1. Face industry challenges efficiently and effectively
Like many markets, Oil & Gas prices are cyclical. When prices are high, it’s great. When prices drop, many companies struggle. Companies that can be flexible in both situations will succeed. Organizations that pile on the debt or purchase costly assets with high operational costs when the market is good will struggle when prices then fall. Therefore, managing investments in a smart and efficient way will lessen the impact of market disturbances.
The Oil & Gas industry is challenged with becoming more efficient while keeping or improving process safety. When markets are in a more favorable position, many operational risks are driven by the potential losses in case of a failure in critical equipment. The last positive cycle of commodity prices made the industry risks heavily driven by financial impact, consequently driving the asset strategies to prevent such events. The current market situation is a golden opportunity to tune the strategies once more, taking into account that financial risks are no longer driving many existing strategies. This means that there are opportunities of deploying less aggressive strategies, which then reduces costs. And, companies that can adapt fast are able to preserve profits without jeopardizing safety.
Even if your company is doing well when it comes to profits, you cannot ignore what’s happening today. Ignoring current conditions and challenges will only set your organization up for failure down the road. Even the best oil companies must adapt to a sharp decline in prices. And increasing output in profitable lines and decreasing output in lower profit sectors where to start.
2. Build strong business relationships
When it comes to profitability, it really isn’t always just about the bottom line. Strong business support can be key to your organization’s future success. Hiring the right employees from your immediate area can impact the local economy and even attract foreign investments down the road.
Proving environmental responsibility, by embracing green technologies, can also go a long way with your host government. This community-focused sense of responsibility can build a strong business relationship for long-term planning and investment.
It’s also very important to establish strong relationships with strategic vendors in order to promote sustainability throughout the entire chain. Companies must partner and work together with innovative contracting models to assure more efficient and profitable operations for all parties.
3. Implement Operational Excellence programs
Operational Excellence is an integral part of any organization’s success. It shouldn’t matter if you’re part of the executive leadership team or an employee working on the floor of a facility, implementing Operational Excellence programs can enable and empower all employees to understand how their specific role impacts business objectives and, ultimately, profits. When different principals, systems, and tools come together, overall performance metrics can be improved.
Implementing the latest technology enables the ability to transform data into information that drives positive business decision making and allows for efficient knowledge transfer, seamless communication, and performance review. Operational Excellence programs are also bringing the management of physical assets to the layers of corporate governance—establishing harmonized practices to be deployed across production facilities.
4. Utilize real-time analytics to impact business decisions
Managing big data is not easy. In fact, a lot of data goes unused or is under-used by asset-intensive companies. This is usually due to a lack of resources, both technological and human. But with the right tools, people, and systems, organizations can use its data to drive business decisions. It’s even better when these tools can work in real-time, making decision making more proactive and productive.
5. Be sensible about investments
While some companies are still recovering from a long period of low oil prices—which caused a domino effect in the hydrocarbon industry—market leaders are positioning themselves wisely thorough investments that are preparing them to be more efficient on the next positive cycle in the industry. Traditional investments in expansions, acquisitions, and turnarounds are very important, but investments in processes, people, and technology are fundamental to prepare the business to take full benefit of current and future opportunities.
Navigating market conditions is never going to be easy, especially when times are tough. Implementing the right systems, processes, and performance can enable Oil & Gas companies to react in a more positive way. Asset Performance Management from GE Digital enables asset-intensive organizations to connect disparate systems and use integrated data to create intelligent asset strategies that increase capacity, reduce asset failures, and continuously improve operational performance.