Industry Trends & Challenges

Oil & gas companies face a number of opportunities and threats to their businesses. The companies best placed to deal with a challenge will consider it as an opportunity, whilst those poorly prepared will face the challenge as a threat.

Before the COVID-19 crisis, there were several trends that oil & gas companies were responding to. Some of those have accelerated because of COVID-19 and are likely to continue to be a challenge over the coming years. Those include:

• competition from alternative sources of energy and the transition to electric vehicles
• cyber security, as processes become more digitised
• health, safety, and environment (HSE) – managing compliance with many different regulatory authorities
• improving operational efficiency to ensure profitability
• managing and analysing big data from sensors
• meeting future demand through unconventional resources, including biofuels as well as shale gas and ‘fracking’
• meeting sustainability goals around global warming and the carbon budget, and reacting to reduced demand for fossil fuels
• rising production costs as it becomes more difficult to access the remaining supplies
• securing future oil and gas supply
• the ‘big crew change’ – as around half of all employees are expected to leave in the next 10 years

Fast growing technologies such as machine learning and predictive analytics are opening up new possibilities for oil & gas. Companies that embrace these new technologies will become more efficient and sustainable.  Looking ahead, companies are investing in leading research in converting crude oil directly to chemicals or hydrogen as a possible energy source choice for the future.

What is the current position of the oil & gas industry?

The oil & gas industry in 2022 is recovering well from the setback it experienced due to the pandemic. The reopening of economies and easing of social distancing guidelines means that demand for oil is reaching prepandemic levels, this would indicate oil & gas companies will perform well in 2022.

Sustainability and decarbonization will likely be a key concern in 2022. Many oil & gas companies are anticipated to boost their investment in R&D capabilities and exploit developments in decarbonization and recycling technology.

The energy transition will continue to remain a key talking point in 2022, even with oil prices at a six-year high. History would indicate that when the oil price is high oil & gas companies have less incentive to focus on sustainable opportunities, that is unlikely to be the case this year as companies are taking advantage of high oil prices to fund their energy transition.

The ageing workforce is a big issue in oil and gas because the sector is set to see around half of its existing workforce leaving over the course of the next ten years or so. Additionally, the pandemic and ensuing oil price crash resulted in thousands of job lay-offs in the industry.

Companies need to make sure they recruit, train, and most importantly, keep their young new recruits in the industry. However, hiring new recruits in the middle of an industry wide sustainability transition will not be easy, companies will need to battle the negative reputation the industry has as an employer, with fierce competition from other industries suffering from a labour shortage for the best recruits.

Technology