple sites will create consistency in maintenance protocols, support more predictable costs and lead to more reliable operations.

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Find out more

CBRE has around 1,400 dedicated facilities management professionals in this sector, with over 8,000 sites under management totaling over 90 million square feet. Our experience spans midstream, downstream and corporate environments, including refineries, petrochemical plants, manufacturing centers, laboratories, renewable energy facilities and petrol stations.

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