The oil and gas industry continues to be volatile and unpredictable at the same levels we have seen over the past few decades. Oil and gas procurement firms are being forced to step up and adopt a dynamic approach to operations and procedures by following:
- Geopolitical and economic uncertainties
- Regulatory constraints
- Shifting global markets
- Supply threats
Operators and oil and gas procurement companies have started cooperating to achieve sustainable cost savings and short- and long-term profitability.
Oil and gas procurement companies are looking into five tactics to adapt to this new environment: cost reduction, vertical integration, new revenue models, consolidation, and new equipment and service models.
Approaches to Improve Oil and gas procurement:
Oil and gas supply chain organizations have seen a boom and collapse in the last two years. Following are five techniques that oil-field service and equipment providers are looking into to meet changes.
Let’s deep dive and discover unique ideas to improve your oil field and gas procurement company.
- Cutting costs: An overweight diet
An industry that had grown fat and happy over the years on high pricing has been shocked by the cost lowering necessary to meet declining profits. According to service and the location, the cost per barrel has increased by between 5 and 15 percent annually since 2009. It is due to the good times.
In offshore fields, expenses increased dramatically, leading to high break-even points.
For instance, in the North Sea, the price of producing an equivalent barrel of oil is more than doubled from a little over $8 per barrel in 2010. It will be around $17 per barrel in just three years. Furthermore, many options exist to reduce weight and expenses thanks to all that fat.
Currently, operators are learning the value of efficiency.
For instance, independent onshore operators in the US have used enhanced horizontal drilling techniques, extended wells with more frac stages, and super fracking.
These drillers pump more drilling fluids (sand) into their wells to increase production per well while cutting costs per barrel.
2015 showed a long-deserved cost improvement in the North Sea as well. Lifting costs decreased by 20% in 2015, according to the North Sea operating benchmark maintained by Prismecs.
- Integrating vertically: One-stop shop
You can achieve both cost savings and contractor management simplification through collaboration. Customers can access the tremendous value by combining equipment, software, engineering, or other service offerings.
Many services and equipment purchases outsource to several providers, adding complexity and fragmenting the supplier base. Several oil and gas procurement companies are bringing these services in-house with integrated offers that cut coordination expenses.
Savings of up to 30% can ensue as a result. For instance, the SIS subsidiary of Schlumberger provides a software backbone based on the Petrel software platform.
This enables an operator to model the field, plan the wells, and finish the design while understanding the reservoir’s oil and gas potential. While businesses are creating integrated offers internally.
Many are joining up with other companies or merging with them to offer a wider choice of services.
- Sharing financial risks in exchange for potential returns
New revenue models have arisen across the oil and gas procurement companies. It includes participation in project financing and performance-based contracts that combine equipment and services (equity in exchange for equipment and service).
This way, oil and gas procurement companies can give operators more flexibility. Companies decrease their cost base and need for investment in difficult times.
Oil and gas procurement companies or services providers will have to carry additional capital costs, which may result in a more steady income flow.
- Increasing concentration through consolidation
The consolidation of firms of a similar nature and integration along the field life cycle can be helpful for Prismecs’ operation in the oil and gas procurement companies sector. Prismecs predicts that once oil prices stabilize. There will be a significant increase in consolidation across a number of oil and gas procurement companies’ sector segments.
Many businesses today are only a tiny portion of what they formerly were, and they could gain from the cost reductions that a merger with a direct competitor would bring. Our opinion is that consolidation is coming in the drilling industry.
- New technology and service models: Design for value
Some businesses can experience new growth thanks to sustained investment in cutting-edge technologies. The low price of oil today has sparked a renewed interest in efficiency, highlighting emerging technologies that can increase efficiencies—albeit at a modest investment cost.
Upstream operators are looking for cutting-edge services like smart (offshore) completions, rotary steerable drilling, and logging. In contrast, drilling enables the collection of good data throughout the drilling phase to increase productivity and win business.
Also, to contribute to creating new business and revenue models, oil and gas procurement enterprises should consider investing in such capabilities and expanding their usage of digital technology in general.
Although commonly used elsewhere, the sector has slowly adopted digital approaches, an area of great opportunity.
For instance, we investigate the significant resources in automating the drilling and completions workflow, reducing the number of workers needed, and improving information from the various processes in the workflow.
To eliminate inefficiencies, many oil and gas procurement companies are currently designing equipment with more modular designs. Many items from the past were not created with the total cost of ownership (TCO) or cost in mind.
We can achieve savings of between 15 and 30 percent by looking at design from a cost perspective with consistency.
Manufacturing and procurement cannot profit from economies of scale without modular design. For instance, Schlumberger’s brand-new “Rig of the Future” is a vital tool in realizing its goal of providing integrated drilling and completion services.
Prismecs has experts in our team that will meet all the requirements related. Check out the site to get complete information about oil and gas procurement. Further, you can call us on this number; 18887747632.
We are always available to provide you with top-notch services. You can also write us at email@example.com for more queries and information.
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