Mid-2020 America finds oil and gas companies continuing to suffer from a persistent and damaging depression of oil prices but just recently have had to add to this challenge a very real and new raging virus we call Covid-19. To expect more profitability in these times may seem more daunting than usual. And it is.
Optimizing production, streamlining the organization, and re-negotiating contracts are a few examples of necessary adjustments to any economy. Profitable outcomes as well are directly affected by governmental regulations, climate change directives, and demand for cleaner technologies.
To be sure, many seasoned professionals may look back to tried-and-true technologies of another day. In this new decade of challenges however, technological advances are providing such progressive perspectives that they inspire new ideas and methods to discover very critical pathways to profitability. Digital transformation has the power to change not only business models but business cultures as well.
It’s easy to understand why there is a tendency to trim programs that do not contribute to cash flow. Instead of shelving their digital transformation programs oil and gas companies need to resist. Improving efficiency and driving profitability makes digitization essential to survival.Today’s current environment with depressed oil prices and COVID-19, oil and gas companies have to look for a better way to become more profitable. Optimizing production and streamlining their organization, re-negotiating contracts with suppliers will certainly be a part of the expense measures required. Still, it has been elusive with additional government regulations, climate change, and cleaner technologies aimed at combating climate change as the world transitions into cleaner technologies.
Add the collapse of oil demand and has added to the many challenges in this sector.Industry leaders currently project a 10% increase in revenue due to increased production and reduced time to project start-up, and an 8.5% decrease in cost from improved operations efficiency, over the next 5 years according to a recent Digital Operations Studies (Strategy&) of over 200+ oil and gas companies. The majority of oil and gas executives clearly do see the benefit for digitization but only 7% consider themselves in the top tier of digitization. More than 70% of oil and gas respondents saw themselves at the lowest tier.
Looking forward, in order to transform operations, tools like manufacturing execution systems (MES), energy analytics, the Internet of things, machine learning, and cloud computing are essential. A significant investment in training staff in these digital skills along with, hiring outside experts outside to adhere to and requiring clear particular governance and accountability guidelines for a digital operating model. This will change the business model with accurate governance and accountability guidelines. And only by taking a holistic approach within the organization to support the model and the future culture of oil and gas companies.
Right now, is the perfect time to digitize your operations and invest in these game-changing technologies. For your company to be successful in our changing world you need to make sure your company is up to date on its technology. To learn how we can enable your success, contact us at firstname.lastname@example.org for an initial discovery call.