Tips and tricks that small oil and gas businesses may use to both overcome current challenges and future-proof their companies.
Like many industries right now, the oil and gas sector is going through some significant shifts, working through new challenges, and setting its sights on a more predictable future. Key challenges include oil price volatility, demand for greener energy sources, and a constantly-changing regulatory environment, all of which have been compounded by external events like the global pandemic.
Combined with other forces, these obstacles are pushing oil and gas companies to seek out better, more efficient ways of operating and serving their customers. And, thanks to advancements in technology, some are finding what they need in the many different tech tools that are being developed both for the industry and for a broader business audience.
Challenges Facing the Oil and Gas Industry
Political maneuvering, alternate energy resources, rising consumer demand, and the changing regulatory environment are all making life challenging for oil and gas companies right now. Forced to do more with less, companies are lowering their costs in order to remain competitive while at the same time trying to shore up their own bottom lines.
To meet these goals, oil and gas companies are working to optimize the production systems at their current sites, reduce extraction costs, and offset the costs of exploration. Even when the price of a barrel of oil was “high” by industry standards (during the 10 years of pre-COVID-19 economic recovery), oil and gas companies were grappling with these and other realities.
Other key challenges include growing competition for a shrinking pool of capital, a global labor shortage that’s left the industry short-handed, and the ongoing supply and demand fluctuations that companies across many different industries are dealing with right now.
Strategies for Your Oil and Gas Company
If your oil and gas company is facing some or all of the challenges outlined above, there are steps you may want to take to help mitigate or avoid these issues, including:
Leverage the latest technology
Companies of all sizes and across all industries are in the midst of digital transformations right now. By leveraging the latest technology, taking advantage of cloud computing, and helping your workforce “cut the wires” and utilize mobile technology, you may streamline processes, enable good collaboration, and better manage remote teams. On the production side, new methods and technologies are helping companies cut costs, improve efficiencies, and boost productivity.
Know what’s happening in your field
Even if your company has been in the oil and gas sector for decades, it should never stop learning. Use news sites, trade publications, and business journals to keep up to date on all aspects of the industry—from pricing to new equipment options to technology implementations. Armed with this information, you’ll be able to make better decisions about your company and the markets that it serves.
Monitor cash flow
A challenge for any company, cash flow may be particularly onerous for oil and gas companies that need major capital infusions at different stages of exploration. Key questions to ask right now include: How much cash do you have on-hand? Where is that cash located? Is this enough to get you through the next 3-6 months? If not, how can you obtain additional cash quickly? And, what are your financial obligations (e.g., paying employees and vendors) and where can you make some cuts (e.g., rent reductions, eliminating travel, reducing unnecessary recurring expenses)? The answers to these questions will help you track cash, identify potential financial disruptions, and then take any necessary corrective action.
Give your website a facelift
Your website is your calling card to the rest of the world, so if you haven’t updated yours lately, it’s probably time for a facelift. Be sure to include an introduction to your company and its products; its history; key capabilities; customer stories or testimonials; and complete contact information. Highlight key team members and their accomplishments, and try to keep the focus on the biggest pain points that you solve for your customers (versus just focusing on what you do). Finally, include your address, phone number, email addresses, and social media links for anyone who wants to learn more.
Technology Trends in the Oil and Gas Industry
By embracing and implementing next-generation technologies, oil and gas companies may be able to work through their current challenges while also future-proofing their operations. Some of the key tech trends taking place in the industry right now include:
Adding automated equipment and software in operational areas where humans who were previously handling monotonous tasks may be freed up to focus on more important tasks.
3D virtual modeling
The 3D digital representation of any object or surface, 3D virtual modeling may be used to create a “digital twin” to replicate the performance of a refinery or an oilfield on a computer screen.
Unmanned aerial vehicles are being used for oilfield inspections, remote monitoring, surveillance of assets, to address emergency situations, and for predictive maintenance.
A distributed ledger that makes and verifies transactions in real-time, blockchain is helping the oil and gas industry reduce costs and lower fraud risk.
Artificial intelligence (AI) and machine learning (ML)
Technologies that help computers “learn by experience,” AI and ML may help oil and gas companies more quickly identify and address defects; reduce production costs; improve safety; and enhance quality assurance.
An industry that generates huge volumes of data every day (e.g., drilling data, production data, flow rates, pressures, etc.), oil and gas may use advanced analytics to dissect big data and use it to reduce costs, maximize asset performance, improve safety, and make better forward-looking decisions.
Making the Shift
As the oil and gas industry continues to evolve, small businesses operating in this space may face a host of new challenges and opportunities. Using the strategies outlined in this article, and adopting some or all of the highlighted technologies, may help oil and gas companies get ahead of the competition and set themselves up for success.
This article is intended for general informational purposes only and does not constitute legal advice or an opinion on any issue. It should not be regarded as comprehensive or a substitute for professional advice.