In Oil & Gas, 2024 Will Be The Year of Doing More with Less

By Adam Hirschfeld, VP of Sales

We're less than two months into 2024, and the industry forecasts have been coming in thick and fast for the past 6 weeks. Global demand growth is slowing. Shipping costs are soaring due to ongoing conflict in the Red Sea and congestion in the Panama Canal. Activity is down, and regulatory costs are on the rise. Prices will hover around $70 per barrel through the year, according to Deloitte. 

Capex growth forecasts among public Oil & Gas companies are as low as they’ve been for years — and for good reason. So with everything pointing to a very tight 2024, the questions for this year, and possibly more to come, become pretty obvious: How can Oil & Gas companies do more with less? How can operators continue to grow, despite the odds and obstacles?

Here's where the good news comes in: Despite the continuing wave of consolidation sweeping through the industry (like Permian Resources’ recently-announced acquisition of two new properties in New Mexico), you don't have to buy a company to improve the efficiency of your operations. 

You just have to be willing to take action in an area of your business that has come to feel like a burdensome — but permanent and unchangeable — fact of life: the supply chain. For example, the AVL has become an integral part of Oil & Gas operations, and it’s easy to see why. Being able to choose from a finite list of vendors who meet all the necessary criteria mitigates the costs and risks involved with everything from onboarding to compliance. To engage beyond that list would take so much time and effort that it would outweigh any potential benefit in cost savings.

But this traditional way of doing things ties operators’ hands, giving them no access to other data in the region and making all costs feel fixed. Realizing that these costs are not fixed — and that they can be actively managed, leveraged, and improved — is a game-changer.

Does this apply to your business?

To self-diagnose, just ask yourself:

• Do you know you’re paying the right price for goods and services in a given region? 
• Do you feel you have all the data you need to make decisions? 
• Can you evaluate spend and make adjustments in real time, or are you at the mercy of your accounting department coming back with a monthly report? 
• Are you able to evaluate vendors outside of your AVL for just-in-time needs?
• After evaluating vendors outside of your AVL are you able to quickly and easily get them up and running on new projects??

If the answer to any of these questions is “no,” it’s time to dig in. 

For Oil & Gas companies, no other part of the business has this much capital flowing through it, and yet so little focus on performance optimization. Amid the array of intense pressures facing operators in today’s environment, the supply chain is the release valve the industry has been looking for. 

It’s time to meaningfully invest in the capability to not only measure but proactively manage the supply chain and everything it touches. To stop looking at input costs as fixed costs, but costs that can be manipulated — if only operators would take the innovative mindset they bring to the field and apply it to the ways in which they find, evaluate, purchase, deploy, and pay for the things they need to operate.

Until they do, they’ll continue to leave millions on the table every time they step up to the mic for an investor call.

_

Adam Hirschfeld is an industry veteran who worked in field operations and project management before shifting to leadership roles focused on business development in the labor project management space. 
‍

About Workrise
Workrise is the supply chain platform for energy. Click here to learn more about how we unlock greater access, more efficient processes, and rich data to improve how the biggest players in energy find, evaluate, and purchase the goods and services they rely on to operate.

‍