Creating a Smarter Oil and Gas Industry, Part 2: Industry Trends Shaping the Digital Oilfield

In my last post, I discussed how the Internet of Everything (IoE) is transforming the energy sector and helping drive the momentum of the Digital Oilfield. Now, we’ll explore what the future holds for Canadian Oil and Gas companies and all of the possibilities enabled by a Digital Oilfield.

We are just beginning to leverage all the benefits of IoE to connect, collaborate, and compete. The question is not how to bring the IoE to the oil and gas industry, but instead, what trends in the next ten years will shape how the Digital Oilfield evolves.  First, let’s consider the some of the challenges facing the Canadian oil and gas industry:

  1. Price uncertainty – Limited control over commodity price and heavy oil differential.
  2.  Consumption constraints – Canada is a net exporter but only has one customer.
  3. High costs – Unconventional oil and gas have costs three to ten times that of Saudi Arabia.
  4. HSE – Canada ranks low among energy producing countries in safety.
  5. Expertise constraints – Workforce needs to out-strip supply by 2014.
  6. Massive Capital Costs – Oil sands projects have 20-30 year return on investment (ROI).

By no means is this a definitive list; the industry in Canada faces significant and unique challenges, yet is predicted to almost double production by 2025.

Consumption constraints and the commodity price risk are the two of the largest threats to sustainable oil and gas development in Canada, but the coming skill shortage is the most immediate challenge that operators, pipeline and service companies will face and it is coming in the next 12 to 24 months. The availability of skilled people will out-strip supply.  The next phase of the Digital Oilfield will need to address this shortage.

In a recent study by the Petroleum Human Resources Council of Canada more than half (54 %) of Canadian oil and gas employers cite skills shortages as a significant issue, and yet almost three-quarters (73%) expect to increase hiring in the next 12 months.

The study further confirms the true enormity of the coming skills shortage.  The industry will need to hire and develop 125,000 to 150,000 people in the next nine years.  What is more concerning is one-third, or 45,000, of those new hires will be replacing senior industry professionals who will retire.

As a result, we are now at a tipping point – a point in which medium term demand for qualified people will out strip the supply.

As shown above we are about to enter into a market shortage of skilled resources starting in 2014.  The result will be significant upside pressure on labor costs.  We have already seen the impact of this supply-side imbalance in 2007 when massive increases in labor cost and availability resulted in delays, cost overruns and, in some cases, cancellations of projects.

In my next post, I will discuss how Cisco is overcoming challenges associated with the Digital Oilfield through network collaboration as a platform to create a secure, converged IP infrastructure.

About Brad Bechtold

As Director of Cisco Canada's Oil and Gas vertical business, Brad Bechtold is responsible for developing and leading Cisco's go to market strategy for Oil and Gas. In his role Brad is working with industry partners, education institutions, and Oil and Gas organizations to align Cisco's technology solutions to the critical challenges facing the industry today. With more then 25 years in Oil and Gas experience Brad Bechtold brings industry relevant knowledge to Cisco Canada's Industry Transformation Team. Prior to joining Cisco, Brad spent 18 years with Halliburton. A global leader in the energy services sector. During his tenure with Halliburton, Brad spent 13 years in a global capacity. As Director for Halliburton's GeoGraphix product line, Brad was responsible for global Operations, R&D, Sales and Marketing. Brad spent 4 years as Director for Mergers and Acquisitions for the Landmark Graphics business unit, resulting is several strategic acquisitions. Brad brings more then a decade of sales and management leadership in the Canadian oil and Gas industry including Regional General Manager for Halliburton's Landmark Graphics business unit. Brad Bechtold resides In Calgary Alberta and holds a Diploma in Business Management for the SAIT Polytechnic in Calgary. À titre de directeur des affaires du marché vertical du secteur pétrolier et gazier de Cisco Canada, M. Bechtold est responsable de l'élaboration et de la gestion de la stratégie de mise en marché à l'intention des entreprises du secteur pétrolier et gazier. Dans ce rôle, il travaille avec des partenaires de l'industrie, des établissements d'enseignement et des entreprises gazières et pétrolières pour faire en sorte que les solutions technologiques de Cisco relèvent les défis auxquels est confronté le secteur aujourd'hui. Possédant plus de 25 années d'expérience du secteur pétrolier et gazier, M. Bechtold vient enrichir l'équipe responsable de la transformation industrielle de Cisco Canada grâce à ses connaissances pertinentes du secteur. Avant d'entrer au service de Cisco, M. Bechtold a travaillé pendant 18 ans chez Halliburton, leader mondial du secteur des services énergétique. Durant sa carrière au sein de cette société, il a passé 13 années à jouer un rôle sur la scène internationale. En tant que directeur de la gamme de produits GeoGraphix d'Halliburton, il était responsable des activités mondiales, de la recherche et du développement et de la mercatique. M. Bechtold a également joué le rôle de directeur des fusions et acquisitions de l'unité commerciale Landmark Graphics pendant quatre années durant lesquelles il a réalisé plusieurs acquisitions stratégiques. Il possède plus d'une décennie d'expérience de leadership en vente et en gestion dans le secteur pétrolier et gazier canadien, y compris à titre de directeur général régional de Landmark Graphics. M. Bechtold vit à Calgary, Alberta et est titulaire d'un diplôme en gestion des affaires de la SAIT Polytechnic de Calgary.
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2 Responses to Creating a Smarter Oil and Gas Industry, Part 2: Industry Trends Shaping the Digital Oilfield

  1. Pingback: Creating a Smarter Oil and Gas Industry, Part 3: Field Enablement and Remote Sensors | Cisco Canada Blog

  2. Pingback: Creating a Smarter Oil and Gas Industry, Part 4: Conclusion | Cisco Canada Blog

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