How oil companies can adjust their business to a period of recovery

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The oil and gas industry is recovering, but companies need to deal with a new reality where a lot of the former experience, knowledge and skills no longer remain.

The upstream oil industry was severely damaged by the collapse in oil prices. The crisis began in 2014 when oil prices started to drop, and this led to a wave of cost reduction. Thousands of people were fired and large unprofitable projects were put to a stop. However, due to these cost reductions, oil companies can now break even at a much lower price than before the crisis, but not without adjusting their business to this new reality. While fewer names on the payroll have helped balance sheets in crises, it unfortunately also created a huge knowledge gap.

The industry is recovering, but companies must now work smarter

My colleagues and I have participated in a number of oil and gas events during the past months, and we sense that the industry is slowly recovering. There is a growing optimism among oil companies and we have also seen a slow rise in oil prices.

According to a survey carried out among the participants at the recent Norwegian Offshore Technology Days (OTD), 75% of the oil companies said they expected growth in turnover this year and 25% expect to hire new employees again. Hence, oil companies are now arising from the ashes like the bird phoenix, however, they need to deal with a new reality where a lot of the former experience, knowledge and skills are gone. So now they have to work even smarter than before – without letting costs rise to the level they used to be.

Why technology is the key to successfully moving forward

I believe that technology will have a crucial role to play. Oil companies will need to embrace new technology to stay ahead in the game. Digitalization will be key to higher productivity, efficiency and lower costs.

We have customers who are already doing this. One example is Songa Offshore, who has placed sensors on assets to predict maintenance before breakdowns actually occur. Another example is Interwell, who replaced old, fragmented IT-landscapes with a modern, integrated enterprise resource planning (ERP) solution.

Oil companies must realize the necessity of modern technology to survive. I am certain that the right solutions can increase efficiency, and thereby keep headcount down – and ensure that data is centralized and accessible to all and not limited to a small group of eg. Engineers.

Previously this year, we did a survey of 750 companies across 16 countries to get a global viewpoint on digital change. This survey showed that the oil industry is lagging a bit behind other industries when it comes to embracing digital change, despite collecting data successfully for 40 years. The survey showed that globally, 33% of oil and gas businesses are still at the exploratory or nascent stage with leveraging digital technologies.

The next steps

Oil & Gas: Augmenting the human skill-set in a downsized industryIn our new eBook, Oil & Gas: Augmenting the human skill-set in a downsized industry, we outline how companies can overcome challenges while under pressure with the help of technology. I hope you will take a few minutes and read it to understand why embracing new technology – among many other measures – will be crucial for your company’s ability to improve work planning, optimize processes and increase efficiency as the industry goes into a period of recovery.


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