What can the exploration & production (E&P) industry do to stabilize and lower project costs for the long term? IPA's Neeraj Nandurdikar offers his agenda for the lull.
After ten years, the capital projects boom has come to an abrupt, painful, and mostly unexpected pause. Rather than developing long-term solutions, however, the industry response to slumping oil prices has focused on familiar short-term focused fixes:
- Cutting training and travel
- Reorganization and layoffs
- Slowing down, and in some cases, canceling projects
Many are concerned with how low oil prices will go and for how long, but oil price is not the real problem. The problem is the cost of projects, which has steadily increased over the last decade making even decent sized projects marginal.