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Management: Industry Challenges Drive the Need for New Business Models

Fig. 2—Business models and their value to the industry.

The increasing diversity of oil and gas resources presents technical challenges for our customers—and at the same time opportunities for oilfield services companies. The challenges range from reducing subsurface risk as exploration and appraisal begins, to increasing the ultimate recovery achievable when the reservoir reaches the end of its economic life. These challenges can be impacted by technology, workflow, people, global back-office support, software, and by business models, which are evolving as the demand for integrated operations has increased over the years.

Business Models Evolution

In terms of business models, the integration of products and services with workflow and process can take many forms. Fig. 1 shows the evolution of business models for our industry. As the pace and complexity of operations have grown, the traditional approach—typically known as “discrete” services—has become increasingly inefficient and expensive for our customers to manage. To control costs and minimize downtime, operators may solicit tenders for “bundled” services, lumping together several related discrete offerings from a single supplier for a lower total cost. While this “bundled” approach may reduce the price, it often fails to boost efficiency, especially when the entire product lines and in many cases, the individual service provider, continue to function independently.

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Management: Industry Challenges Drive the Need for New Business Models

Patrick Schorn, President, Integration and Operations, Schlumberger

01 October 2014

Volume: 66 | Issue: 10

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