Adapting to a world of low prices and plentiful supply
Supply is up, demand is down and it looks like the conditions that created the rapid price slump at the end of 2014 will remain in place for the foreseeable future. Whilst Oil and Gas Industry veterans are no strangers to the boom and bust cycle, the slower than anticipated recovery has exposed entrenched operational inefficiencies that need to be addressed. Some industry leaders saw the writing on the wall back in 2014 and began implementing measures to drive inefficiencies out of their business. Others chose to watch and wait, perhaps in the belief that, as in 2008, low crude prices were just a blip and would soon return to the normal $80-$100 range. The message to those organizations is that doing nothing is no longer an option. Producers and refiners can survive, and indeed thrive, in a market where supply outstrips demand (figure 1) but, to do so, they need to rapidly adapt to the industry’s new reality.