As energy companies explore the best path forward after the Covid-19 pandemic, they are focusing on solutions for challenging oil and gas sector trends such as costly completion of projects post-pandemic, the energy transition, and digitalization for process improvement and cost-cutting.
The Cost of Completions
Covid-19 has had an unprecedented impact on the global economy and oil and gas companies. The pandemic has created the largest energy demand shock in history and its repercussions are likely to extend through a future supply-demand shock. This is a result of exploration and production (E&P) companies curtailing their spending on upstream oil and gas operations and calling for the reinvention of operating models to improve efficiency, extend asset economic life, create resilience, and reduce carbon emissions.
Drilled but uncompleted wells, also known as DUCs, are oil and natural gas wells that have been drilled but have not yet undergone well completion activities to start producing hydrocarbons. DUC inventory peaked mid-pandemic as a result of exploration and production (E&P) companies cutting capital expenditures, deploying fewer rigs, and reducing oil and natural gas production in response to lower demand and lower prices. (1)
The disruption to demand during the pandemic has had a ripple effect with increasing impacts in production, capacity, and inventory throughout the supply chain just as demand has started to increase. This bullwhip effect significantly the cost of completions, and on a larger level, project budgets as a whole. Cost management and improved productivity will be increasingly important for the future of the industry and to reduce the impact of the Covid-19 pandemic.
COVID-19 and the oil downturn have accelerated other market trends, such as the energy transition and digital transformation.
The Energy Transition
Along with increasing energy demand and pressure imposed by the pandemic, there are increasing social and environmental expectations impacting the industry. Upstream, midstream, and downstream oil are facing a public highly concerned about the impacts of fossil fuels on the environment, along with governmental challenges. As a result, many industry leaders are striving to become part of the solution and transitioning to supply a diverse range of energy to consumers: fuels, electricity, and renewable energy services. There are also a number of companies that have set net-zero emissions targets, and despite the current economic challenges, they are sustaining efforts to decarbonize their operations and their value chains. (2)
The Digital Transformation
The energy transition goes hand in hand with digitalization. Digitalization will continue to play a key role in effective energy transition strategies. It is more than just facilitating remote operations; it has an important role in setting near-term emissions targets and tracking accountability by utilizing production data and advanced data analytics. PipeSearch is an example of technology that allows oil and gas operators to reduce carbon emissions.
Technological innovations have also been a means to increase profitability in the upstream oil and gas sector. It has allowed companies to capture a tremendous amount of worth across the entire value chain. Upstream operators have optimized production with data-use innovations. Digitized workflows have reduced cost, time, and effort required to complete small tasks and large projects.
According to the analytics experts at Quantzig, "Leading oil and gas companies are using technology to improve their decision-making process. They are able to tap new resources, increase recovery rates, and reduce environmental impact with the help of new and upcoming technologies." (3)
PipeSearch is a digitized platform that provides technology-based solutions that enable users to buy and sell tubular goods. We connect urgent demand to unused stock. Our commitment to quality and reliability is what separates us from our competitors. We connect critical projects with the materials that are vital to the drilling operations. Please click here to view our full product guide.
The PipeSearch Platform consolidates update-to-date mill schedules, lead times, and global market inventory into the largest database of corrosion-resistant alloy tubulars in the world.
PipeFacts by PipeSearch is a multi-stage process that utilizes proprietary software to manage a sequence of QA/QC steps in the evaluation of OCTG. It is designed to bring transparency, integrity, and consistency to the evaluation of tubulars no matter the location of the pipe.
PipeFacts goes beyond standard physical inspections of material. It evaluates the specification of the original MTRs against API 5CRA or 5CT, identifies any exceptions, and sets a standard by which MTRs are reviewed and by which inspections are performed. Our PipeFacts process has been developed to give customers complete confidence in the product they are receiving.
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