Workrise reports challenges facing the oil & gas industry
As the energy transition accelerates, the oil and gas industry faces inspection and criticism, whilst the global energy crisis turns to it for support.
A new benchmark study commissioned by Workrise in partnership with NewtonX reports on the current state of the oil and gas supply chain. It features responses from leaders ranging from C-level executives to managers with regional scope across the supply chain, operations, logistics, and finance departments from both oil and gas operators and their suppliers, offering insight on the industry day to day.
Challenges facing oil and gas companies
Despite robust earnings in Q1 and Q2 2023, the industry faces unprecedented challenges. The confluence of geopolitics, manufacturing downturns, and declining investments spell a turbulent future, with one leader from a major US natural gas company summarising the general feeling that resistance to change is throttling the industry's potential:
“We have an industry that doesn't like to change. We find things we're good at and we like to do the same thing over and over. There's a lot of reluctance to think outside the box or challenge anything. I would say that we don't have anyone that's consistently advocating for change.”
The report cites other barriers to progress as bureaucracy and human error, alongside:
- Rising costs — even with soaring production numbers due to increased efficiency, costs are surging. A vast majority (80%) report substantial cost increases in all service categories.
- Data — decision-makers are operating with data that's alarmingly low in fidelity, with only 20% of industry leaders feeling confident in their data's reliability.
- Labour and supplier scarcity — competition for skilled workers and dependable vendors is intensifying, leading to project delays and cost escalations.
- Manufacturing and logistics — the aftermath of global disruptions caused by the pandemic still linger, with longer lead times becoming the nightmare keeping 62% of industry leaders up at night.
- ESG — while 76% of respondents anticipate an increased focus on carbon reduction, the move to diversify into new energy verticals faces obstacles, including long standing beliefs in fossil fuel supremacy.
- Technology — as challenges mount, the majority of the industry is eyeing innovative solutions, notably AI and supply chain automation.
Improving oil and gas management
Energy providers feel that the biggest operations challenge that needs immediate improvement is reducing red tape and bureaucracy to empower teams to be more agile, with energy service providers also wanting increased access to quality labour and improved building of equipment/units with shorter lead time.
No supplier reported that they are at less than 60-80% capacity, and 25% of suppliers reported they are at 10)% capacity and have a waiting list for clients, which highlights the continued demand for oil and gas.
“With so many external forces at play, and so much outside of our control, oil and gas companies have the power to make meaningful changes by starting from within,” says Joshua Trott, Chief Revenue Officer, Workrise.
“What becomes clear with this new data is that we are at a crossroads: accept the status quo and continue to bake waste into your operating model, or take proactive measures to strengthen the supply chain. The companies that do so, and evolve to do more with less, will reap the rewards no matter how choppy the water gets.”
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