5 Challenges in Oil and Gas Manufacturing
March 29, 2023
The world consumed roughly 94.1 million barrels per day in 2021. Undoubtedly, the oil and gas manufacturing industry is a critical component of the global energy sector, producing the fuels that power everything from transportation to industrial processes. Make no mistake, the oil and gas industry is no stranger to economic highs and lows. Recent challenges such as COVID-19 coupled with a longer-term decline in oil demand threaten to change how the entire sector operates permanently. However, this industry faces numerous additional challenges, including environmental concerns, price volatility, shifting regulations, and the need to maximize efficiency and productivity.
In recent years, digital solutions and software have emerged as powerful tools for addressing such challenges and improving the oil and gas manufacturing industry. From streamlining operations and reducing costs to improving safety and minimizing environmental impact, digital technologies offer numerous benefits for this vital sector.
In this article, we will explore 5 challenges in oil and gas manufacturing. As well as, how digital solutions are transforming the oil and gas manufacturing industry, and what companies can do to take advantage of these powerful tools.
#1 Environmental Concerns
Environmental concerns have become a significant challenge for the oil and gas manufacturing sector, as the public has become increasingly aware of the impact of fossil fuels on the planet. The risk of oil spills, greenhouse gas emissions, and other environmental hazards loom large, and companies in the industry must find ways to mitigate these risks in order to reduce their impact on the environment.
One powerful solution to the environmental challenges faced by the oil and gas manufacturing industry is the use of digital connected worker platforms like Proceedix. By digitizing procedures and providing real-time guidance to workers, Proceedix helps ensure that safety protocols are followed correctly and that workers are properly trained and equipped to handle potentially hazardous situations. This not only reduces the risk of accidents but also minimizes the environmental impact of the industry. Additionally, by digitizing operations, companies can better track and manage their environmental impact, allowing them to identify areas for improvement and take proactive steps to reduce their footprint. In this way, digital solutions like Proceedix provide a powerful tool for the oil and gas manufacturing industry to address its environmental challenges and work towards a more sustainable future.
If you are interested in learning more about how Proceedix helps companies achieve their ESG goals, please visit this article.
#2 Managing Regulations
Regulations play a significant role in the oil and gas manufacturing industry, impacting everything from exploration and production to transportation and storage. Governments around the world impose a range of regulations to protect the environment, ensure worker safety, and promote fair competition. These regulations can have a significant impact on the cost of doing business, as companies must invest in compliance efforts, adhere to strict standards, and navigate complex legal frameworks. Additionally, regulatory requirements are constantly evolving, which can create uncertainty and require companies to adapt quickly to changing conditions.
One way that oil and gas manufacturers can navigate these regulatory challenges is by using digital connected worker platforms like Proceedix. By digitizing procedures and providing real-time guidance to workers, Proceedix helps ensure that companies comply with regulatory requirements and adhere to strict standards. This not only reduces the risk of regulatory violations but also minimizes the potential for costly fines and legal penalties. Additionally, by digitizing operations, companies can better track and manage their compliance efforts, ensuring that they remain in good standing with regulatory bodies. In this way, digital connected worker platforms like Proceedix provide a powerful tool for oil and gas manufacturers to navigate the complex regulatory landscape and ensure compliance with the various regulations that impact their operations.
Proceedix is a feature-rich software that oil and gas manufacturers can leverage to accomplish such improvements; Workspaces is one example of such features. Workspaces allows enterprise-level companies to create several and seperate sites within an enterprise and author workflows specific to a region or site. This enables oil and gas manufacturers to have executable workflows that adhere to regulations per site or region.
#3 High Operational Costs
It’s pretty obvious to say no matter the industry, the margin between cost and revenue will directly impact a company’s profitability. Even though some generic cost and revenue drivers remain the same throughout all industries, each industry has its nuances. Operational costs are a significant challenge for the oil and gas manufacturing industry, as companies must invest in expensive equipment and processes to extract and process oil and gas. Additionally, transportation and logistics costs can be high, particularly for companies operating in remote and/or harsh environments. As a result, companies in the industry must find ways to maximize efficiency and reduce costs in order to remain competitive and profitable.
One way that oil and gas manufacturers can improve efficiency and reduce costs is by using digital connected worker platforms, like Proceedix. By digitizing procedures and providing real-time guidance to workers, Proceedix helps ensure that operations are conducted in the most efficient and effective manner possible. Especially when comapred to using a sheet of paper. Additionally, Proceedix automatically collects work execution data, which can be used to uncover blind spots in operations and identify areas for improvement. This data can be analyzed to identify patterns and trends, allowing companies to optimize their operations and reduce costs.
By providing real-time guidance and actionable insights, digital connected worker platforms like Proceedix are helping oil and gas manufacturers to improve efficiency, reduce costs, and remain competitive in a challenging market.
#4 Pricing Volatility
According to the U.S. Energy Information Administration (EIA), the price of crude oil has experienced significant volatility in recent years. For example, in 2020, the price of Brent crude oil fell from over $60 per barrel in January to less than $20 per barrel in April due to a combination of oversupply and decreased demand caused by the COVID-19 pandemic. Political instability in major oil-producing countries, such as Venezuela and Iran, has also contributed to price volatility in the industry.
Political instability is a major contributor to pricing volatility even though it is outside of a manufacturers control. Despite this, there are many other contributing factors to operational costs that are within a manufacturers grasp. Such as:
#5 Supply and Demand
Supply and demand is a major challenge for fossil fuel production. Fluctuations in demand, whether due to economic downturns or changing consumer behavior, can have a significant impact on the price of fossil fuels. This can cause a ripple effect throughout the industry, impacting not only producers but also suppliers, transporters, and other stakeholders. Moreover, the rise of renewable energy sources and increasing regulatory pressure to reduce emissions are leading to a long-term decline in demand for fossil fuels. This means that fossil fuel producers must adapt and innovate to remain competitive in an ever-changing market.
Connected worker solutions like Proceedix enables digital transformation to help oil and gas producers mitigate the consequences of supply and demand in their market. By collecting real-time execution data and then exporting such data to analytic tools (e.g. KPI360, Power BI, Etc..), producers can better adjust their production in accordance with their predicted fluctuations in demand.
Additionally, connected worker solutions can help improve safety and reduce the risk of accidents. For example, using Proceedix to remind and request confirmation that an operator is using the appropriate personal protective equipment. This reduces disruptions to production due to unforeseen events. By adopting such technologies, fossil fuel producers can increase their resilience in the face of supply and demand challenges and position themselves for long-term success in a changing market.
Proceedix is a Symphony AI solution that helps guide businesses towards the next level in their digital transformation. Let Proceedix demonstrate the measurable improvements a digital transformation has in limiting the most prevalent challenges in oil and gas manufacturing by scheduling a demo here.
Manager of Solution Engineering at Symphony AI Industrial