Saurabh SharmaOil and Gas Industry Future Outlook – Lessons from 2017 and anticipation of a better year ahead.
2017 was an eventful year, no less than any psych thriller movie. We observed a blend of opportunities, surprises and disaster; like always it’s time to bid it farewell and a time to remind ourselves that it’s New Year and we’ve got to make it count. We’re witnessing infinite possibilities the coming year and its early signs can be OPEC’s decision to cut the production in order to re-balance the market’s demand and supply equation has led to the rise in oil prices, US virtually becoming energy independent with its Shale bloom; oil market is reinventing itself which was left devastated in 2014.
Surprises of 2017
The surprises were not highly unprecedented but fairly cognizable. This year the industry realised and paid heed to the drums which were thumping from the time when the era of face-marketing started, the drum-beating of ‘Collaboration.’ With GE acquiring Baker Hughes, Shell’s signing of $70 billion deal to buy Britain’s BG group in 2016, to India’s willingness to collate all the PSU’s together in order to function in coherence. All these are signs that the Oil & Gas sector has realised that sustained growth is possible through mergers and acquisitions. And that no field or company can exist in isolation. There has to be a constant interaction with other business players in order to optimize and maximize the profitability of an enterprise.
Warnings of 2017
The contemporary situation of the Oil & Gas industry reminds me of a famous German proverb, “Kümmere Dich nicht um ungelegte Eier” which loosely translates to, ‘don’t count your chickens before they hatch.’
Well, the world is going gaga about the escalating prices and optimistic pundits declare that we’re heading towards a re-balance of the market but it concerns me that in order to watch out for oversupply, there might not blossom a situation where we’ll be left with an under-supply. Other warnings which came in handy were the environmental warnings. But there are other contributing factors which are deteriorating the environment. And we will be in a situation wherein we will not be able to handle the situation anymore. Harvey led to the shutdown of a plethora of refineries and the paraphernalia of the industry going haywire. Any other environmental disaster can be waiting to happen. We need to be mindful of such a scenario.
We also need to understand that we cannot choose to ignore the very environment we are living in. We need to take up initiatives and take ownership of working towards a greener planet. One of the examples of it can be France’s Total which has implemented a step in which it invests its 1/5th account base in low-carbon based technologies. Such steps towards the direction of a more holistic environment should be our, ‘call-to-action.’
Challenges: 2018
There are major fundamental flaws which we have to address this New Year. The resolutions of the industry should be to address these fundamental and structural challenges which the industry is facing. And these challenges are:
- Creating an environment for shared profit and growth;
- A space where new talent can thrive and is welcomed to contribute and thus, in turn, the industry can progress;
- Incorporation of new and progressive technologies aimed at doing the repetitive work and thus reducing the operational time;
- And according to the industry experts there needs to be a conversation about the ‘corporate culture’ in order to attract and connect the people.
It seems that we have forgotten that we drive the world; almost 35% of all the energy needs of the world are met by Oil! If we aspire to maintain this status and contribute like we have been doing previously we need to address these issues and mitigate them with immediate effect.
While there’s a buzz of collaborations and M&A’s in place, it is expected that there should be a revision of the business model, the conventional business model which was laid down by the ancestors of the industry and it [the current business conglomerates] silently practiced it from the time the industry exists.
2018: The year of opportunities
What does this year, 2018, has in store for us? All the opportunities we have with us are the ones which we already missed in 2017, it seems like we, as an industry, took a detour from our targets but we need to pay heed to the call of the duty. And all thanks to the latest technology which has sprung up like a pool of opportunities is where today’s optimism lies.
It isn’t easy to identify who is holding the strings, who are involved in which power politics because anyway we know that all the predictions about 2017 fell flat on our face. But something which cannot fail us would be technology.
In the technological trends, it can be easily pointed out that the stalwarts of the industry like General Electric, PetroChina, ABB, Alstom, and Statoil are investing more and more in technological solutions for their business operations. Be it GE which has signed agreements with large and small companies in order to curate a database of all the digital devices and sensors which can be employed by them for their exploration and production activities or be it France’s Total’s investment in low-carbon based technologies. Every business group is incorporating technology in their business culture so as to maximize the efficiency of operations and predict cost incurred for any business activity related to the Oil and Gas industry.
A few of the upcoming technologies which this year, we’re hoping, will observe a tremendous boost will be 4D seismic technology (It maps & interprets potential hydrocarbon reserves), Cloud computing, Drones (UAVs), Wearables and Artificial Neural Networks.
For an overall analysis of 2017 and preview of 2018, click here
Soft computing and augmented reality have revolutionized the way the industry used to operate. There’s an unprecedented level of engagement of the industry with gadgets and why not. Artificial Neural Networking (ANNs) which have been employed to predict oil trends and prices; I believe there’d be an increased use of this technology & we should exploit it more and not limit it to academic discourses. Drones are going to be the next big thing, be it surveillance, or be it the investigation or reaching a previously unexplored area for E&P activity it can drastically reduce the cost, time and energy involved in any activity.
Wearables like smart helmets are going to be the game changer. With the advent of smart helmet and glasses- these will present an AR (Augmented Reality) image of a sensor via IoT (Internet of Things) – which can ease the task of an investigator who had to previously be present before a sensor for manual readings. Such is the spurge of technology that we do not have to invest so much time in doing idle things; a lot of work can now be done and recorded via a smart computing device, a more reliable and feasible to do things.
Having said that and high on optimism, I’ve to be cautious enough when I say and endorse technology because what concerns me the most in this regard is ‘Security.’ Data security is the next thing which we should focus on. I guess at this juncture we can foresee the creation of new security solutions which can be of great help to the industry thus making us more technology reliant.
With this concern and on this optimistic note I would leave you with the thought, ‘It’s 2018, let’s make it count, technologically!’
Add comment