Reducing Opex and improving productivity to extend the life of mature basins

Old Texan RigThroughout the oil sector, companies are feeling the pinch of a near-$100 drop in the price of oil. Exploration budgets have been slashed or, in many cases, reassigned towards innovation as firms seek to heighten efficiency and increase recovery from already-producing assets. This has been most acutely felt in regions with high production costs like the Gulf of Mexico, Western Canada and the North Sea.

With the price of Brent crude sitting around $40, there is very little room for error.
However, while operators have complained about a lack of innovation among their supply base, both operators and services firms must implement innovative measures to combat these shrinking margins.

While operators are squeezed by shareholders seeking dividends, services firms bear the brunt of the knock-on effect – the pressure from low prices has become so great that even Middle Eastern producers, who can produce oil under $6 per barrel have requested significant discounts from contractors.

One area that the industry has traditionally been reticent to embrace is the automation of equipment management and logistics work and tasks.

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There is now a growing number of industrial mobile apps tailored for the on and off-shore oil and gas workforce, all of which can be run securely through either a mobile phone, tablet or intrinsically safe industrial device.

Indeed, while operators continue pushing services firms to produce better results more quickly and at a lower price, one of the few options to set a service provider apart from the competition is to automate and mobilise processes. Removing paper, spreadsheets and emails from the supply chain will streamline cumbersome admin work, freeing up staff for more wrench or keyboard time, while creating greater process control and reducing waste.

If rapid cost-cutting measures are not taken, the economics of oil production in some mature basins will no longer make sense, fields will be closed and production may never resume.

The conclusion is simple: streamlining business procedures to minimize costs and transform productivity is a low cost, low risk quick win. The industry is generating a reputation for being slow to adopt new approaches. In these times of survival of the fastest, those who fail to adapt will not be around long enough to stay in the race.

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