For the past decade, the US has seen a remarkable resurgence of its energy industry through the advances of exploration technology in its shale plays. This revitalization has brought unprecedented prosperity, not only to the oil and gas companies, but to the communities in which they operate. Unfortunately, as anyone in the industry with a knows, these times of explosive growth are inevitably followed by periods of constriction and austerity. Such is the landscape in which we find ourselves today.
The energy community has, over time, grown accustomed to these cycles, and the reaction is predictable and swift. When prices begin to fall the traditional playbook is dusted off:
- Eliminate all non-essential operations
- Aggressively work with vendors to reduce rates on those functions that must continue
- Reduce headcount in all aspects of the business
- Clamp down on operational processes to reduce waste and asset losses
- Cut deep, cut everywhere
- Do more with less
These time-tested approaches can lower costs, but they often have an immediate detrimental impact on a company’s ability to operate effectively. The intelligent implementation of technology, however, can achieve those immediate cost reductions, without the negative impact on operational control.
As surely as the price of crude oil falls and the market constricts, the pendulum will at some point begin to swing the other direction. Are the same cuts and reductions in workforce going to be an obstacle to a timely response? How can a company break out of the cycle of cut and rebuild, constrict and grow? How can they turn a market downturn into an opportunity for “sharpening the saw”, laying the groundwork for the long haul?