Oil and gas: How do you compete with free?

Let’s consider the value potential within each domain.

In portfolio management, a 10 to 15 percent improvement in capital efficiency is possible.
Dynamic risk-return assessments can predict the likely evolution of an asset’s financial performance. These insights lead to reduced capital investments and a boost in productivity.

In the area of asset development, companies can lower capital expenditures by 10 to 20 percent and achieve a 5 to 10 percent improvement in productivity.
Analytics can make an integrated and efficient approach to field development possible by pinpointing optimal well locations, informing design decisions, and identifying and remediating project risks.

In the area of operations, companies can boost their productivity by 2 to 7 percent and reduce operational costs by 5 to 15 percent.
Analytics can reveal what interventions are needed at the wellhead, refinery or other facilities to maximize throughput, while minimizing costs.

When it comes to commercialization, a 2 to 5 percent margin uplift is possible.
Analytics can help companies identify the most profitable plays—not just at the wellhead, but across the value chain.

Increase over baseline ROI

Analytics at the core

Leading companies will cast a system-wide data net and then apply analytics to identify (and redefine) causal relationships between domains. With such insights, companies can dissolve boundaries and begin working in concert to optimize the whole system.

Analytics in the New

Beyond transforming core operations, industry leaders will re-imagine the future roles they will play within emerging energy ecosystems. Advanced data analytics help companies pivot to new business models in three ways:

• By enabling a better understanding of consumers’ needs and behaviors
• By determining the relevance and potential value of different models
• By rethinking the role and placement of each molecule to maximize bottom line impact

In these ways, analytics help companies identify what they will sell in the future, how they will sell it, and to whom.

Connecting the dots

To be competitive in an era of “free” energy, companies need to make sure four elements are in place:

• The right talent. Welcome talent from other disciplines—such as image processing experts from the healthcare industry—to gain analytics firepower and insights.
• The right North Star. Shift the corporate focus from managing capital risk to managing the speed and accuracy of decision-making.
• The right analytics backbone. Use advances in computing power, automation, storage and data science to consider all aspects of the value chain system in a matter of seconds.
• The right partners. Create ecosystems to ensure molecules are dispatched to end uses that exhibit the greatest demand. Use partnerships strategically to provide services—not to sell commodities at the wellhead.

SlideShare: Oil & gas: How do you compete with free?