STRIVING TO MEET FUTURE ENERGY DEMAND
Technology and innovation key to cost reduction and capital efficiency
Operators are pursuing efficiency initiatives for high- cost oil and gas activities, says IHS.
Operators are pursuing a range of cost- cutting and efficiency initiatives including automation and mechanization of high- cost, repetitive oil and gas activities.
As persistent low oil prices take their toll on both industry profits and spending projections, oil and gas operators are turning, in part, to technology and innovation to reduce costs and increase capital efficiency in the short- term. At the same time, according to new analysis from IHS, they aim to meet increased future energy demands in a low carbon environment.
“Rapid changes in price, such as the halving of the oil benchmark between 2014 and 2015, naturally bring into focus the need for oil companies and their suppliers to reduce costs to maintain viable returns. Technology helps on two fronts,” said Paul Markwell, vice president of upstream oil and gas consulting and research, at IHS Energy.
“The first is in raising short- term production, the key denominator in the cost- per- barrel equation. The other involves attacking capital costs and operating expenses head on. Both place an emphasis on efficiency.” Still, investment in oil and gas technology should be viewed as a long- game. Producers, Markwell advised, must commit to unwavering innovation through the oil and gas price cycles if they are to meet demand safely and at competitive costs through to 2050 and beyond.
To remain competitive, operators are pursuing a range of costcutting and efficiency initiatives including automation and mechanization of high- cost, repetitive oil and gas activities, such as drilling. They’re also looking to apply data- driven analytics to draw key insights from high- volume data streams, such as detecting when a piece of equipment is going to fail or identifying ‘ sweet spots’ in unconventional oil and gas plays. In still other instances, operators are increasing their use of mobility technologies to improve the efficiency and effectiveness of their field workforces.
Investment in oil and gas technology should be viewed as a long- game.