Each year, an array of industry analysts makes its predictions on the specific directions the oil and gas industry could be heading in the coming months. However, it’s fair to say that a detrimental global pandemic was not factored into any of those calculations. We know that oil is the lifeblood of industrialized nations, but COVID-19 has forced even this thriving industry to reevaluate and reset.
Henry Berry, director of the U.K. oil company, Tristone Holdings, believes that an investigation of the oil industry as it stands now – rather than where it may have been six months ago – is paramount. With business continuing to change rapidly, there certainly will be developments to come, but Berry has identified distinct areas in which solid trends seem to be manifesting.
The pandemic has thrown the oil business into a new era, one in which agility has proven a mandatory trait for any company that wants to grow and succeed in the undetermined times ahead. Oil companies will need to consider a substantial level of agility and flexibility within the industry as crucial for the foreseeable future.
It’s no surprise that in such an uncertain climate only the fittest and most competent businesses will survive. Even prior to COVID-19, a few successful companies identified the need for flexibility and started to lay the necessary foundations for increasingly agile practices. Oil giant, bp, for example, announced last year that it had been able to cut its logistical costs in Azerbaijan by a considerable $60 million. The “scrum” technique was the main catalyst in this business development plan. Essentially, this technique is all about teamwork, bringing the right conglomeration of professionals together and allowing them to develop and implement the ideal solution to a problem.
The benefit of putting this type of agile practice in motion within a company is its incredible simplicity. Each utilized member would be an expert in their field, enabling a quick and efficient way of problem solving.
The need for this shift has significantly accelerated. While these practices may have enabled certain companies to get ahead of the game a few months ago, they are now considered essential for industry survival.
Across all industries, oil companies included, there is a large focus and effort on contributing to environmental care by cleaning up essential processes. It goes without saying that in an industry revolving around a particular fossil fuel, an effort to use more sustainable practices can only go so far. There is, however, a lot that can be implemented in order to make the oil industry, as a whole, much cleaner.
It’s important to evaluate strategies and make sure that even the smallest inefficiencies are running as smoothly as possible. There is a significant amount that can help make processes more sustainable, from recycling and reducing freshwater wastage to mitigating methane leakages.
Tristone Holdings has identified that utilizing technology is a contributing factor in making this endeavor more successful. As a range of companies have discovered, using drones can effectively detect ozone-destroying leakages of methane, one of the most harmful greenhouse gases. Making small changes like this can help oil companies cut costs and adapt for success in the future.
Expansion into the natural gas market, for any oil operator that has the means to do so, is highly recommended. Natural gas is the fastest growing fossil fuel, according to the 2019 edition of bp’s Energy Outlook. With an estimated annual growth of 1.7 percent between 2017 and 2040, its volumes are set to continue their increase.
Likewise, liquefied natural gas (LNG) is also predicted to grow steadily. In the uncertain period we’re all experiencing, the prospect of investing our interests safely with a more diverse asset portfolio seems a sagacious move. While natural gas, like crude oil, has taken a hit as a result of the pandemic, it’s also likely to return to form in the coming year.
An Example from Tristone Holdings
Tristone Holdings’ primary vision is to pursue high-value crude oil assets located in the Cherokee Valley in the United States. It’s fair to say, however, that diversification is most definitely an option. The area we focus on not only features existing wells, but also a very well-established natural gas pipeline network, too. Pursuing such a prospect can allow us to secure an asset, which is not only high value, but extremely versatile, as well.
It’s important to note that no matter how well prepared your company may be, this year has emphasized the significance of being able to evaluate and adapt your approach. You can be acutely organized and still fall victim to an unforeseen event – like a global pandemic – that has the capability to disrupt even the most thoroughly prepared of businesses.
Consequently, agility and flexibility are fundamental strategies for companies looking to succeed in the industry in this unprecedented time. Be smart and vigilant in the way you have your business structured. That allowance for diversification will place you in a substantially better position to deal with any new challenges that arise.