Buy versus Rent of cargo carrying units in the Wireline segment at Schlumberger Norway

Abstract

In today's economy with dramatically low energy prices, it is extremely important to make all the processes efficient and lean inside an organization in order to eliminate unnecessary costs. Schlumberger supplies its offshore customers by transporting them products in baskets and containers. Wireline, together with the other company’s segments has always rented the offshore units and paid for them at daily rate basis. However, such a rental system has generated extra unnecessary costs due to the idle time of the units, and, depending on the various projects’ duration, the company has had poor control of rental costs. Thus, the main objective of the paper is to investigate whether there are economic advantages in buying particular types of units instead of renting them repeatedly. In particular, it was defined which types of units it is beneficiary to buy for Wireline, at what amount, and under what price conditions in order to maximize total cost savings during the life span of the equipment. The research in this paper was done by conducting the quantitative analysis based on exploratory sequential mixed method and theoretical foundations. The findings of the research work has shown that there are huge potential cost savings in case of buying mini containers, 8m baskets and 10ft closed containers. The optimal amount of the units for purchase was identified, and the overview of the potential purchase prices and corresponding cost savings for each of the three analyzed units was presented.