Fear, Uncertainty and Doubt over Oil Highlights Need for Efficient Operation
The price of oil, steady for the past several years above $100 per barrel, has plummeted in the past few months by over 50% to under $50 per barrel. Speculation on the future is intense. Some draw comparisons to the 1986 downturn, when a four-month, 67% plunge left oil just above $10 a barrel and prices took over 15 years to recover. (Source: http://business.financialpost.com/2014/11/26/fears-of-opec-price-war-evokes-ugly-memories-of-1986-oil-bust-for-u-s-drillers/?__lsa=7cb1-0d50). Others anticipate that prices will recover in the near future. (Source: http://www.bloomberg.com/news/articles/2015-01-16/iea-sees-oil-price-recovery-cuts-2015-non-opec-output-estimate)
The root cause of the price drop is an imbalance between supply and demand. Production in the US has grown dramatically with the advent of shale while relatively stability in the Northern Africa and the Middle East has allowed countries like Libya to bring nearly 1 million barrels per day back online. Russia is recording record months of production and OPEC has refused to cut production. This flood of production has swamped the tepid demand growth with sluggish demand from emerging economies, such as China, and reducing demand through much of Europe and the US. With this imbalance and pricing pressures, many oil companies are scaling back exploration and drilling investments for 2015 and are focusing on reducing cost and improving efficiency in currently operating plays. So you can’t control the price of oil, but you can tackle the cost of doing business by improving efficiency. How? You can start by minimizing your maintenance expenses and implementing field-wide monitoring, in turn reducing operating expenses and improving your efficiency. With Coriolis meters, you cut maintenance immediately with no wearing surfaces or parts to replace. You can engage Emerson Lifecycle Services to monitor meter performance and identify process upsets quickly, allowing your production crews to focus efforts on the wells that need attention rather than traveling to remote locations looking for problems.
We all wish we had a crystal ball to show us what will happen with the price of oil; but, whether the industry is rapidly growing or trimming for efficiency, Micro Motion and Emerson will be here to support your needs.
What have you done to improve efficiency? Contact me to discuss your challenges and find out more!