ARO Management by Spreadsheets Doesn’t Work… Here’s Why.
Spreadsheets are easy-to-use, highly customizable, and come at no additional cost to most companies, so it is easy to see why they have become the default tool of choice for maintaining asset retirement obligations (ARO). However, as end–of–life closure activities and obligations have grown in importance and complexity, managing an ARO program through spreadsheets comes at a hidden cost. The initial benefits of spreadsheets – flexibility, familiarity, and affordability – can’t overcome the challenges posed by utilizing a tool never made for this job.
Excel wizards do love a good spreadsheet, and with such wizardry it can be a fine tool. But when should you consider moving beyond a spreadsheet for ARO management? We talked to many E&P companies to get their perspective on when and how they know they’ve outgrown their trusty tool for this purpose.
Here are some of our favourite quotes from those who have outgrown their spreadsheets:
- “Things got too complicated” – Simple worksheets originally built to manage our initial basic End of Life reporting needs grew into difficult, overblown monsters as we grew. With dozens of tabs and fragile nested formulas, merged and acquired companies became impossible to fit into our legacy structure and had to be managed independently. What a waste of time!
- “We had to call in IT” – As file sizes bloated, spreadsheets became more difficult to load, slow to respond, and more prone to crashes. I was sick of calling IT every time that little hourglass started turning.
- “I lost my wizard” – Because I relied on a single Excel expert for all things ARO, then any time that person moved on from their role, we had to start from scratch getting someone else up to speed. We held up one promotion because no one else could tackle the ARO spreadsheet.
- “We wasted so much time on errors” – From simple data entry errors to broken formulas, we constantly had to do something over because something in the worksheet broke. Finding the formula break was like finding a needle in a haystack! Furthermore, with a centralized database we were also able to find savings missed discounts on well pads and configuration changes.
- “I’m always being asked for reports” – We usually sigh with relief when the task of year-end ARO reporting is done. But banks, investors, and executives are all insisting on more transparency, reporting, and planning when it comes to end-of-life obligations. Quick reporting of any sort is not easy to do with our unwieldy spreadsheets.
- “I need a better audit trail” – Managing critical data with spreadsheets is hard enough when you’re on top of things, but not having an automated log of who made what changes to our data made it excruciating. It always frustrated me that anyone with access to the document could make changes without anyone else knowing, not to mention our Auditors were always breathing down our neck to know who had access and how did we log changes
- “Updating is so manual” – Every quarter the data needs to be refreshed with all changes to the licenses. Pulling this data is complex and time-consuming. I was constantly looking for a more efficient approach.
Do any of these issues resonate with you?
Our investigation continued to further uncover the most important advantages that happen when companies move to a central management tool. Interdepartmental use of various ARO reports were appreciated. Clarification of changes within the data flowed easily based on the history trail of users and inputs. Formula integrity remained intact and pulling quick reports for banks, investors or auditors became as simple as a click of a button.
At XI, we have become a go-to for ARO management because of the problems we’ve solved. AssetBook ARO Manager was purpose-built for the oil and gas industry, developed through a culmination of government resources, expert opinion, and industry data. Plus, it is SOC 1 Type 2 compliant (read the press release here) everyone can trust the calculations.
Figure 1 – ARO Manager provides users with a simple, comprehensive look at their end-of-life closure activities and obligations, available to anyone in their organization who needs the data.
You can read more about the various struggles our clients have had with their ARO spreadsheets, including dedicated hardware solutions and “the Rainbow Unicorn Spreadsheet of Barf” by reading our case study “The Problem with Spreadsheets in ARO Management” or contact us for a demo.