3 cost saving ideas for the oil and gas industry
April 2020 saw oil prices dip negative for the first time in memory. A mixture of COVID-19 travel restrictions worldwide, an oil price war and potential global recession led the oil price to tumble. As a cyclical industry, the oil and gas sector is well-used to weathering storms, but this is the second in quick succession after the 2014/15 crash, making it different.
It’s likely the impacts of this downturn will be here for a while and we need to adapt to operating in a lower oil price environment. So where can the industry make savings? Below we outline 3 cost saving ideas for the oil and gas sector.
- Spend less time offshore
COVID-19 has reduced the number of people offshore and we don’t know when operations will return to normal, but with a slimmed down team safety still remains of paramount importance.
Previous downturns have meant that operators have already looked for ways to create efficiencies, reduce time offshore and reduce the number of people needed for certain operations. Such as smart platform-to-shore communication and reconsidering their drilling project approach. But operators can do more.
An example of this is Well Start, which helps to safely and quickly navigate the early stages of new drilling operations, can be a smart approach to achieve the same effect for initial drilling, by reducing the number of personnel needed.
Reconfiguring offshore operations to utilise solutions that require a slimmer offshore workforce remains a key post-COVID-19 to reduce costs.
- Identify quick wins
For drilling projects in particular, a quick return is vital to reduce risk and increase the liklihood of raising capital. One way to do this is to take a modular platform approach to field development, such as our Sea Swift platform. Designed to be fabricated across multiple locations and assembled on-site using available installation infrastructure, the reduced-steel design allows for simultaneous progress on different platform elements. With this approach, platforms can be up and running in as little as 10 months – a perfect example of innovative thinking as a cost saving idea for the oil and gas industry.
- Think TOTEX
By renting, upfront costs are reduced and operators benefit from the provider’s expert technical support, further lowering risk to large projects.
Ultimately, the industry needs to reconsider CAPEX, OPEX and even DECOMEX. With the oil price hovering around the $40 mark, choosing a solution that offers lower total cost of ownership including decommissioning is another area to look at for cost saving ideas for the oil and gas industry. For example, new projects using Sea Swift can realise savings versus a traditional jacketed platform of up to 30%, or existing assets can benefit from cost-effective asset-life extension.
We can’t afford to stand still. Following the downturn of 2014/15, operators have already slimmed down operations with the “low hanging fruit” solutions implemented. But keeping – and evolving – that mindset of marginal gains will be crucial for the industry to weather this unexpected lower oil price storm.