The oil and gas industry has always been cyclical. Veterans of the field have lived through more than a few of this industry’s peaks and valleys. So how do some companies make it through the lull and come out stronger than they were going into the downturn?
In a recent New York Times article, “Natural Gas Glut Isn’t Deterring Southwestern Energy,” the company’s CEO Steven Mueller discusses his operation’s strategic, continued focus on natural gas. He believes the profitability of natural gas will again rise. Unlike his competitors, Mueller retains a focus on gas instead of oil, continues to invest heavily in his operations, and enjoys competing in a space where much of his competition has pulled out.
With natural gas at nearly half of what it was less than a year ago, it’s hard not to ask yourself: How does a company like Southwestern Energy remain profitable during a downturn in the oil and gas market?
A big part of the answer lies in cutting costs and improving the bottom line through increasing efficiencies in their processes. The article highlighted some of the results of Southwestern Energy’s ongoing optimization efforts:
- Decreasing drilling time for new wells from 17.5 to 6.7 days
- Reducing operational costs by 12%
- Utilizing the natural gas they produce to drive rigs, instead of diesel
“Efficiency” is the name-of-the-game when prices are down, and as Southwestern Energy shows, it impacts everything from production time to the bottom line. It represents one of the most significant sources of cost savings.
As new technologies continue to emerge in the industry, automation throughout the entire oil and gas supply chain continues to be a growing contributor to these increased efficiencies. Some would even say that automation is the key component to addressing the industry’s production challenges. Data analysis, drilling and wellheads, maintenance, and business operations represent a handful of the most significant automation opportunities, according to McKinsey & Co., a global market research firm.
With this type of connected enterprise in place, oilfield operations technology is converging with business system information technology, creating a more agile ecosystem for managing field operations, making decisions, and fulfilling customer needs.
While oil prices lay low, the players in this dynamic industry will continue to look for ways to reduce their costs and stay competitive. When leveraging automation technologies, being competitive starts by having real-time information, but it becomes a differentiator by having the systems in place to act on that information appropriately and quickly.
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