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Major Roadblocks to Achieving Operational Excellence in the Oil and Gas Industry

The current landscape in the oil and gas sector is pressurizing players in the industry to re-evaluate their operations. Furthermore, oil and gas companies are also driven by cost-containment and sustainability challenges.

To deliver and maintain a superior level of operational excellence, it is imperative for oil and gas companies to consider some critical factors including safety, reliability, productivity, and cost optimization. These factors play a crucial role in determining the economic viability of a drilling program in a given set of market conditions. At the same time, the growing level of complexity and scrutiny in the sector is increasingly creating roadblocks for companies in the sector to extract maximum benefits from the available opportunities for revenue growth. Oil and gas companies are also faced with the challenge of altering and realign their operations with the rapidly changing market variables. These factors coupled with a cut-throat market competition are driving a renewed focus on achieving operational excellence among oil and gas operators. In this article, experts at Infiniti Research have listed out some of the key operational excellence challenges facing oil and gas companies and also defines how to avoid them.

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Gaining visibility into complex operations

Some of the top oil and gas challenges include challenging work terrains, price volatility, regulatory and compliance requirements, and varying educational skills of employees. For effective cost containment and to ensure better employee performance, it is important for oil and gas companies to attain greater visibility into their operations. Adopting integrated operations can be useful in enhancing reservoir recoverability, optimization of production, and reducing safety risks in the oil and gas industry.

Dependency on third party suppliers

Even some of the biggest oil and companies rely on third party suppliers for specialist equipment and expertise relating to oil and gas supply chain. These oilfield services platforms perform critical business functions for companies in the oil and gas sector. This means that any inefficiency caused by one company can have a devastating effect. Additionally, inconsistency in collaboration and communication can slow down projects, thereby giving rise to increased inefficiency. By leveraging solutions such as cloud-based collaboration platforms, oil and gas companies can share comprehensive planning and forecasting information and also standardize their inventory management.

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Employee onboarding, retention, and training

This is one of the most critical issues facing companies in the oil and gas industry. The market for good talent has become highly competitive, especially due to the growth and demand for talent in oil and gas from emerging economies like India and China. To make it worse, the growing rate of retirement of the industry’s highly experienced employees are adding further pressure. Therefore, it is essential for oil and gas companies to look for ways to retain their skilled labor through robust learning and development opportunities.

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Spearheading Transformation in the Oil and Gas Supply Chain: A Guide for the C-Suite

oil and gasThe growth of oil and gas supply chain companies has been showing a trend of steady decline over the past couple of years. As the supply chain spending by operators has been cut back due to crumbling crude prices, the Oil Field Services and Equipment companies (OFSE) have been losing business. The companies in the oil and gas industry have cut down costs and, in some cases, made changes to their business models to cope up. Here are some strategies that experts at Infiniti envision will change the current state of the oil and gas industry companies and adapt to the changing environment.

Commodity-price fundamentals are challenging in the short term, requiring executive teams to constantly reevaluate mid- to long-term expectations. As a result, companies in the oil and gas industry are confronting significant strategic challenges and complex decisions. Request a free proposal to know more about our solutions and how we can help oil and gas companies formulate sustainable business strategies.

Cost-cutting

The oil and gas industry is one such sector that has grown exponentially due to soaring prices over the years. However, the current oil and gas industry landscape and the need to cut down prices have come as a big blow for oil and gas companies. The industry has been faced with multiple years of cost inflation, this rising expenditure per barrel, and high break-even levels. Operators are now rediscovering the spirit of efficiency to overcome these challenging times. For instance, independent operators in the US onshore raised production per well while lowering cost per barrel by using improved horizontal drilling techniques, and longer wells with more frac stages, along with super fracking, where drillers pump a lot more sand into their wells. Tactical initiatives such as project postponements, expenditure cuts, and staff reductions were given prime importance, and OFSE firms responded by cutting back on their own service and manufacturing footprint to cope with less activity, lowering their costs for solutions delivered.

