Word to the Wise: The Problem with Using Spreadsheets for ARO Management

August 24, 2021

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Despite software solutions purpose-built for oil and gas companies to manage, track, and calculate ARO, many companies choose to manage their ARO programs using spreadsheets. At first glance, it’s easy to understand why. For many people, spreadsheets are easy-to-use, highly customizable, and come at no additional cost. It’s the tool people are accustomed to using to calculate various business costs, develop plans, and build and share reports.

But as ARO management has grown in importance and complexity, managing an ARO program through spreadsheets is less than ideal. The initial benefits of spreadsheets – flexibility, familiarity, and affordability can’t overcome the challenges posed by utilizing a tool never made for this job.

Some might scoff at the notion that spreadsheets aren’t up for this job. There are Excel Wizards out there capable of creating remarkable spreadsheets, harnessing the power of the tool to create complex workbooks custom-tailored to meet their needs. The issue is that spreadsheets are just that – customizable to meet the needs of their creator. They are personal productivity tools, not mission-critical applications to be used across departments and entire companies. People build them with their own logic, understanding and a unique endpoint. They aren’t meant to be managed and used by multiple users with differing needs.

That VLOOKUP formula, complicated cell, or field that makes sense to one user might not make sense to the next, leading to confusion, errors, and over-dependence on one expert to manage the entire ARO reporting process. And as a company’s assets and liabilities grow, even a properly maintained spreadsheet can become too big and unwieldy to manage.

Through the years, we’ve had many customers share their own personal spreadsheet horror stories as they replace their old processes with our standardized, web-based AssetBook ARO Manager. The stories themselves are varied, but all share a similar theme: the spreadsheets that once got the job done were now making the job far more difficult than it needed to be.

A sampling of these issues can be summarized as follows:

• Complicated spreadsheets – Simple worksheets built to manage at-the-time basic ARO reporting needs grow into difficult, overblown messes filled with multi-coloured columns, dozens of tabs, and fragile nested formulas. New functions, user-demands, and imported processes from merged and acquired companies build on top of one another, making the spreadsheet continue to grow in size and complication.
• IT management demands – As the spreadsheets grow, they can become a problem to manage – physically in some cases. As file sizes swell, spreadsheets become more difficult to load, slow to respond, and more prone to crashes. We even had one customer who required a laptop dedicated solely to running the company’s spreadsheet.
• Reliance on Excel experts – Complicated spreadsheets are no trouble for an Excel expert, right? Some companies don’t realize how difficult their spreadsheet has become because the person who built it is the one who deals with it. Then that person moves on or it starts to touch more people in the organization, and they realize they need something that works for everyone.
• Break downs – From simple data entry errors to broken formulas to file corruption issues, it seems like everyone has a story of the time they had to do something over because something in the worksheet broke.
• Lack of flexibility – Users tend to limit their time in cumbersome spreadsheets to a minimum and thus fail to incorporate ARO reports in their day-to-day operations or are unable to build in more advanced features such as scenario analysis with changing cost models/discount rates.
• Lack of audit trail – Managing critical data with spreadsheets means not having an automated log of who made what changes to reports. Anyone who has access to the document can make changes without anyone else knowing.

When you factor in the time spent building and updating spreadsheets to manage ARO processes, the time lost to corrupted files or confusing layouts and lengthy load times, and the added difficulty in satisfying auditors, free spreadsheets start to become a lot less cost-effective than they initially appear. ARO management has grown into far too important and too large a process to be trusted to a custom-built spreadsheet. Companies need a more standardized approach that can be easily used by anyone throughout their organization, and the protection that comes from a fully auditable, cloud-based solution.

XI Technologies provides just such a solution with AssetBook ARO Manager, the industry’s premiere web-based tool for estimating and monitoring asset retirement obligations in the WCSB.  Our soon to be SOC Compliant tool tracks any changes to data made by your team, so you can save time on your audits. 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” in our latest case study “The Problem with Spreadsheets in ARO Management” or contact us for a demo.