Oil and gas production has encountered a world-historic challenge in the form of COVID-19. Oil futures briefly traded in the negative numbers during April 2020. Current oil and gas prices are only just beginning to improve alongside positive news about a potential vaccine for the novel coronavirus. Yet, many major and super major companies are merging in an attempt to survive.
When oil and gas prices are low, the natural imperative for any oil company is to reduce both production and costs. Shrinking supply helps increase demand, helping to return prices to normal. Meanwhile, reducing LOE costs allows the company to husband its war chest, ensuring that it can manage staff efficiently and remain equipped so that it can return to a normal operating cadence once the recession breaks.
In order to take a look at the challenges facing the industry at large, let’s look at a microcosm (albeit a large one) for an example. The Permian Basin, which is still one of the largest oil and gas producing regions in the world, is experiencing new challenges as well as aging and declining production.
Oil companies in the Permian Basin are reducing their drilling operations (or having this necessity forced on them) while also attempting to decrease LOE. Their traditional methods have included:
The problem with the traditional approach is that the COVID-19 crisis is just the latest expression of a new normal in terms of lower oil production and lower gas prices. Producers can’t defer maintenance until production ramps up again because that may never happen. Not only will the pumps go offline, but the infrastructure will also fail in more-or-less permanent ways. There will be no way to resume production once prices return to normal if they ever do.
What’s more, producers can only cut production so much. Our natural gas clients have recently experienced problems because running their compressors at reduced flow rates risks damaging the equipment. Oil producers face similar risks. Running production equipment below normal operating thresholds can cause it to behave in unexpected and undesirable ways—paradoxically increasing maintenance costs at the same time that decreasing LOE is most important.
In a nutshell, using IIoT can make traditional maintenance schedules a thing of the past. Operators can schedule less maintenance and leave equipment running for much longer without interruptions. They can then make more precise repairs and adjustments, resulting in shorter periods of planned downtime. At the end of the day, this single aspect of IIoT can help oil and gas producers reduce their LOE and increase their revenue—allowing them to grow their profits independently of the commodity market.
There are millions of oilfield assets and many are unmonitored, much less optimized to deliver lower operating costs while maintaining top production. Lowering your LOE, operating lean and maintaining safety and regulatory compliance requires a new, digital approach.
Industry analysts report that asset optimization is being rapidly accelerated through the adoption of IIoT. Our experience with producers confirms two things. First, data acquisition from remote assets and digitizing data from field workers is an acute problem in the oilfield. Secondly, the benefits from digital technologies can drive meaningful improvements to operations.
Detechtion is a leader in asset optimization. We accomplish this by delivering a unique product suite of Asset Performance Management (APM), Industrial Internet of Things (IIoT) and Mobile Oilfield Management solutions.
Each product improves oilfield operations. Used together, they enable best-in-class operations, leading to lower operating costs and improved production.
We know our customers’ business because we focus exclusively on Upstream and Midstream Oil and Gas. We deliver digital transformation and optimization of natural gas compression, oilfield chemicals and other production operations, saving our customers millions of dollars per year.
If you feel as though the economic climate has put a ceiling on your ability to generate revenue and appease your investors, reducing your LOE is your only option. With Detechtion, you can add authoritative intelligence to the process of reducing costs and increasing production. Contact us and get started on the path today!