Does the oil and gas production sector have long legs to move forward in 2019? Yes, with manageable risks, digital boom and a drive for structural changes, several players have already indicated their strength with capital expenditure goals. Global industry experts feel the focus will shift towards ROI while expenditure on new investments may be on hold. However, the stimulus that will keep operations busy will depend on IoT-based processes. The goal is to optimize the operations in the volatile industry. As the head of exploration projects are you agreeable to this state of affairs?

There are 5 key trends that will discipline the upstream and mid-stream companies and also produce healthy margins for services linked to production. So far what have we learned from the revival game?

Capital Expenditure and Move Towards Productivity

Unless investment is done there is no expansion. However, the early part of this year will focus on consolidating the business and realization of ROIs. Digitization has already proven to be a saving grace for capital investments. The 5 key trends that reflect on the movement forward are:

  1. Making infrastructure changes to suit virtualization.
  2. Natural Gas is making the US a major player in the global energy sector. The produce can dictate pricing in various markets worldwide.
  3. Peripherals will give way to core capabilities for sustainability.
  4. IoT and other virtual technologies adoption will be accelerated.
  5. ROI will give faith to investors to increase value propositions in oil and gas production areas.

Benefits of IoT

Operational efficiency is at the core of the business, and it sends positive signals to the overall industry. It directly impacts the following areas:

  1. Import and export terminals after the crude oil undergo transportation.
  2. Expansion of pipelines and natural gas plants.
  3. Storage and processing facilities activation.
  4. The value chain makes a difference in the optimization of capital expenditure.

The Permian Basin has seen the rise, the slump and again an upward surge of production with the support of new technologies. New automated infrastructure is a complex beast but brings a better level of competence. Maybe few challenges in adopting the IoT-based infrastructures are common but its investment is inevitable. Embedded sensors, strong connectivity, and digitization are proving to be significant for procuring data from remote locations. The accuracy of the data cannot be denied as it can be analyzed further for understanding how expenditure can be allocated. The current generation of sensors is more advanced than their previous counterparts. Due to the demands, manufacturers develop high-quality devices that meet global standards and regulations. Keeping tabs on remote locations is better with advanced sensors. The possibility of communications, data analysis & management, cloud computing across devices that need to be wired is reducing several data gaps. The devices ranging from GPS and RFID come with excellent navigation capabilities. Performances can be reviewed with these significant components. Companies which have realized the importance of sensors have seen IoT applications most beneficial in the management of assets and security, monitoring pipelines, and preventive control.

To Ignore Workforce is Against Growth

Often when projects get over, contract workers are laid off. During the slump, many skilled technicians moved to greener pastures. No company would like to lose their prized workforce. Can technicians be retained and trained to use new digital processes? Retaining talent is essential as they also come under capital reserves. When talent goes, attracting new ones can be difficult. The younger crew which is ready to learn the IoT-based procedures will be a future investment. Companies that have survived the slump and are still in business will have to take special care to keep the workforce motivated in new projects.

Future Proofing the Business

Capital expenditure can gear up for returns only if the project portfolios meet break-even prices early on. Larger players in the market are removing assets that no longer bring revenue, especially that give out higher emissions and are bad for the environment. The technical challenges and commercial viabilities dominate decisions to put money in stable areas even if they have a lesser profit margin. Companies that have aging infrastructure need to focus more on maintenance. Frequent breakdowns are red flags that need to be addressed immediately. If your company has been deferring the costs of assets that do not directly impact the exploration, then you may see that soon the costs rise up. In some cases, it may even eat into the capital reserves. Pipelines that are more than 40 years old should be reviewed for changes. Investing in new technologies will be crucial and beneficial in restoring the foundations and installations.

Author's Bio: 

I, Jimish Shah am a Professional Blogger, Digital Marketer, Content Marketer & an SEO expert with a 5+ experience. I work with new startups, entrepreneurs, freelancers, and bloggers. The main motive behind my concept is to disseminate more knowledge about various topics to present – day youth.