Low Prices Trigger Much-Needed Change Through a Holistic Approach

Topics: Petroleum economics/production forecasting Risk management/decision-making
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Change in the oil and gas industry often comes slowly. However, as months of low oil prices turn into years, it is necessary now. Oil producers have taken to cutting billions of dollars in expenditure, which has forced providers and contractors to slash rates and delay and even cancel projects.

The upstream industry in particular needs to fundamentally transform the way it works to survive and thrive. While cost-cutting can be an effective plan in the short term, the industry needs to take a longer-term focus and change the fundamentals of the way it operates. To compound matters, the days of triple-digit oil prices appear well and truly over, with the World Bank estimating that a barrel of oil will only rise to USD 60 by 2020.

Regardless of the oil price, the sector needs to rethink established ways of working in order to better handle increasingly complex projects. The high crude price in recent years helped the industry gloss over inefficiencies and enjoy success in the short term. But the recent slump has fully exposed shortcomings, and shone a spotlight on the fact that the offshore industry was on an unsustainable path and in need of guidance to standardize processes to lead the industry through a turbulent time.

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Low Prices Trigger Much-Needed Change Through a Holistic Approach

Dan Jackson, Chief Executive Officer, io oil & gas consulting

23 August 2016

Volume: 68 | Issue: 9