Rental vs Buying Oil Tools

Depressed oil and gas prices have put the pressure on upstream oil and gas companies to increase efficiency at every level. Companies have been looking to rent oilfield equipment to reduce equipment costs. Renting equipment can be a great way to save costs, yet purchasing equipment also has its benefits. Factors such as downtime, storage, transport and availability will effect equipment costs. Sometimes it may be a case of purchasing some equipment and hiring other items depending on your needs. In this post Tasman Oil Tools will outline how to choose whether to buy or rent your oil tools.

Initial Costs

The initial equipment outlay for oilfield equipment can be massive. Buying the equipment required is the most costly option. This can be a risky strategy for oilfield operators. If well production is poor the cost of equipment may never be recovered. Renting equipment can reduce this risk as the initial outlay is much smaller. When buying equipment you can use it in your next project. With the depressed oil prices conditions over capitalising can eat into profits.

Maintenance Costs

The other major benefit of renting equipment is cost of maintenance. When using an oilfields rental equipment company cost of maintenance is generally included in your package. Maintaining oilfield equipment such as drilling tools and pressure control equipment is a specialised skill. A quality equipment supplier will have the expertise to ensure your equipment is up to safety standards and in perfect working order. Oil tools must be inspected to ensure they meet the proper standards. Ensuring your equipment is certified and maintained requires you hire staff with appropriate skills. It may be more cost effective to hire your equipment rather than deal with these details yourself.

Timeliness

Another issue to consider is the timeline of your project and how often you will use each piece of equipment. If you have a long project you may consider buying the tools that will be used during the entire duration of that project. This may work out to be the most cost effective solution for these items. Yet for products that you will only be using intermittently it may work out to be more cost effective to hire these items. The other issue with timeliness is the potential downtime. If you have a piece of equipment that is used to rectify an issue that causes potential downtime, you may prefer to buy this equipment so you can keep it on hand. It depends on the cost of expected downtime, compared the cost of keeping the equipment on hand.