Despite geopolitical uncertainties, global oil supply continues to be robust at around 93 million barrels per day (b/d). However, the global oil demand outlook is much less certain and, according to the International Energy Association (IEA), might now average around 91.5 million b/d in 2014, down on previous estimates, owing mainly to a slowdown in several emerging markets, notably China. The support for the well supplied oil market continues to come from rising non-OPEC oil production -primarily the USA, and the return of key suppliers to the markets like Libya. US oil production is currently at a 27-year high of 8.5 million b/d and is expected to touch a 43-year high of more than 9 million b/d next year. Other non-OPEC locations, such as Brazil, East Africa, Argentina and Mexico, continue to offer oil companies new upstream opportunities. However, the strong supply situation continues to put downward pressure on oil prices. The Brent oil price falling under $100/bbl in September 2014, for the first time in over a year is likely to have implications for oil company profitability as many continue to struggle with high costs and the reshaping of portfolios.
How do oil and gas companies keep pace ever changing fundamentals which can dramatically alter their value proposition? Many continue to use technology and innovation to cut costs, embrace efficiencies and stay ahead of the competition. An increasing part of this technology story is now digital and as digital disruption becomes the norm, oil companies are dealing with it by introducing formerly uncommon technology and processes into their everyday operations. Some of this is based on the so-called “internet of things” (connecting objects or assets to the internet to make them smarter).
For instance, returning to the story of increasing production in the US, one of the outcomes here is a growth in investment in oil and gas infrastructure, including pipelines - both building new pipelines, and expanding and upgrading existing ones. Some of these pipelines are now using a range of devices such as fiber optics cables and radio frequency identification devices (RFID), allowing them to connect to the internet. Accenture and GE have recently launched the first-ever industrial internet offering to help pipeline operators make better decisions concerning the condition of their critical machines and assets in the oil and gas pipeline industry. Called the Intelligent Pipeline Solution, it combines Pipeline Management, a GE Predictivity software solution, with Accenture’s digital capabilities, to help pipeline operators make better, faster decisions to improve safety and prevent costly downtime. The solution will be used for the first time by the Columbia Pipeline Group, strategically located within the Marcellus and Utica shale plays in the US, across its 15,000 miles of interstate natural gas pipelines.
Listen to this podcast to learn more on industry trends and how integrating these digital capabilities can spell a real transformation in the way companies work every day. Read more about the Accenture and GE’s Intelligent Pipeline Solution.