Reaching $50 a barrel was quite a landmark, however some traders are already betting on $20/barrel futures. Industry giants, such as Shell, Premier Oil, Statoil and Canadian Natural Resources, are now abandoning billions of dollars in exploration drilling projects. This current trend has caused a great deal of scrutiny towards capital spending across the energy sector.
Ongoing obligations are “forcing the hand” of companies to rapidly become more efficient. So, how can companies plan to retain profits at $50 or less per barrel? Or, how will they navigate the downturn in 2015 without risking efficient operations when the cyclical upturn occurs? These are burning questions that oil and gas executives need to address this year.
Our clients often have a number of cost cutting initiatives already in process. However, these initiatives typically fail to deliver most targeted benefits and are not sustainable. This scenario can result in these efforts being reconsidered, relaunched or abandoned entirely. It’s vital for operational strategies to be reviewed if they are to be successful.
Based on our findings, barriers for cost reduction are sometimes so deeply ingrained that people have either given up complaining about them or do not realize that they can be corrected. In a matter of weeks, we have witnessed tangible benefits in many areas, including operations uptime and turnarounds, productivity, logistics, fleet management, maintenance and support services, and contracting services.