Challenges facing the oil and gas industry today
Although the energy sector has faced prominent disturbances over the years, the global oil and gas market is expected to grow at a compound annual growth rate (CAGR) of 25.5% in 2021. The industry constitutes about 3.8% of the global economy.
With innovative technologies transforming how businesses handle digital transformation challenges and opportunities, decreasing costs to remain competitive has become the biggest hurdle. To that, we can add the fragility of integrated supply chain planning and execution, plus the lack of real-time insights, hindering collaboration and decision-making.
We will share some tactical practices to help you tackle the major challenges facing the oil and gas industry and take advantage of present opportunities.
Technology adoption is vital to cut costs in oil and gas
Technology advances have become an excellent resource for oil and gas companies that want to streamline operations. These are some of the leading technologies that can save you time and money while keeping you at the forefront of your competition:
Drones and IoT
The ability to monitor expansive and risky areas remotely using robotic assistants and sensors has reduced staff’s need to travel to every inspection point. The outcome has been dramatically beneficial since travel expenses have almost disappeared while efficiency has improved.
Cloud computing
Operations in the oil and gas industry span multiple locations, making data collection and tracking complex and expensive. Adopting cloud technology allows the workforce to access data, enter readings, and streamline inspections or maintenance from their tablets or mobile devices. Without needing to have workers physically present at the locations, this practice will optimize the workflow, reduce overall costs for your business, and improve the decision-making process.
Artificial intelligence (AI)
When combining this technology with traditional equipment, the advancements can deliver significant benefits. The use of smart bits, for example, can reduce replacement expenses since they have a longer lifespan and a more consistent rate of penetration. Intelligent rigs are another excellent tool to help companies save on maintenance and equipment. Finally, artificial intelligence as a service (AIaaS) has become commonplace, allowing industry leaders to test innovative tech solutions with lower risk and initial investment.
In reality, oil and gas organizations are changing how they work as they strive to integrate new technologies into their operations. The urgency to build a sustainable cost structure will help companies adapt to the price climate’s volatility while smoothly making a digital transition.
Applying long-term strategies to manage costs
Embracing technology with a profitable digital strategy should be vital for oil and gas companies. Enterprises like Brazil’s Petrobras, which have already started a complete renovation, consider digital as the answer to improving their operations and value. To achieve this, companies need to do more than just adopt innovative technologies. An effective digital transformation along with workforce upskilling is fundamental to aligning your business for perpetual growth.
Digital transformation
Companies need to build a digital strategy that focuses on improving remote and autonomous operations more than adopting different technologies. A well-structured digital plan supported by technological innovation will become a long-term solution to lower expenses throughout the value chain.
The World Economic Forum predicts a 20% decline in drilling and completion costs when using new technologies, plus a 25% reduction in inspection and maintenance costs by 2025. These savings will result from implementing a successful digital transformation strategy.
Workforce upskilling
With the adoption of modern technologies and intelligent automation, workforce upskilling will become inevitable. Talent will need to have a more robust technical skillset to execute more valuable tasks and meet new oil and gas industry needs.
The existing skill gap craves more than just money investments. It requires a comprehensive approach where stakeholders, educators, and employers are engaged. Companies can start to retrain existing employees with cross-functional skills as a quick response to current hiring difficulties.
As more companies prioritize upskilling through a long-term strategy, the savings will ultimately become evident. In fact, the World Economic Forum predicts 20% lower employee costs across all areas of the industry by 2025.
Required investments to secure long-term profits
To be equipped to face the inevitable and drastic upcoming changes, oil and gas companies need to be quick to adapt and transform the way they work. Implementing and planning a strategic digitalization will become a key factor. Organizations need to ensure that this transformation happens through all phases of the industry and within their companies to guarantee success.
Senior executives should be promoting digital as a top priority and ensuring that it becomes a part of the company’s culture. To change workforce mindsets, investments in programs promoting technology adoption and digital thinking will be necessary. Significant investments in human resources to sustain a culture of innovation will be vital as well.
Efforts to improve and reset company’s data architecture will also be needed. Although the investments may seem overwhelming initially, they will make all the difference when it comes to securing long-term profits in such a volatile ecosystem. Establishing your business for strong growth starts today. Contact us and let us guide you through your digital transformation journey.