The petroleum industry as well as the oil and gas industry is undergoing a significant shift, with this being driven by a few trends. While much of this has been through the increased implementation of technology, there have been several other factors at play.
From sustainability efforts to legal challenges focused on certain practices, oil and gas companies have had to weather several factors and deal with many challenges. Though some have been relatively small in the past few months or years, they look poised to become larger in the coming years.
10 Key Petroleum Trends
As such, companies operating in the petroleum industry will need to adapt and position themselves accordingly. There are a few areas where they should focus on in particular.
Focus On Infrastructure
Infrastructure, while being one of the larger parts of the petroleum industry, has been somewhat underserved for quite some time. This has been changing in the past few years as more businesses place more investment into their supply and logistics.
While this investment can be large, it can often be vital for a variety of processes outside of the extraction of oil and gas. Many of the investments that have been seen haven’t solely been focused on expanded networks, although this does play a large role.
Instead, many companies have focused on improving and repairing their existing networks so that they’re better able to meet needs. This has been beneficial in allowing firms to increase their capacity while delivering products at a faster timeframe.
While many consumers believe that sustainability is solely the area of wind and solar energy. This isn’t the case, as the oil and gas industry has been focusing more and more on sustainability in the past few years.
Much of this has been seen in reducing their environmental impact. The majority of this has been driven by consumer expectations, which has resulted in ecological causes becoming increasingly more commonplace across the industry.
There are a few ways that this has been done, such as focusing on renewable, non-carbon energy.
Growth In Natural Gas
Oil has gotten most of the attention in the energy industry, with much of the rest going to wind and solar power. This hasn’t meant that natural gas had gone away, however. In contrast, there has been somewhat of a resurgence in natural gas in recent years.
This is driven by the fact that it’s a low-carbon alternative to oil, which means that it’s more sustainable and environmentally-friendly. Alongside this has been the United States having a greater access to natural gas fields.
Employee health and safety is often one of the largest concerns for any company in the petroleum industry. While standards have remained high for decades, there have been several improvements in how to meet and exceed this, with wearables beginning to make an impact on this.
This has included the implementation of augmented reality and virtual reality devices, such as headsets, which allows for the inspection of dangerous areas without the need for a physical presence. As a result, workers will be able to inspect an area through these smart headsets and determine whether it’s safe for work to begin.
There is also a range of devices that monitor air-quality, employee vitals, and much more to ensure that workers remain physically safe while on the job.
4D Seismic Technology
Deep sea exploration has often been one of the largest costs associated with the oil and gas industry, which has led to various ways to bring this cost down. As a result, there have been several technologies developed to help with this.
Alongside the above mentioned augmented and virtual reality software has been 4D seismic technology. This is predominantly used by petroleum geophysicists and geologists to map out potential reserves for exploration. There are a variety of benefits associated with this, with the most obvious being cost-savings.
Companies will also see less time investment for areas that may not be as fruitful as they may have believed. It also means that they’ll be able to plan out subsequent moves more effectively from an earlier stage.
While this was already seen with 3D technology, 4D helps firms determine how a reservoir should change over time, providing them with much more data.
Increased Labor Costs
Though there’s been an expansion in the number of positions available in the industry, this has been met with an aging workforce, which provides several challenges. Many of these are seen in the areas of retention and training, which are compounded by the wealth of opportunities available elsewhere.
This has subsequently meant that many companies have struggled to attract younger employees. One of the core ways that they’ve done so is through offering higher salaries, as well as more benefits. Because of this, labor costs have continued to stay high, despite technology reducing the overall total number of workers needed.
This has been driven further by the increasingly specialized needs and skills of certain roles, which is one of the few side effects of more technology being implemented.
Though technological needs in the petroleum industry have increased rapidly, the pace of employee upskilling hasn’t kept the same pace. This has meant that many companies have found themselves in a position where they often have an underskilled workforce.
There have been a few ways that many companies have been tackling this skills shortage, however. The first, as we mentioned above, is attracting newer talent that’s already skilled with a particular technology, although this provides many of the challenges that we’ve mentioned above.
Secondly, many firms have been upskilling their existing workforce. This avoids many of the costs associated with hiring new employees, although it does mean that there will be both a time and financial investment needed to do so.
Either of the above options should offer a large number of dividends over time, especially once the related technology is implemented and capitalized on.
Fracking is one of the more traditional techniques used in the petroleum industry. Because of some unwanted side effects of the practice, however, it’s started to become increasingly challenged across the world.
This has primarily been international, such as in the United Kingdom and several other countries, it has started to affect more American companies. The majority of this has been focused on chemicals being leaked into the surrounding water, as well as the potential for seismic activity.
Much of this has been seen through protests and legal challenges, which has made fracking-related activities increasingly more difficult. While the United States has only begun seeing opposition to this, it’s expected that this is likely to grow in the coming years.
As a result, American companies may need to begin adjusting their strategies accordingly.
There are several tasks in the petroleum industry that are repetitive and laborious, although they’re often essential. This has led to companies increasingly focusing on automation and robotics. These have been primarily used in wastewater disposal, drill pipes, and repairing broken machinery.
While the majority of companies utilizing robotics in the industry have been on the larger side, including The Petroleum Institute and others, smaller companies have begun taking advantage of the tech. This is being driven by its increasing affordability, as well as several of the benefits it can offer.
Chief among these has been that automation and robotics can reduce labor costs, which is further enhanced by how quickly they can perform a task compared to a typical worker. This offsets much of the upfront investment a firm will need to make to purchase the technology needed for these tasks.
Alongside the increased use of hardware in the petroleum industry has been the implementation of software. This has been used in several capacities, with one of the largest of these being what’s known as the Internet of Things (IoT).
Through this, robotics and other machinery are connected and can subsequently monitor each other. There are a variety of benefits that this provides, with performance being key. This results in companies having more data on where and when their machinery should be repaired to optimize results.
Alongside this is the reduced need to replace equipment, as preventative maintenance will avoid any breakages. As a result, the majority of companies will be able to see much less associated with downtime and machine replacement.
Key Petroleum Statistics You Need To Know
There are a variety of statistics that have become increasingly more obvious in the petroleum industry. With the number of shifts in the niche over the past few years, it can be quite easy for many of these to be overlooked. There are a few that companies should be aware of:
- Upstream capex for oil and gas worldwide is expected to grow by 4% during 2019.
- LNG demand is set to grow by 60% by 2030.
- Demand for natural gas grew 1% from 2018 to 2019.
- The petroleum industry grew to employ approximately 8% by the end of 2018.
- Petroleum inventories are up 4.1% compared to the five-year average.
- An 9% growth in the CAGR market is expected by Data Business in Oil & Gas.
- Oil remains the largest part of the petroleum industry, typically averaging between 35% and 40% of the market per year.
- OPEC member countries saw an increase in exports by 0.1%.
- The bulk of OPEC exports, 64.3% went to the Asia-Pacific region.
- Refinery capacity worldwide grew by 6% through 2018.
Being informed about the niche is the first step in taking measures to adapt to its changing needs. Though a focus on technology has been one of the larger trends affecting the petroleum industry, market demands and customer preference have been the largest aspects in the past few years.
Thanks for reading "Trends That Will Transform The Oil and Gas Industry Outlook in 2020", by the Linchpin Team in Chicago, Raleigh, and Wake Forest.