Navigating a market in transition

For the past two years, much discussion has focused on the question of when the market will recover. Given how the price of oil impacts our industry, our companies, and our employees, there is little doubt that this should be foremost on our minds.

Transition points. But, as we approach what hopefully is a recovery point, we must think beyond the immediacy of the marketplace today. It is time to consider impending industry and societal transitions, how they will impact our companies, and how we will navigate these changes. For the oilfield service, supply and manufacturing sector, we are impacted while leading the change. This position makes the stakes ever greater.

Today, like no time in our industry’s history, PESA member companies are technology leaders. But they are more than just leaders—they are developing disruptive technologies that should be mentioned in the same breath as self-driving cars, gene-based medicine, and others. This has resulted in efficiencies that have enabled the industry to navigate the downturn, and, moving forward, it will enable us to build on the revolutionary combination of horizontal drilling and hydraulic fracturing.

Critical to these efforts is Big Data and its analysis. Sensor technologies and analytical systems will increasingly drive efficiency and productivity. Taking these efforts one step further is the emerging potential of automation across the oil field.  This has important benefits, especially for safety, while continuing efforts to reduce the cost per well.  

Talent. From the downturn to new technology, we have been forced to re-think how we engage our greatest asset, the men and women of our industry. Without them, our core entrepreneurial spirit and commitment to safety would be nothing more than words on paper. For companies across the service, supply and manufacturing sector, this transition and disruption offers an opportunity to empower our employees with that entrepreneurial and purposeful spirit, much in the same way as was done by start-ups from Silicon Valley and Austin. 

Focusing on what impact employees have within our companies, and on our industry’s global image, will be critical to attracting future talent. We must be proud of the fact that our industry’s work not only enables every iPhone and cancer treatment, but it is also in the front lines of the fight against global poverty. Thus, talent is crucial moving forward.

Regulatory matters. The transition is not happening within a bubble.  Societal trends, in the form of shifting behaviors and new governmental requirements, are forcing further changes. The most apparent emergence can be found in governmental regulations across the globe.  Whether it is the new Well Control Rule offshore in the U.S., proposed restrictions on hydraulic fracturing in Colorado, or methane regulations in countries around the world, the impact of these requirements on our day-to-day activities cannot be overstated. 

It is important that our industry, including the oilfield service-and-supply sector, be engaged with the agencies proposing these rules, ensuring that they are fully informed about our work. Many of these new rules are empowered by a shift to lower-carbon energy sources. This is more than subsidized solar or the signing of the Paris Agreement—Germany has pledged a goal of an emissions-free car fleet by 2030. Even in China, demand for renewables is helping growth in this sector exceed all other energy sources. 

While oil and natural gas will continue to be critical to global economic development, especially as the demand for electricity is forecast to double by 2060, it is critical that we bring our industry’s commitment to innovation and entrepreneurial spirit to helping solve these emissions challenges. Helping society navigate these challenges is critical to our industry moving forward. If we are not working on solutions, a more dangerous trend looms, which not only threatens our industry’s license to operate, but also the continued economic advancement of our society. 

The emergence of movements which seek to restrict access to the resources the world needs, whether by opposing necessary pipeline developments or even campaigning to restrict access to oil and gas reserves, need to be addressed with the truth of our actions and the benefits our endeavors bring to society.

Throughout our history, the oil and gas industry has brought about transformation. We have always navigated these transitions, whether in our industry, alone, or across society. As we face the challenges of tomorrow, we must not shy away from directing our talent, our technology, and our spirit toward navigating them, both for the good of our industry and society.