Collaboration

Collaboration could prove to be an effective strategy to lower costs and simplify contractor management in the oil and gas industry. Many services and equipment purchases currently are outsourced to several different providers. This often results in complexity and a fragmented supplier base. Multiple OFSE companies are now bringing these services in-house, with integrated offerings reducing coordination costs. This can result in significant cost savings. While some oil and gas companies are developing integrated offers in-house, many also are partnering or merging with others to provide a wider range of services.

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New revenue models

New revenue models have emerged in the oil and gas sector. This includes performance-based contracts that combine equipment and services and participation in project financing. This allows oil and gas companies to give operators more flexibility by reducing their cost base and need for investment during challenging times. Although this results in more capital expenses for OFSE providers, it also can create a more stable income flow.

Investment in new technologies

Investments in modern technologies are helping oil and gas companies to capture new growth and attain sustainability. Today’s low oil prices have created a need for efficiency, which highlights new technologies that can drive efficiencies albeit at a limited investment cost. Many OFSEs now are redesigning equipment using modular designs to drive out inefficiencies and attain maximum cost reduction.

Our solutions can help oil and gas companies to manage uncertainty and improve performance through analysis, insights, and benchmarking. Learn more about our solutions.

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Biggest Challenges Facing Oil and Gas Companies in 2019

The oil and gas companies operate within complex national and global frameworks. Although expansion into new geographies such as ultra-deepwater drilling is opening up new avenues for revenue growth, it is also simultaneously increasing the complexity and risk of business operations. Moreover, the dynamic regulatory frameworks imposed by various national governments on oil and gas companies is adding to the scrutiny within which oil and gas companies are operating in.

Additionally, factors like China’s gradual shift away from coal and an insatiable appetite for liquefied natural gas (LNG) will bring unusual challenges to the marketplace by the end of this year. In response, top oil and gas companies and industry leaders will need to review their strategy to factor in a widely anticipated slowdown in economic growth, an increasing focus on renewables, a likely trade war, and tension between the U.S. and Iran.

Oil and Gas Industry Challenges

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Impact of trade wars

The 25 per cent hike in steel tariff that was meant to drive jobs back to the United States and encourage domestic steel producers has consequently led to a rise in the price of specialty tubing and pipelines. This has given rise to the possibility of cost inflation in future oil and gas projects and turnarounds alike. Increased steel costs eventually have an impact on the overall price of pipeline and will be reflected in a gradually increased price for products in the oil and gas industry.

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Reducing costs to remain competitive

Producing at a lower cost to stay competitive in the market is one of the key challenges facing oil and gas companies. Optimizing production systems and environmental utilities on the current operating sites is, therefore, a priority for oil companies. This would help maximize production efficiency, reduce the costs of extraction and refining and thereby offset the exploration costs.

Sustainability challenges

In order to ensure sustainability, oil and gas companies are increasingly looking to extend the life of mature sites and are also compelled to seek new sources of oil or gas for which extraction, transport and refining are highly complex and costly. To achieve this, they also need to achieve 100% reliability of their plants which includes no unplanned shutdowns, increased output, and secure industrial assets.

Infiniti’s expertise in offering market intelligence solutions have made the company a market leader in helping top companies around the world to overcome their key business challenges. Get in touch with us to know how our solutions can help your business.

Employee onboarding and retention

With an aging and shrinking talent pool, oil and gas companies will have to invest more than ever to attract the best people to their business. Furthermore, as specialized experience lies predominantly with the older age groups, oil companies face critical challenges in recruiting and training the next generation and matching the staffing demands of a starved sector.

Learn more about Infiniti’s portfolio of services for oil and gas companies.

Read this case study to learn how Infiniti’s market intelligence solution helped an oil and gas company

Infiniti’s Industry Risk Assessment Engagement: How a Pressure Control Valve Manufacturer Monitored Their Market Attractiveness

As the end users of pressure control valve become more complex and demanding, manufacturers and suppliers have been forced to find better, more efficient processes.

While engineers continue to be the forces behind new innovations, companies have started realizing the importance of other people within the company, who are needed to pinpoint what’s needed and to assure that the results meet customers’ demands. Additionally, a good R&D is about fostering creativity, which is much more effective when a group is working together. However, the challenge is to bring the group together and allow them to speak candidly to solve the problem.

