The global price of oil is now at a 5 year low, which means that the profits from them are lower than they have been in a long time.
This has not only seen companies suffering, but it has had a monumental effect on on states such as Russia, who rely heavily on oil prices to maintain their economy. In some cases those who have high levels of investment in oil have seen them loose 50% of their wealth.
The crash in oil prices has actually seen the price of crude oil plummet by 60% since a high in Q3 of 2013.
Therefore, something needs to change.
The oil industry has been progressive in adopting new technologies in order to gain better rewards from the oil they mine and refine. This increase in productivity has arguably led to the price falling as countries like Saudi Arabia and Dubai have become efficient at extracting oil, costing between $5-6 per barrel to drill it.
As we have seen from Saudi Arabia, their tactic following this crisis has been to keep the price of oil low in order to put the higher cost oil producers out of business. This would then give them control over the oil industry in a more effective way than they are today.
So the only way that these other producers will be able to stay in business, is through technology.
At the moment one of the biggest thorns in their side is the growth of fracking in the US, which has seen the demand of imported oil drop significantly. Therefore, in order for these companies to maintain profitability, they need to improve efficiency and money saving schemes. Below are some of the technologies they could look at adopting to help:
Real Time Analysis
Through real time analysis of a number of metrics, it is possible to optimize drilling. This means that the necessary amount of oil can be extracted without either pumping too little and potentially losing customers to pumping too much and being left with excess that needs special storage.
Additional to this is the possibility to have a centralized safety centre that allows for controllers to have the opportunity to automatically shut down equipment that could be malfunctioning or defaulting. This means that accidents are less likely to happen and reparations/clean up costs are going to not be necessary.
With tiny sensors throughout pipelines and shafts, it becomes possible to make drilling and pumping more efficient. If there are small changes to the way that oil is drilled, it can make significant changes to the overall cost of a barrel when millions are being pumped.
This smart drilling is increasingly being used to improve the efficiency of production and production of oil, driving down prices and allowing companies to increase their profits.
Labour costs form a large expenditure for many of the more expensive oil producers. Especially with US and European producers, they are restricted in the amount that can be saved on labour costs thanks to minimum wages and worker rights.
Therefore, as they cannot decrease the amount they are paying their employees, they need to maximise the amount they are doing to justify their wages.
This is done through optimizing their workforce to perform tasks that have the highest importance. This is done through monitoring where work needs to be done and sending people there, whilst noticing where workers are not needed as frequently and redistributing their workforce accordingly.
Automation means that machinery can pump oil by itself, whilst monitoring pressures and other important metrics to maximise efficiency but minimizing waste. It also means that the workforce who may have been working on that particular area can be redistributed accordingly to improve production in other areas of the business.