8 Challenges That Canadian E&P Companies Are up Against Today

Oil and gas organizations must be willing to create and embrace change
 

The saying “lower for longer” has officially reached cliché status, but that doesn’t make it not true. Canadian E&P companies are trying to make things work with an oil price that’s teetering in the mid-$40s to mid-$50s range, and it doesn’t look like that price is going to make any drastic leaps any time soon.

Some challenges are created by low prices while others are made, well, more challenging because of them.

Here are eight of those challenges:

• Reduced staff
• Loss of industry knowledge because of staff cuts
• Overworked staff
• More government regulations, which create more reporting requirements
• Constant demand for reducing operating costs (Opex)
• Aging technologies
• Large well counts combined with lower operator counts
• More automation but less data validation

The question is, how can these companies generate positive netbacks in today’s low-price environment? Most companies have already reduced their Opex as much as it can be reduced. They have asked for an received discounts from their service providers and vendors. So what now? Where’s the next round of savings going to come from and how can operators be more profitable? 

One solution is to become more efficient with fewer people. This is the reality of the market today – staff cuts have forced people to take on more work. The worker has three choices:

• To continue doing their job the same way. However, they’d need to put in long hours to get the additional work done, which usually leads to employee burnout.
• To stop doing a good portion of their work demanded of them. This would obviously lead to poor performance and possible termination.
• To find more effective ways to do the work required of them.  

Clearly, option 3 is the best one. Today, oil and gas workers at every level are being asked to think outside the box and come up with innovative solutions. Here are a few ways innovation can be achieved:

• Take an idea used in different geographical locations and adapt it to your own locations.  
• Take ideas from different industries and adapt them to your industry.
• Take multiple ideas together to come up with a new and better idea.  

Companies are challenging their workforce to think up new and innovative ideas, but this is sometimes easier said than done – oil and gas companies are notorious for being slow to adapt to new ideas. Concepts must be proven over and over again by forward-thinking companies before they’re adopted on a larger scale. Take horizontal wells, for example. Oil and gas workers were aware of the concept of horizontal drilling as far back as 1920. However, because of technological limitations, it didn’t become economical until the 1980s. So, many decades elapsed before it became the industry norm.

Can we take that long to put new ideas into practice? I don’t think we can afford to. Current market conditions are forcing us to implement changes faster. Technology changes fast as well. E&P companies need to be ready to embrace these changes. Those that do will be the survivors and those that don’t will be a footnote in history.

So where are the industry differentiators coming from today? We have new software that reduces the grinding work of gathering data from multiple systems for analysis in Operational Intelligence applications. Within these systems are predefined workflows that have proven to be effective. Instead of an engineer spending weeks collating data, they can now spend more of their precious time investigating and analyzing this data.

Electronic flow measurement (EFM) and remote-monitoring systems are reducing the need for lease operators to visit every location. This allows them to optimize their time by focusing on locations that need the most attention.

These are just a couple of examples of what can be achieved today with a little ingenuity. Today’s challenging market conditions will continue to breed new processes and new ways of doing business in the E&P world. We just need the ability and foresight to embrace these changes in a timely fashion.

What are you doing now that you weren’t doing two years ago? How is your company handling the changing environment and improving its processes to navigate today’s oil and gas challenges?
 

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About The Author
Bob Blomme has been working in the oil and gas industry for 23-plus years and with field data capture systems for the past 17 years. He holds a degree in Mechanical Engineering from the University of Saskatchewan. A husband and father of three boys and a girl, Bob is the president of his own consulting company, Sunset Solutions Consulting.