The globalization of clients over the past five years has been rapid in pressure control valve manufacturing industries and they are now expecting reliable levels of service and support worldwide. As a result, companies in this industry will require established global suppliers to keep pace in the market and meet their growing and unique demands.

Business Issues

  • The client: A leading pressure control valve manufacturer

A leading pressure control valve manufacturer based out of the United States approached Infiniti to develop a technique to identify the potential risks in the industry and benchmark competitors’ offerings. With the help of Infiniti’s risk assessment engagement, the client also wanted to evaluate the relative risk in the industry and effectively manage their risks while they operate, grow, and improve businesses profits.

How Can Risk Assessment Help Companies in the Oil and Gas Industry?

Industry risk assessment engagements help companies in the oil and gas industry space to efficiently streamline business risks and deliver a one-size-fits-all solution. Moreover, a well-executed risk assessment plan can help pressure control valve manufacturers to make informed decisions and protect their assets. Also, with the aid of an effective industry risk assessment solution, businesses can profile the competitors and their product offerings and improve the time-to-market for the products being offered.


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Client Journey

Infiniti’s risk assessment experts carried out both qualitative and quantitative research with leading stakeholders in the oil and gas industry to help the client enhance market effectiveness. The risk assessment experts at Infiniti also compiled information from prominent secondary sources such as paid industry databases, company presentations, and industry forums to help the client apply risk mitigation strategies in an organized manner.

Solution Benefits and the Business Impact

The pressure control valve manufacturer identified factors impeding market growth and implemented an effective risk management strategy with the help of this risk assessment engagement. Also, with the help of our industry risk assessment engagement, the client was able to monitor their market attractiveness. This further helped the client make checklists of the potential risks and further devise effective measures to reduce bottlenecks and enhance their overall business efficiency.

The Future

The introduction of intelligent pressure control valve positioners with internal capabilities for diagnostics, trending, alarm status, etc., is eliminating the need for external software in many cases. This approach is expected to be more fail-safe and secure for end users in the near future as setting changes must be made physically at the valve positioner. Moreover, maintaining valve history data in the positioner rather than in the distributed control system software ensures that valued information is not lost if the positioner is removed from service.


A must-read case study for strategy specialists and decision makers looking to develop an understanding of the pressure control valve manufacturing space

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A Renowned Crude Oil Manufacturer Leverages Infiniti’s Market Intelligence Solution to Enter New Markets and Minimize the Risk of Investments

The exploration and production in crude oil manufacturing industry face numerous challenges as it addresses growing energy demand, declining production from older reservoirs, the need for sustainable operations, and new resources are harder to reach and harsher environments.

Additionally, the challenges for the crude oil manufacturing industry come at the same time with some fantastic opportunities emerging for the sector. Investing in innovation and R&D is crucial for companies manufacturing crude oil as every company understands, that R&D and innovation is a key to growth and prosperity. However, this position creates severe competition between market-players with sufficient resources for R&D. Furthermore, corporate social responsibility requires crude oil companies to success in each criterion in order to build a reputation as a reliable potential partner for public-private strategic partnerships: cross-sector and government. However, this challenge includes relations with various stakeholder groups, health and safety concerns, i.e. human rights, stakeholder rights, employee rights, community relations, environmental protection, transparency, and corruption issues.

Business Issues

  • The client: A leading crude oil manufacturer

A leading crude oil manufacturer based out of the US – approached Infiniti to gain a comprehensive view of the company’s existing market presence, challenges, customers, and the competition prevailing across the crude oil manufacturing industry space. The client with a considerable number of business units spread across the globe was facing predicaments in understanding the market dynamics and accordingly formulating robust marketing strategies to stay ahead of the competition.

How Can Market Intelligence Help Companies in the Oil and Gas Industry?

Market intelligence solutions help firms analyze the unstructured data and identify the crucial pieces of data that are used to retain customers. Additionally, these solutions help companies in the oil and gas industry space develop customer segmentation based on value, understand precisely how much marketing activity to carry out to which customers and which of their most valuable customers are at a risk of churning.


