Oil And Gas Economic Status: Time to Evaluate and Strategize

Although the oil and gas industry is still in the mode that I commonly refer to as "suck mode" there is a silver lining in it. I would hope all companies associated with the industry are taking advantage of the time and evaluating and developing strategies for the next 10 years. There is a change coming! How do I know? I'm a good guesser or maybe I can read a crystal ball or throw a bunch of chicken bones on the ground and predict the future. No, I'm here to tell you, none of that works. I tried. Ummm.....I mean a friend of mine tried, yeah that is right, a friend gave it a shot. He said none of those things worked. As always, everything you will read here or anywhere else I post information comes solely from my own personal perspective based on my experience, knowledge, and intuition (gut feeling). Take it for what it is worth. Only history will tell how right or wrong I am.

I started seeing the changes in the clients' approaches to their projects start somewhere between 5 and 7 years ago. The implementation of more stringent oversight on contractor bids (started leaning toward the lower bid submissions), inspection included. Implementing closer tracking of materials and inventory for new construction projects, and pushed for tighter schedules. Narrowing up pipeline right of ways, and disturbing less ground for stations and other assets to save time and money. I have also witnessed more situational changes to their procedures, specifications, and policies for the sake of scheduling and/or cost. These trends continue today.

Although none of these things are by any means bad approaches to construction projects, however, there are some hidden caveats. Leaning toward and considering the lower bids for construction and inspection lowers your quality of the product. I know everyone hates to hear that statement but in reality, there is nothing truer said. You get what you pay for. Instead of exchanging quality for lower cost, seek a strategy to keep quality and still lower cost. There are a lot of individuals out there who can probably bring something to the table that can make that strategy come to fruition. You just have to search them out.

Instead of closing up work areas for your assets to be established on, thus creating additional safety hazards to contend with and in turn, creating change orders from the contractor, devise strategies and contingencies to eliminate these pitfalls. Understanding that the clients can supersede their company directives at any time, it is my opinion that this course of action should be very limited. It is possible that once this "door" is opened it can create a habit that can generate inconsistencies within the groups of personnel associated with the construction project as well as the client's individual departments leading to miscommunications of required work practices.

So, while the industry is in "suck mode", clients, contractors, inspection firms, vendors, etc. should all be reviewing data from their past 5 years and looking for "budget leaks", inconsistent personnel, and failed company approaches and seeking alternative strategies toward better control on costs while still building their brand. It will take some thinking "outside the box" to prepare for the next 10 years in this industry. I have seen a ton of money from all entities going out in so many different directions and most are easily rectified with very little changes needed. The winners in this industry over the next 10 years will be those entities who can be the most creative with their strategies and act on them the quickest. 

To all the employees in the oil and gas industry, and I am talking to everyone from the office admin to the CEO to the labor humping skids down the ROW, you too will have to be creative and implement strategies to keep up with the changes that are coming. Some of you have already started and don't even know it.