Oil and gas: How do you compete with free?
June 18, 2018
Historically, oil and gas companies have used only a small fraction of the data at their disposal to make better decisions. That will change soon. Advanced analytics are now available to help them solve what have long been considered unsolvable issues across the value chain—from portfolio management, development and operations all the way to commercialization. While the impact of analytics will vary across these domains, the cumulative effect is significant: A return on investment that is almost four times the baseline. When used in tandem with artificial intelligence or machine learning, the result is even more profound.
Eighty-seven percent of oil and gas companies consider themselves data-driven organizations. But they use just a fraction of the data now at their disposal.
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
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.
Oil and gas companies that apply advanced analytics can slash exploration and production costs by up to 30%. That translates into ~$4.5 trillion over the next 10 years.
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:
In these ways, analytics help companies identify what they will sell in the future, how they will sell it, and to whom.
To be competitive in an era of “free” energy, companies need to make sure four elements are in place: