Major Pitfalls in the Oil and Gas Industry
Current insights and data from the oil and gas industry reflect that the recovery phase of COVID-19 could demand a significant comeback. All the downfalls impact the cost, employment, and human resource together and create some concerning challenges for the industry.
Hence, it is essential to understand what these challenges are. The following section includes major and minor challenges in the oil and gas industry.
Understanding the graph of the Oil and Gas Industry
Data analysts have predicted some long-term challenges in the industry that can be a substantial opportunity for aspiring energy leaders. The current rate of production and increasing demands are not in sync with each other for multiple reasons.
The only way to lead the industry is to think in an innovative direction by keeping next-generation demands in mind. An increase in the fuel price indicates a need for better energy resources and their extraction technique.
The most significant risks of the industry can turn out to be the most extensive resource for companies that are hunting for growth opportunities. The current needs of the industry are
• Finding better ways to produce oil and gas
• Reducing the greenhouse gas emission effectively
• Incorporation of water conservation techniques
There are so many theories on utilizing oil and gas industry resources sustainably. The significant challenges that need some highlighting are mentioned in the next section.
Significant Challenges in the Oil and Gas Industry
As customers depend on organic resources and their preferences change, the challenges gradually rise. Uncertainty will always remain a part of the oil and gas industry, and companies will have to figure out a way to deal with it.
Below are some of the challenges in by oil and gas industry.
Keeping the Costs Competitive
This is one challenge that is tough to overcome and difficult to maintain in the long run. Any company that manages to reduce the cost and optimize the production reaches the top tier of the energy market.
Managing the production efficiency makes it easier to reduce the cost of refining and extraction, but all this requires reforming the field and maintaining a balance of everything.
Keeping the Plants Alive
During the peak phase of the pandemic, when transportation, logistics, and major industries were shut, the fuel industry also experienced an imbalance. Many plants were put to a halt to balance the company’s loss. Due to the shutdown of these plants, many employees lost their jobs, and companies suffered the loss.
Improving Human Resources
The industry becomes innovative and broadens its scope because of the human capital. The oil and gas industry produces expert human capital through hands-on experience. This is a challenge because all the experienced professionals who understand the industry are on the verge of retirement.
The next decade needs a competent and innovative workforce to deal with the upcoming technical challenges. Due to uncertainties in the industry, it is also required to have a better employment pitch for the younger generation.
Following Regulatory Norms
Every country is moving towards green energy utilization, which has imposed a significant challenge for the oil and gas industry. The new companies have their strategies to deal with the current demand.
This is a challenge for existing companies because government policies also promote and fund the companies that meet the norms. Currently, the industry is struggling to find the right and sustainable way of creating green energy for the public.
Maintaining consistency is a significant problem because the energy industry is dependent on natural resources. The promises of excellence in quality can be achieved only when the adaptive methodologies are in place.
The industry is facing a shortage in the skilled workforce that ultimately impacts the quality of the outcome. Hence, it becomes a significant task to justify the inconsistency in the operational sector.
Respecting Customer’s Preferences
People are growing conscious of the damage to the environment, and there is a rapid shift in their preferences. Meeting the demands of environmentally conscious products in the energy sector requires time and effort.
With other challenges on the shoulder, this requirement from customers adds to the burden on companies in this domain.
Lack of Funds
Investors are backing off from putting their money in this industry because of the uncertainties involved. Due to a lack of funds, it becomes difficult to pull off the workload alongside maintaining innovation and efficiency.
With changes in policies from higher authorities, the government also supports companies already incorporating green energy techniques. Hence, the overall competition to adopt better practices is draining the energy of the fuel industry.
While there are risks involved in the fieldwork associated with the oil and gas industry, workplace safety policies are also there. The current scenario wants the fuel industry workers to dig deeper and think out of the box.
This also challenges ensuring workplace safety despite the risks and rise in demand. Reforming the legislative frameworks to work on everything from scratch will take time, but it is the only resource that can cost a lot to the fuel industry firms.
Now that the challenges in the oil and gas industry are clear let us chalk out a temporary solution for the same.
Overcoming the Challenges
Below are some suggestions to overcome the existing challenges in the oil and gas industry.
• Improving the operational framework and efficiency
• Going digital with the help of innovative tools and technologies
• Building the human capital with a better recruitment pitch
• Involving ethical practices to ensure the safety of the workers
• Keeping up with the climate change and reducing carbon footprints
There are unavoidable challenges, but there are plenty of opportunities as well. In the coming years, technology will overpower every sector and every company. This brings a ray of hope for the fuel industry to keep the hustle on and stay updated on these predicted advancements.
Also Read: Most critical security challenges in oil and gas industry