STRIV­ING TO MEET FU­TURE EN­ERGY DE­MAND

Tech­nol­ogy and in­no­va­tion key to cost re­duc­tion and cap­i­tal ef­fi­ciency

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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.

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