2016 Predictions for the Oil and Gas Industry


As another year of low oil prices and strategic shifts comes to a close in the oil and gas industry, executives are laying the groundwork for what’s next in 2016. In the past few years, the industrial internet of things (IIoT) has been a dominant technology trend and transformed the way organizations evaluate asset value. Many oil and gas companies have invested heavily in sensors and connected machines to drive more informed decisions and reduce risk with enhanced maintenance and increased efficiencies. But too much data – or data overload – is a real challenge for all organizations.

To get the most from this large volume of data, organizations are transitioning to asset performance management (APM), implementing a platform that manages big data and pulls key insights into a simple interface for plant operators and executive level decision makers. Not only does APM enable actionable recommendations gleaned from data, it helps companies better predict failures and benchmark the performance of their own sites against that of industry peers around the globe to get a true picture of how well they’re operating. This new way of thinking about physical assets as a true competitive advantage with APM is one of a few key trends that will drive improvement in oil and gas operations in 2016.

Here are a few others:

Oil pricing ripple effect. Low oil prices have caused significant pain and suffering for upstream organizations, resulting in limited cash flow and major shifts in business objectives and financial initiatives. Over the next year, less mature or smaller organizations will continue to react more extremely and cut spending, even shutting down for a period of time to save the business. The bigger players will guard budgets and reduce or delay planned maintenance, expansion projects and other business transformations in order to maintain critical activities. Regardless of market conditions, oil companies will continue to prioritize investment in exploration. For downstream, falling oil prices have resulted in higher margins and more investment opportunities for advanced technology and proactive maintenance to fix long-term reliability issues.

Long awaited cloud adoption. In the next three years, operating in the cloud will become the norm across the oil and gas industry. Wireless technology was the first big step, and the cloud is soon to follow as it’s both more efficient and cost effective. Prior road blocks, including security and control, will be resolved with dramatically improved cyber protections, industry standards and access control. There have always been risks around industrial espionage, and physical control provides operators with a certain level of comfort, but the industry will soon learn that the benefits of cloud adoption outweigh the risks.

Industrial organizations will reap the benefits of big data. As affordable sensors have been introduced to the market, more data has become available to industrial organizations. This is analogous to how pneumatic instrumentation transitioned to digital controls in the early 1980s when control system vendors introduced distributed control systems (DCSs). Within a decade, every executive in the oil and gas industry implemented multi-million dollar projects to instrument the plant with DCS. When the adoption of APM becomes more widespread, we will see more confidence in technology across the industry. With the IIoT, we are able to take data that’s available, put it together in a way that makes sense and allows plant, site or regional managers to make more informed decisions with regard to their equipment. By reaping the benefits of big data, we will be able to present information in a way that gives owner and operators insight into how to improve equipment one asset at a time.

2016 will introduce new challenges and opportunities for the oil and gas industry. By understanding what’s to come, we can help organizations prepare, adapt and remain competitive.