Challenges and trends in oil and gas
The energy industry is facing a paradox. While global energy use is higher than ever and continues to rise with the advance of technology, the public is aware of the necessity of reducing emissions to ensure the continued habitability of our planet. At the same time, as global fossil fuel resources dwindle, keeping costs down is a vital concern for both oil and gas businesses and their customers.
The good news is that progress is already being made. As technology advances, experts predict we will reach net zero emissions by 2050. Since 2015, the cost base of the oil and gas industry has been lower as companies across the board have implemented more efficient processes. While the price of raw material is out of the industry’s hands, by controlling what they can, they have made their products as affordable as possible.
There are still areas of underinvestment in today’s oil and gas industry that will result in higher prices down the line. Whether by redeveloping current supplies or diversifying to other (and cleaner) sources, the next hurdle will be simply keeping up with demand.
Related to this is the need to inspire confidence in investors. Gone are the days when oil and gas companies could spend beyond their means and still expect returns--now those who consistently avoid risk and boast stable cash flow will find themselves leading the pack.
These factors will be strong influences on industry trends over the rest of this year and in the year to come. Companies will need to emphasise collaboration and innovation to improve technology at the rate needed to lower emissions, costs, and investor risk for long-term success. The key will be transitioning to new ways of doing things efficiently and effectively, with minimal impact to upstream expense.
Reaching net zero emissions by 2050 is a goal that is both within reach and obligatory for every player in the energy industry--bringing companies and consumers together under a common cause. By focusing on this potential, companies can not only reassure investors but open lines of communication with their customer base. The way forward is steep, but clear to all.