The oil and gas industry has been under severe pressure since late 2014 when oil prices dropped significantly. The highly volatile international market and oversupply of oil has meant companies have had to reduce costs in one way shape or form.
Bill Kroger, co-chair of law firm Baker Botts told Rigzone in an interview that, “Energy companies may need to lower their prices in response to a drop in demand …. For this reason, we may see CAPEX [capital expenditures] begin to decline until there is some stability with oil prices,”
This has been evident in Australia where many oil and gas companies have reduced capital spending significantly. However, with a lot of oil and gas projects shifting towards the operational phase, how can we make processes and decisions more efficient and effective?
Tackling an uncertain marketplace
Rather than focusing on reducing capital expenditure companies have to look inward to find efficiencies and cost savings. Kroger explained, “In 2015, more emphasis will be placed on technologies that reduce cost and improve efficiencies.”
Technology has allowed companies to increase productivity and yields in their oil and gas operations. R.T. Dukes, Upstream Analyst at Wood Mackenzie said that “customised manufacturing approaches lead to individual well performance improvements.” Improvements which may have not been considered beforehand.
These are the sort of efficiencies oil and gas companies need to look for in order to find the best savings, whether it be upstream exploration and production, midstream transport and storage, or downstream refining and sales.
“In a tough price environment, being able to push out every bit of optimisation matters.” – Dukes
New Technology Investments
According to a recent report by Lux Research, since 2003 oil and gas upstream technological investment has exceeded $7 billion (In the United States). “Unlike in the past, the oil and gas industry now embraces emerging technologies from adjacent industries,” said Daniel Choi, Lux research analyst.
The oil and gas industry can learn a lot from looking at how their operations merge together. If there are decisions to be made, and resources to be moved, business analytics can assist in significant savings. When you are looking at rig construction costs reaching the hundreds of millions, even a 5% reduction in planning time can have a significant positive impact on your bottom line.
Big Data in Oil and Gas
Big data will remain a massive part of the oil and gas industry. Despite there being a reduction in upstream oil and gas activities, existing oil and gas development and future operations will require greater efficiencies and productivity. Through the analysis of the core data that is driving business decisions, oil and gas organisations will be able to save on costs and planning time.
“With the strategic use of analytics, oil and gas companies can achieve the high degrees of confidence needed to make ground-breaking, profitable decisions.”
Biarri Optimisation, Empowering Oil and Gas Companies
Biarri build custom cloud based software solutions regardless of company size or project complexity. We use quantitative modelling, optimisation and mathematics at the core of your software so that you can make better, more informed decisions.
With proven capabilities in the oil and gas industry, working with companies such as Savanna, Arrow Energy, and Origin Energy on unique, complex problems, you can be sure that we can find the right solution for you. Whether it is upstream exploration and production, midstream transport and storage or downstream refining and retail we can help.
Find out how our easy to use, customised software powered by mathematics, can help you make better decisions, get in touch today!