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Client Journey

Infiniti’s market intelligence experts carried out a unified approach comprising of interviews and discussions with leading investors in oil and gas industry space to help the crude oil manufacturing client understand the target segment and accordingly devise robust marketing strategies. The experts also gathered information from various exclusive sources such as newsletters, paid industry databases, and company presentations.

Solution Benefits and the Business Impact

The leading crude oil manufacturer gathered information on various data sets and analyzed the information across multiple sub-segments with the help of Infiniti’s market intelligence engagement. Additionally, the client gained detailed insights relevant to company’s markets and made informed business decisions. This further helped the client enter new markets and minimize the risk of investments.

The Future

In the next few years, crude oil manufacturing companies will be merrily drilling and pumping away. However, crude oil companies may be smaller and will be extracting almost exclusively unconventional oil such as oil shale and tar sands. This requires more technology, more equipment, and more cost, but is perfectly viable in the foreseeable long term.


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Market Sizing Engagement: How A Drilling Rig Manufacturer Minimized Risks Across Multiple Geographical Locations

Technological innovation, as we have all heard, is taking over the world. There is no exception to that rule in the oil and gas industry too. In digital oil fields, instruments constantly read data on drilling rig conditions and mechanical systems. The information is then evaluated by clusters of computers, which feed results to real-time operation centers that regulate oil flows to minimize downtimes and optimize production.

Companies in the oil and gas industry are facing major challenges in terms of globalization and connectivity.

Today, you don’t need to be a multi-national corporation to have overseas operations and locations, which is especially relevant in oil and gas industry. Globalization has changed the flow of products and goods, expanded sales teams, and aggrandized customer base. Therefore, it has become crucial to devise a technology platform for customers, internal users, and partners to access operations from anywhere in the world, at any time. We live in the age of the ‘now’ customer; who demands quick response times and is well informed. The only way to keep up with customers is to leverage automated platforms and tools that provide control over the entire customer interaction lifecycle, from inquiry to order to fulfillment.

Business Issues

  • The client: A drilling rig manufacturer
  • The client, a renowned drilling rig manufacturer based out of North America, approached Infiniti to carry out a market sizing engagement. The primary objective of the client was to assess the potential for their products across various geographies. Additionally, the client wanted to gain insights into the segmentation strategies by technology, customer type, and end-use application as they were facing issues understanding the complexities of segmentation due to recent uncertainties in the global oil and gas industry.

How Can Market Sizing Help Drilling Rig Manufacturers?

Market sizing engagement helps firms in the oil and gas industry to gain insights into their revenue generating capacity by covering both the historical growth of the market and forecasting the future growth prospects. Firms can also gain insights into the important metrics to understand the potential opportunities and current market performance across the industry.

Summary of our Market Sizing Solution

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Client Journey

To help the drilling rig manufacturer carry out a comprehensive segmentation study on technology, customer type, and end-user application, the market sizing experts at Infiniti followed a comprehensive approach comprising of discussions and interviews with leading stakeholders in the oil and gas industry.

The Solution Benefits and the Business Impact

With the help of Infiniti’s market sizing engagement, the drilling rig manufacturer gained vital information on the target market’s segments. The client also developed a robust business plan and identified the most relevant market segments. This further helped them to find new niche market segments, operate more efficiently, and minimize risks across multiple geographical locations.

The Future

Continuing uncertainties over oil prices, regulations and infrastructure expansions will encourage drilling rig manufacturers to focus on internal operations and rely on order backlogs to generate revenues. Additionally, manufacturers will continue to emphasize on efficient drilling rig and technology, as more efficient machinery typically coincides with higher cost-effectiveness and safety standards.


A must-read case study for strategy specialists and decision makers looking to develop an understanding of the global oil and gas industry

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Market Research Engagement: Helping a Multinational Oil and Gas Company Understand Customer Behavior and Establish Ongoing Trends

Owing to the rise in global demand along with the volatility of prices and stringency of environmental guidelines, oil and gas companies face three main challenges – cost reduction, performance optimization, and improvements in environmental footprint.

Technological advancements, as we are aware, has taken over the world and the global oil and gas industry is no exception to this rule. Deployment of technology has given rise to digital oilfields that use specific tools to read and interpret data on pipelines, wellhead conditions, and mechanical systems. Leading oil and gas companies have even leveraged big data analytics to increase oil production while cutting down on operational costs. However, just leveraging technology to enhance product experiences won’t help companies to completely capitalize on the benefits of innovation.

