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Prolonged commodity price declines forced
companies to remove operating costs, create
innovative financing options, and address supply chain efficiency. New found discipline is
yielding substantial results and migrating into
deepwater operations. Consequently, deepwater break-even economics, and general offshore
results, have changed tremendously.
“Offshore advantaged” geographies are
expanding. Recently, both Mexico and Brazil
concluded successful auctions. Additionally,
the Mediterranean, especially offshore Egypt
and Israel, is becoming an increasingly attrac-
tive natural gas play to supply Europe.
The authors also expect new approaches
in offshore oilfield service operating models.
Continued improvement in service company
design and implementation is necessary to
enhance efficiency and reduce costs. Tech-
nology advances, the creation of larger, more
focused service firms and fully integrated
service packages increase offshore viability.
Finally, offshore projects – like most other
oil and gas projects – will be evaluated with environmental and climate change implications
integrated into decision-making processes.
Offshore investments necessitate a long-term
view due to cost and timeline. For this rea-
son, companies will increasingly incorporate
regulatory risks related to climate change in
their cost and benefit reckoning, especially
regarding “difficult to reach” oil.
Digital technology, such as robotics and au-
tomation, will rise in the offshore market and
is expected to be a big profitability lever. At the
recent Baker Institute Global Energy Summit,
one speaker suggested deepwater drilling
costs can be cut in half by new technologies,
such as digital equipment monitoring.
To capture the full emerging technologies
benefit, companies need a smart combination of
both human and digital labor. Through intelligent
automation and a free-flowing ongoing process,
companies can bring together wide-ranging
technologies: social, mobile, analytics, cloud
computing, and intelligence-driven automation.
Integrating across these technologies as well as
combining them with the human workforce can
deliver major value across the enterprise.
Digital labor will automate many routine
tasks, reduce costs, and free employees to
focus on improving efficiencies and other value-
added activities. But E&P companies need to
embrace digital labor across the enterprise
through a comprehensive digital strategy rath-
er than attempt piecemeal rollouts in selected
back-office functions. Key to these step-change
opportunities is elevating digital strategy to the
board room and C-suite, where it can be given
the proper resources and attention.
As digital becomes more commonplace, the
skills employees need may also shift. Therefore,
digital strategies must include a dedicated mission to train employees and recruit new talent
to ensure the proper digital skills and mindset
are integrated throughout the company. Smart
operators will recognize a more collaborative
organizational structure is possible, and that
employees in many functions will require new
skills and mindsets. It will not be enough to sim-
ply install software and equipment; companies
will need to rethink and restructure how they
approach E&P from start to finish.
The offshore outlook
The potential for offshore to deliver significant
returns over a long timeframe makes it an attrac-
tive option for companies seeking higher value
opportunities. Already, offshore cost cur ves have
changed tremendously. To maximize offshore
(including deepwater) reser ves potential – espe-
cially in a lower-price environment – companies
must accelerate their adoption pace and integrate
new technology and processes to reduce costs
and enhance profitability. •