Getting the Most of the Downturn for a Brighter US Unconventionals Future

Getting the Most of the Downturn for a Brighter US Unconventionals Future

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Business

Getting the Most of the Downturn for a Brighter US Unconventionals Future

Prices go up and prices go down. Oil and gas markets have always been volatile, and over the years the industry has learned to live with this volatility. However, in an industry where the highs and lows of economic and commodity price cycles have always posed challenges, 2020 has proved to be more disruptive than previous downturns. While the spread of COVID-19 shook global markets, the US oil and gas industry saw an unprecedented decline in energy demand. Together these challenges and uncertainties are causing oil and gas organizations to discover how they can not only remain competitive but emerge stronger from this downturn. The key may be to see the downturn as an opportunity rather than a threat. Here’s how you can get the most of the downturn for a brighter US unconventionals future.

Oil and Gas Challenges

The challenges facing the oil and gas industry come at a time when many upstream companies were already struggling to create sustainable value. Upstream companies today are confronted with very competitive markets alongside increasing business complexity, and unfortunately, cutting costs can only do so much within a down market. Instead, there must be a new vision of what value creation means for these companies.

Historically, conventional onshore oil sources were preferred because they are less expensive than unconventional sources, and unconventional oil and gas were only associated with relatively high prices when costlier methods of extraction could be economically justified. This is no longer the case. Driven by economic considerations and new technological developments, unconventional oil and natural gas extraction is becoming more common.

Unconventionals are providing production companies with the opportunity to improve operating practices with the ultimate goal of reducing total OPEX. Moreover, they can compensate for oil and gas production declined by optimizing production from existing wells in areas where the potential production uplift meets the investment criteria.

Opportunities for Improvement

The economic climate surrounding the oil and gas industry has often driven fundamental changes, and operators are once again facing a paradigm shift. This is an opportunity for operators, especially shale players, to perform detailed lookbacks to identify gaps, opportunities for improvement, and best practices as internal resources become available due to substantially lower drilling and/or completion activity.

However, realizing this opportunity will require expertise and experience. Decades of oil and gas production has seen companies focus on developing conventional, or easy, resources first, followed by deeper resources, those in harder to reach areas, and finally within the source rock itself. Operational leadership should look to partner with a highly specialized petroleum engineering and technology firm to secure the knowledge needed in key subject matter areas such as well productivity enhancement, production system optimization, corrosion management, and solids control in addition to hydraulic fracturing.

A new era is here and with it a new opportunity. At Inteleum we have the experience to keep your conventional and unconventional assets producing at their max potential and efficiency. We are a petroleum engineering and technology firm providing expertise and solutions in unconventionals, including hydraulic fracturing design and optimization, flow assurance, corrosion management, production system modeling and optimization, and well productivity enhancement. We are passionate about delivering cost-effective solutions while introducing and further developing game-changing technologies.

Key Takeaways

  • 2020 has proved to be more disruptive to the oil and gas industry than previous downturns.
  • The spread of COVID-19 shook global markets and the US oil and gas industry saw an unprecedented decline in energy demand.
  • This is an opportunity for operators, especially shale players, to perform detailed lookbacks. However, realizing this opportunity will require expertise and experience.
  • At Inteleum we have the experience to keep your conventional and unconventional assets producing at their max potential and efficiency.

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