During times of austerity, spending drops. When it comes to the oil industry, if the price of a barrel of oil drops, suddenly and sharply spending also drops. As we can all see at the moment, the industry is cutting costs from travel bans, to project suspensions, to halts on marketing campaigns, and until the price of a barrel of oil improves these measures and more are likely to stay. Or are they?
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The results of a survey carried out by Accenture and Microsoft recently came to my attention and the jist of it is that, “despite current lower crude oil prices, most companies in the oil and gas industry plan to invest the same amount or more in digital technologies.” Digital investment will benefit the entire oil and gas supply chain in numerous ways, as it will essentially improve operational efficiency allowing the bottom line to be cut as workforces can run facilities more efficiently. However, one of the biggest benefits in investing in digital infrastructure has to be improvements in cyber security. Over the last few years this has been a hot topic across the globe, and not just in our sector as there have been cyber attacks on social media, businesses and individuals alike. As a recent report from IHS Aerospace, Defence & Security reads, “real world conflicts and political upheaval in the Middle East have driven an increase in the range and frequency of cyber attacks,” and one would imagine this is the same for other regions of upheaval. So, investing in digital will undoubtedly help reduce costs in the long run by preventing cyber attacks, which usually have very expensive fallouts.
Digital isn’t the only area where investments are being made. Honing in geographically, Canada’s federal government has announced budget measures to foster growth in the country’s oil and gas industry, as it is recognised as the key economic sector in the country. It has even been voiced by the Canadian Association of Petroleum Producers that, “capital investment in 2015 is expected to be CAN$49 billion, highest of any sector in Canada and higher than the next two largest sectors combined,” and this is in spite of the drop in crude prices. Whilst there was no specific mention of digital investment in the proposed budget measures for Canada, transportation infrastructure, marine safety and environmental protection were focused on, and all three will inevitably contribute to improving the bottom line for oil and gas companies across the nation. Transportation infrastructure needs to be improved globally for the ever increasing population, marine safety is always debated as there are problems from pirates to spills and when it comes to environmental protection, we can also consider spills and leaks along with emissions levels and more. Without investment to improve the above in the long run, they will end up costing a fortune as accidents happen and challenges arise.
So, whilst many are keeping the purse strings drawn tight, there is some investment happening in the industry and maybe more needs to be considered in order to keep costs down for the long haul.