The world around us is changing at a breakneck pace. Whether we are talking about technology, geopolitics, or the economy, with each passing year, this development only becomes more apparent and all-encompassing. Of course, the best examples can be found in the industries that have, historically, proved the slowest to evolve with the times like, for instance, the oil and gas industry that can trace its roots all the way back to the XIX century.
But, the walls have breached the floodgate, and this evolutionary tide is sweeping over the O&G sector, forever changing its landscape. Let’s take a look at some of the most powerful driving forces that will shape the future of the O&G industry.
Rise of Technology-Driven Business Models
The main goal of every successful business is to create greater profit for the shareholders. Rising digital technologies are finally changing the way how this profit can be reached, softening the “bigger is better” mentality that was driving this industry ever since its inception. With enhanced possibilities for analytics and marketing on disposal, the O&G companies will be able to expand their operations by offering new products in the form of services like consultancy, creating new digital-based business models in the process.
Asset lighting and reduction
This topic is very closely related to the one we have just covered above. Advanced analytics, remote management, and automation of industrial processes will inevitably streamline the extraction and lead to lighting and reduction of industrial assets. This will help O&G companies to meet their mid-cycle demand levels far easier and lease the unused assets to other businesses and cut the practice of building ever-increasing capacity to meet long-term demands. Leasing will also create new sources of revenue, again leading us to the introduction of new business models.
The push for new and more efficient equipment
Image Source: Unsplash.com
The introduction of advanced analytics and AI-run operations inevitably pushes the industry towards efficiency. However, the optimal levels of operational efficiency can’t be achieved with the equipment that wasn’t this attribute in mind. So, even if they are not directly associated with the digital revolution, pieces like more efficient butterfly valves will find their way into the existing infrastructure as a result of the contemporary digital trends. This is very fortunate since investments in this area are definitely required and, honestly, long overdue.
Steps toward sustainability
The oil and gas industry was never known as a particularly green sector. On the contrary, ever since the rise of the green movement, the O&G companies always seemed to be on the opposite side of the front. But, as the famous poet once said, ‘Times They are A-Changing.’ The fresh perspectives introduced by the inherently-efficient digital technologies really go hand-in-hand with sustainability and renewable resources. Therefore, even though the O&G sector won’t make a complete transition in this direction, we can expect the industry to show its green face and start investing in renewable resources.
Increasing demand for the natural gas
Of course, we have to point out that not all tectonic changes occurring in the oil and gas sector are driven by technological advancements. For instance, the changing market demand can completely re-shift the focus, and as a result, the entire infrastructure of the industry. Take, for instance, the 1.5% rise in demand we saw in 2019. By the end of the year, that number grew to 1.9% or 34.5 Bcm in more tangible numbers. If these figures continue to grow in the following year, the priorities of the O&G industries will need to change to survive long-term.
Image Source: Unsplash.com
The oil and gas industry was always closely related to contemporary geopolitical issues. So much so, that the O&G demand was always driving the hand of the relevant global political factors. With that in mind, the list of regions that are the biggest O&G manufacturers (Asia Pacific, Middle East, Syria, Yemen, Latin America, and more specifically, Venezuela) still looks far from consolidated. Turmoil in these regions can still make the exporting countries unable to pay off the debts and re-invest in production. As you can expect, the developments like this can shuffle the market geography.
The gradual replacement of the existing workforce
Every workforce eventually ends up replaced by the younger staff. In the case of the O&G industry, however, one generation won’t simply be replaced by another. Looking at all the topics we have covered above, we can see that the O&G will start looking for new employee profiles, start prioritizing technical proves over manual skill, and branch out in some completely new directions. This new balance between physical and digital assets, new playing fields, and expansion to new regions will also entail changes in management, communication, and leadership alignment.
We hope these few examples showed you just how deep the changes are that are currently sweeping over the O&G sector. Like any business landscape, the oil and gas industry was forced to change with the times. But, for the first time, we are seeing the evolution right to its very core. If geopolitical factors don’t throw a wrench in this machine, our idea about this industrial sector may be drastically different only a couple of years from now.