Moreover, the global oil and gas industry faces major regulatory challenges being a significant consumer of water and energy resources. This acts as a major constraint for oil and gas companies; thereby, compelling them to redefine their extraction, production, and distribution techniques. Also, to obtain their license to operate, oil and gas companies have to ensure transparency in the environmental management of their business activities.

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The Business Challenge

  • The client: A multinational oil and gas company

To understand customer behavior and establish ongoing trends, the client – a multinational oil and gas company, also regarded as one of the ‘Seven Sisters’ – approached Infiniti to engage in a market research study. The B2B industrial organization wanted to understand the market landscape in order to maximize benefits by effectively tapping into the prevailing market opportunities.

The oil and gas client wanted to conduct market research to study the existing market trends and set up newer trends to match consumer needs and preferences. However, their primary objective was to employ a systematic approach to understand the market dynamics – competitors, strengths, weaknesses, and key trends.

Market Research

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Our Approach

Infiniti’s market research engagement helped the oil and gas company to understand customer needs and market trends. The changing market landscape with aggressive competitors posed several challenges for players in the global oil and gas sector. Furthermore, to help the client assess the market landscape and identify imminent market trends, the market research experts at Infiniti conducted a market research study that offered valuable insights on decision-making procedures, market trends, and barriers.

The approach included primary and secondary research methodologies coupled with qualitative and quantitative data collection procedures. The experts also reached out to various stakeholders in the oil and gas industry.

Business Impact

Infiniti’s market research experts offered end-to-end solutions that helped the oil and gas client to better understand the market’s dynamics. In addition, the market research study helped identify potential problems and uncovered several areas for improvements. The oil and gas client also gained insights on existing market trends that helped identify newer trends and align them with customers preferences.

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Business Forecasting

Three Steps to Overcome Challenges in The Oil and Gas Industry

The last five years have been extremely dramatic for the companies in the oil and gas industry all over the globe. With decreasing profit margins, the oil companies are minimizing their capital expenditures which have led to layoffs and resulted in either cancellation or postponement of projects. The massive cost-cutting activities undertaken by the companies in the oil and gas industry is an alarming response that could affect the results of the future business cycles. To overcome these challenges in the oil and gas industryIR_Brochure, the oil companies must reassess the organizational objectives by understanding the oil and gas market landscape. Plagued with existential crisis, climate change, fossil fuel issues, and the hype around minimizing carbon footprints, the oil companies must find an answer to the ultimate challenge – how to exist successfully in a carbon constrained world?

The Oil and Gas Industry: Overcoming Challenges

Organizations across the globe vouch to take actions to minimize global warming and limit the fossil fuel usage. With the limited availability of fossil fuel in the future, concerns over the use of non-renewable resources, exploratory activities, and the oil and gas industry’s attempt at creating a carbon-free economy have increased. This is why the oil companies must devise a plan to overcome the turbulence and market complexity to establish a new environment that encourages business stability and drives growth. What are the three steps to overcome the challenges in the oil and gas industry, you wonder? Here’s what,

  1. The oil companies must review their business strategies and organizational objectives by identifying their strengths and gaining a competitive edge over the other players in the oil and gas industry. Organizations must look for growth opportunities, adopt agile business models, and have a targeted approach, which can help them adapt to the dynamic market conditions. For instance, production and exploration have extremely different approaches where the former requires more investment while the latter involves high risk
  2. Oil companies tend to resort to massive cost-cutting, which leads to an uncertain organizational future. Instead, the companies in the oil and gas industry can direct their efforts and monetary resources towards growth areas to promote and enhance their capabilities. The oil companies must figure out competitive alternatives for oil and gas production by mining carbon footprints and adopting low-carbon technologies
  3. Companies in the industry must exploit and adopt advanced technologies to drive innovation, reduce costs, and create a sustainable environment. The technological advancements can eliminate the requirement for on-site checks by merely deploying remote monitoring for both on-shore and off-shore operations

 

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