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TRANSCENDING CONVENTIONS TO OPTIMIZE CAPEX AND OPEX

The Oil & Gas (O&G) industry has been in a state of flux over the last few years. A constant fluctuation in the oil and gas prices is the result of disruption in demand and supply, which is fueled by drastic and unpredictable changes in the commodity price, rapid technological advances, changing customer needs, tighter environmental norms, and aging plants. These factors inevitably impact effective utilization of resources, calling for a measured focus in the following areas:

• Investment – Disciplined capital investment • Operations – Maximization of delivery from the assets, including exploration facilities and refineries • Personnel – Streamlined and well-defined roles of the workers While cash flows have started to look promising, project scopes have expanded and brought with them bigger challenges to curb operational costs and manage project risks. Given the industry’s recent propensity for mega projects that leverage economies of scale, it is now time for companies to target prospects that can be rapidly developed at a lower cost. This can make way for greater agility and help companies respond quickly to market changes.

In order to align the humongous cost of new capital projects with the current economic reality and shorten exploration & production (E&P) cycles, companies need to go beyond just putting pressure on suppliers or implementing stringent internal project controls. According to PwC, the implementation of digital technologies can cumulatively save up to $100 billion in the upstream oil & gas sector by 2025. The immediate focus should be on implementing a robust enterprise data management (EDM) platform for improved collaboration and asset data management (ADM) strategies to drive operational efficiency. Now that the industry has successfully achieved material cost reductions of almost 30%, this might very well be the next logical step toward optimizing capital project costs.

The O&G industry is awash with more data than it can manage. Companies in this segment have access to diverse data sets generated by smart sensors, logging tools, geophones and other sources. Analytics helps add a layer of insights on top of this data deluge, enabling better decision-making.

As analytics-driven operating models become a new norm in the industry, the focus will shift toward data quality.