30 is the new 50: surviving the low oil price environment
How technology can help achieve greater oilfield efficiency
Gone are the days of $100 barrel oil and gone too are the days of ‘easy’ oil. The drop in price over the previous two years has brought changes to the industry at an unprecedented rate. While a fortunate few profit at prices below $30 per barrel, those in the rest of the world are struggling. This is particularly prevalent in the North Sea, where at least $40 per barrel is required to cover lifting costs.
An obvious response has been the dramatic level of cost reductions, with widespread write-downs and lay-offs throughout the upstream sector.
Downsizing does not solve the root cause of inefficient operations. Rather, disjointed operations become harder to manage and more susceptible to error as fewer people must perform more work than ever before. The ability to plan for future price upturns is greatly compromised if you cannot implement efficiency changes that permanently reduce operating costs. The current oil price could therefore, be seen as an opportunity to transform efficiency.
Understandably, the emphasis has shifted to technology, with innovation more important than ever before. From enhanced recovery methods and innovative drilling techniques to automated processes and improved IT systems, the message is clear: innovate or die.
Meanwhile, mobile operations represent one of the most effective ways for businesses to quickly address age-old problems that leaked money, even when barrel prices were soaring.
Mobility in the oilfield, with easy to use industrial apps on smart phones or industrial devices, can:
- Free up cash by sending customers accurate invoices on the same day as the work is completed.
- Ensure higher equipment utilisation and increased revenue through removing the delay and error in paper-based processes
- Improve the efficiency (and motivation) of staff who can now spend more time managing customers, work and equipment and less time completing and chasing paperwork.
If the recent drop in oil price has one positive impact, it should be that it focuses the minds of leaders on how to survive and grow in today’s era of enforced belt-tightening.
As the list of oil company casualties grows, it is no longer a case of first mover advantage in terms of technological advances, rather survival of the fastest. Streamlining business and administrative processes is at the heart of the ongoing drive to cut unnecessary spending and with the oil prices lower than lifting costs in mature basins, there is little room for manoeuvre.
Rapid change is needed and the technology exists to transform oilfield efficiency. We do not know when or how far, the price will rebound. One thing though is for sure; the efficiency gains brought by the weak market will change our industry for many years to come. Those who innovate now and adapt best to these difficult times will be well placed to make alpha gains in the future boom years.
