The oil industry is under as much pressure as the oil they take out of the ground. Industry is responding in new and creative ways. The Newfoundland Oil Industry Association (NOIA) in St. John’s, this week held it’s annual conference but it had a distinctly different conversation.
The NOIA conference was less about vision, exploration and future projects and more about addressing the challenges of the day – “oil price”.
Presentations focused on cost savings, efficiencies and maintaining profitability in an industry under pressure. Speakers included industry professionals, government, and organization who had a common theme in their message. It’s a time of adjustment, a time of innovation and a time of exponential change.
And why wouldn’t it be about the price of oil and its impact? In the last 18 months the price of oil has been cut in half. Think about that in personal terms. Your paycheck has just been cut in half. How do you live? What do you do? What cutbacks to you take? What are your priorities? How do you simplify and modify? What do you keep and what do you eliminate? That’s the challenge of oil companies, major contractors, and suppliers in the oil base today.
For the oil industry dealing with half of their revenue base has led to hundreds of thousands of jobs in the energy industry, being cut worldwide. There are drastic reductions in spending, transport, logistics, exploration, production, sales, and future projects. Times are tough around the globe. Many call it a time of crisis.
But is all lost?
The oil and gas industry presenting at the NOIA conference thinks not. After all, the world’s leading commodity is oil and gas and it attracts the greatest minds in the world. Rather than being defeated they’ve strategically channeled those great minds into an entirely new way of operating. With resiliency and creativity, the people of the oil and gas sector now have a new level of industry conversations that transform and recreate. It’s actually a time of rebirth through efficiency, business process, operational overview, collaboration, standardization, simplification and a reduction of operational costs.
This is a time of cultural and behavioral change. That means the vision, focus, and conversations that make business work have been catapulted to an entirely new level. Leadership is now more about being the facilitators of new regimens of efficiency and powerful innovation. Concepts of integrity, transparency, sharing, collaboration and industry partnership are not just “key” they are now non-negotiable.
Esteemed speakers on the topic of oil and gas innovation and efficiency included:
Naheed Nenshi, The Mayor of Calgary
Paul Fulton, President of Statoil Canada
Stephen Marcos Jones, Director of Business Excellence, with Oil & Gas UK
Hakon Skretting, Regional Director, TSOK, The Norwegian Oil & Gas Partners
Knut Boe, President, North Sea Canada, Technip
The conversations of the morning rang in similar fashion. Embracing rapid change and moving forward is a navigational challenge in which they all had similar plans. We can expect to see three main operational themes emerging:
3. Industry collaboration
Each of these variables will emerge with the advancement of technology and new global communication systems. Resource allocation will be aligned with all that elevates these three themes and supports them in coming to fruition.
All that brings adversity also brings us together and today’s adversity will foster intricate industry networks that will lead to new solutions and results. Given we are on the cusp of globalization this can only be a good thing. I have the sneaking suspicion that it’s getting us ready for the new energy world that’s about to emerge.
New operational efficiencies in the oil and gas industry will include systems that prove themselves in reducing cost and increasing profitability. Some of the trends include access to global virtual resources, detailed and shared inventories, sharing expertise and past experience, virtual hiring, the internet of things, big data, operations in the cloud, more efficient software and hardware, and advanced communication systems.
At the heart of each of these modifications and adjustments is “new conversations”.
So what we really have is a communications challenge. The goal now becomes more about enhancing the networks of conversations and the number of conversations we have that can strategically and succinctly lead us to a new world order. All of this bodes well for the world that’s globalizing and streamlining simultaneously. It seems that these new operational models will be the foundation for what’s to come and therefore are a necessary course of correction that will result in a sustainable new energy future.
Crisis forces change and it’s a good thing because people have conversations they wouldn’t have in the past. So rather than slashing costs by putting pressure on the supply base of the oil and gas industry, it’s a time to look at the big picture and optimize the entire offering where project durations are reduced, simplicity offers direct cost reduction, waste is eliminated, optimized efficiencies are implemented and technology ensures communication and operations effective overall.
The game of lean operations ensures we architect business with what we “need” rather than what we “want”. The model ensures a foundation for success in the midst of fluctuating market costs, emerging global markets and unpredictable variables. How we modify and move forward will inevitably provide us with the much-needed foundation for the new energy, globalized world of tomorrow
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