While it's easy to focus on oil spills and other ills that result from negligence or accidents in the oil sector, we should also factor in the good. Without oil and gas, developing nations wouldn't be developing — at least, not at the same pace. We wouldn't be able to power the vast majority of homes or vehicles. So, while widespread renewable energy adoption is a goal to strive towards, we must come to grips with the role that oil and gas companies play in moving societies forward.
With that said, how are the oil and gas sectors moving forward? What will they look like in one year, five years, or ten?
These industry insiders did their best to answer these questions. Here's what they had to say:
1. Pierre E. Conner III, Executive Director and Professor of Practice, Tulane Energy Institute/ A.B.Freeman School of Business
“Major trends include the emergence of the US and a net exporter of oil and gas (LNG) and its involvement in trade negotiations. Carbon Capture Use and Storage will need to progress in order to meet emission limits and still use reliable energy from oil and gas. The demands of full cycle returns by equity investors in the upstream will limit new sources of capital driving quality over quantity contributing to faster decline rates. Infrastructure limits are being testing for pipelines and export facilities as demand grows worldwide for oil and gas as a power source for growing electrification.”
2. Heena Purohit, Senior Product Manager at IBM Watson IoT
“Clients have adopted IoT technologies to gather operational and machine data and are now leveraging technologies such as AI, ML, etc. to make intelligent decisions centered around the following key pain points: increasing operational efficiency, anticipating risks, new revenue streams.
Common use cases include condition-based maintenance, predicting incidents in advance, AI-driven prescriptive guidance for technicians.
Clients select the use case based on key pain points and maturity. Vendors that win will be ones that integrate AI and analytics in the existing process flow, making it easy for operations/maintenance personnel to take action on the basis of the output or recommendation.”
3. Geoffrey Cann, Oil & Gas Advisor and Author of Bits, Bytes, and Barrels: The Digital Transformation of Oil and Gas
“With strong supply options, an uncertain demand outlook, and a volatile geopolitical setting, the oil and gas industry will continue to experience strong pressure throughout 2019 and 2020 to reduce costs and improve productivity. The latest digital technologies, such as the internet of things, artificial intelligence, digital reality, autonomous technologies and blockchain are key to that agenda. For example, ADNOC (the national oil company for the UAE), has recently announced its “Oil and Gas 4.0” initiative, which focuses on digital innovation to improve operations.”
4. Meade H. Lewis, founder and CEO of mIQroTech
“The oil and gas industry is ripe for disruption. Many startups like ours are working on products revolving around Artificial Intelligence, Internet of Things, Blockchain, andAugmented Reality. What these innovations are accomplishing is taking this previously physical industry and digitalizing it. All of these innovations revolve around data, but more importantly, actionable data. Collecting this actionable data is what a lot of the operators in oil and gas are struggling with.”
5. Matt Beckmann, Managing Director at Ascent Consultants
“M&A activity will remain strong as the industry matures and investors demand that companies operate within cash flow and return real value to shareholders. Mergers and acquisitions will bring greater economies of scale and efficiency to the industry, and position it for even greater growth going forward.
The second trend is climate change. To paraphrase BP CEO Bob Dudley's comments during CERA Week, the industry has to step up and get involved. Colorado's SB181 will be the test case for greater restrictions on oil and gas exploration, but the industry cannot react any longer; it must be proactive.”
6. Jim Mathers, CEO and President of Energy Professionals
“With demand continuing to outpace annual forecasts and inventory reducing, the biggest trends for large commercial and industrial users of oil and gas will be supplementary solutions focused on making their energy budget stretch further. While oil and gas prices rise, the cost of battery storage has dropped by over 77% over the past decade, economizing the strategy to reduce peak consumption levels and get more from their power. Battery storage is proving itself to be a marketable product that is continuously becoming more affordable for more people, changing the energy landscape and making people rethink the way they purchase and manage their power.”
7. Andy Beck, Managing Director at kglobal
“The oil and gas industry would do well to look at the digitization that is happening in the renewable energy sector. Take for example German company, Kaiserwetter, in Europe, this company has created a cloud-based IoT platform ARISTOTELES that processes technical data along with meteorological and financial data into structured, easily understood and actionable information. With this data intelligence as a service solution, asset managers, investors and financial institutions can make smart decisions, minimizing investment performance risks and maximizing monetary returns.
With supply and demand mismatched and prices likely to remain low until that imbalance starts to ease, the need for new efficiencies is urgent. The name of the game is no longer big production, but better margins. Digitization is the key to unlock this.”
8. Alex Shartsis, founder and CEO of Perfect Price
“Driven by mobility (Uber, Lyft, GetAround, etc.) and the innovations in the electric drivetrain, the retail stores–think gas stations–are in the quiet before the storm, and everyone smart is running around frantically to get ready. AI-powered dynamic pricing both at the pump for the “liquid products” and in the convenience stores frequently attached to gas stations are what the most forward-thinking companies are implementing today. This represents the best and possibly the only sure path to continued profit and revenue growth in an industry undergoing a profound shift in fundamental demand.”
9. Ian Cogswell, Consultant to Superior Honda
“In the automotive industry, we’re witnessing the dawn of electric cars. As
the demand goes up, manufacturers are seeing electric as a niche to fill.
As more car companies create more electric cars to meet this demand, competition is driving the prices down and the quality of the units up. Eventually, this trend could dethrone diesel and gasoline as fuel sources.”
With that said, however, there is still room for oil and gas in the
automotive industry. The factories that produce the components for the cars like batteries, metals, plastics, rubbers, and lubricants, will require oil and gas to operate.”
10. Albert Goldson, Executive Director of Indo-Brazilian Associates
“The aggressive entry of Big Oil into US shale represents a seismic industry shift. In 2018 only 5 the top 30 shale oil producers had a positive rate on investment. For this reason their shareholders and the private equity that finances them have become increasingly discontent. Because Big Oil has deep pockets and provides consistently solid dividends, their growing participation in shale production crowds out smaller rivals and enables them to increase production much more efficiently. Additionally, three additional pipelines to Gulf Coast refineries are scheduled to become operational later this year which will enhance cash flow.”
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