Analysis of Oil Collection and Distribution for an Oil Company
Project Type: Industry
LoDI Team: Monica Gentili, John Usher, Lihui Bai, Mohsen Mohammadi, Arnab Roy
Period: January 2019-November 2019
Overview
CountryMark is the largest buyer of crude oil from the Illinois Basin, a geological region that covers Southern Illinois, Southern Indiana, and Western Kentucky, and includes 22,000 oil wells producing more than 12 million barrels of crude oil per year. In 2019, CountryMark contracted with the Logistics and Distribution Institute (LoDI) at the University of Louisville to identify potential cost savings in CountryMark’s overall logistics operations.
Purpose and Need
Before collection of oil from oil well owners, each full tank of oil must first be checked by a CountryMark “gauger” who is responsible for ensuring a variety of quality metrics. Once the tank is deemed to contain merchantable oil, it is cleared for pickup by the CountryMark fleet. A truck is then dispatched centrally to individual leases where oil is transferred from the tank and delivered to the CountryMark Refinery. Due to the size of the geographical region, many of the leases require long travel distances which significantly increases CountryMark’s costs for crude oil gathering. CountryMark, particularly, was seeking advice on how to improve these operations.
Methodology
To address the requested challenges, the LoDI team applied operational research and data analytics tools with the goals of (i) determining the actual cost per barrel of collecting oil at each lease to derive better pricing and scheduling decisions, (ii) developing long-term statistics on oil quality and production volumes to identify reliable and unreliable leases, and (iii) reducing the total travel distance of gaugers and transport drivers as they visit multiple leases per day.
Results and Impacts
The CountryMark and LoDI analysis project proved that in depth data analysis can provide unforeseen measures and identify opportunities, even for well-established operations. Summing up the project, team member Adam Dickerson, CountryMark’s Manager of Pipeline Operations stated: “With having gathering operations in 55 counties located in three states, we must use the data we continuously collect to our advantage. Partnering with the LoDI team at the University of Louisville is allowing us to develop an operational strategy that will keep us competitive in the basin while supporting the needs of our customers.”