How Can Oil & Gas Industry Leverage IT During Economic Slowdown?

With the price of crude oil dropping below its yearly low, mixed with the current state of the union, how can oil and gas companies continue expanding production efficiency and drive further investments? It’s simple!

•Invest in key areas of technology to integrate systems and processes
•Simplify access to accurate information
•Partner with vendors that provide industry-specific solutions and are eager to form a “partnership-based” relationshipoil_and_gas

Given the exponential increase in the cost to explore, produce and service oil and gas, energy companies need to look at new tools to increase efficiency and maximize existing systems. IT departments need to provide a technology foundation that can support the increase in seismic processing demands, as well as tools that support the optimization of project and portfolio management.

Invest in key areas of technology that will integrate systems and processes
Implementing enterprise resource planning (ERP) packages like Oracle, PeopleSoft and JD Edwards allows companies to seamlessly integrate business work flows, data and processes with the various business segments of the company (Accounting, Shipping/Receiving, Human Resources, etc.).

Simplify access to accurate business information
Assuming the implementation was successful and the users are maximizing the features of the system, oil and gas executives can require more from their predictive analytics and business intelligence tools than ever before. Investments in ERP remediation and/or post-implementation audits are highly advised, especially for those companies that feel they are not getting as much as they could out of their ERP system.

Partner with vendors that provide specific industry solutions and are eager to form a “partnership-based” relationship
Oil and gas IT departments should work with technology partners that invest in building a long-term relationship with them and make an effort to understand their business vision.

The partner should not only demonstrate competency in oil and gas industry knowledge, but look to structure its relationship as a value-added partner. Usually, this is evident by the partner’s ability to deliver highly technical solutions to your SPECIFIC business pains and challenges. A true partner will not only work to solve the problem, but will work just as hard to uncover the true business need.

To truly add value to a company, the partner needs to have a full understanding of your business and its vision before making recommendations to lead to the next level.

Are your systems integrated?

Do you have the tools in place to allow for your executive team to make accurate and timely decisions?

Are you working with a company that truly works at building a long term relationship?

4 thoughts on “How Can Oil & Gas Industry Leverage IT During Economic Slowdown?

  1. Very good point of view. What would be your thought on top/essential/critical technologies for Oil and Gas industry in this economic downturn?

  2. Thank you for the inquiry. I am not sure that I have a quick and easy answer for you, but I will give it a shot. There are a couple of things that come to mind initially that would determine the answer to your question.

    First, the natural state of the oil and gas industry is best viewed as its own ecosystem comprised of three primary areas: upstream, downstream, and midstream. Each one of them has their own unique set of challenges during this current economic climate. The basic problem is that of demand, price (sales), and cost (expense). The market hates uncertainty and the current situation is definitely one of uncertainty. Each area of the ecosystem feeds the other in that price in one area becomes cost to the others.

    Given the volatility in the market, the barrel of crude slowly climbing after a $100 free fall, and the difficulty in being able to forecast accurately due to the lack of a consistent demand, cost and price, I would recommend looking into any technology that reduces capital requirements, operating expenses, and/or frees up resources in a very short timeframe. I would suggest that a 90 to 180 day return on investment is appropriate. The applied technology needs to make a significant impact on the bottom line or improvement in company operations in a very short amount of time. Companies are not willing to commit the capital on a long term payback at the moment.

    However, if the company does have the capital to spend and they are forecasting a strong financial position over the next year or two, I would recommend investing in technologies that will improve efficiencies and streamline processes. These would be projects that require a bit more capital, time, and commitment from the executive leadership and the board. Ultimately, this would allow the company to take full advantage of the market when it turns for the better by being positioned to handle a significant increase in volume without a commensurate increase in expense. Projects in this area might include process redesign or those that provide additional automated support such as workflow. Your best targets for these will depend on where the company is positioned in the oil and gas ecosystem. For instance, for E&P companies, investment in solutions to manage the process (workflow) and information generated in evaluating exploration opportunities is a new area of evaluation.

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