Question

What are the driving forces for Oil Industry? list and explain three main forces.

Answer 1

Although many are wishing for the demise of the oil industry, it is here to stay because it still is a major energy source for the civilized world. The demand for oil is only increasing and the following are the main driving force for the industry.

1. Technological Advancements

Not only oilfield equipment can work more efficiently than they did 50 years ago there is a new tech called AI. AI and the oil industry are like a mix of ancient industry and a latest, yet to be fully explored technology. AI can improve oil and gas production and cut costs. AI for the oil and gas industry is expected to reach $2.85 Billion by 2022. Let's look at where this new tool can help the industry

Exploration and production life cycle

Ai system consists of tools like machine learning, neural networks, etc. which transforms data into valuable insights that can be applied to various stages of E&P, drilling, reservoir, and production

Location of new reserves

This is probably the most discussed topic when the future of the oil industry is being talked about, the artificial intelligence can discover sources of potential new drilling sites, tech behemoths like Amazon and Google are working and testing these AI tools with oil industries already and this alone can significantly reduce costs by saving money time and manpower across the first stages of E&P process

Eliminate the risk in drilling

Drilling is a very expensive and risky investment. Applying AI tools in operational planning and execution stages significantly improves the success rate.

2. Cost Revenue Ratio

The generation of revenue is an important factor for the sustainability of every industry, especially the energy industry because of how costly it is to operate a refinery. With the ever-increasing demand for oil, stable revenue is expected from the energy industry to invest in new offshore exploration projects and technologies

So a manager in oil industry will have to pursue new drilling and exploration technologies and to increase research in sustainability and clean energy. With best equipment, motivated team and adoption of new technology, the oil industry can reduce the cost of making oil for themselves and maybe everybody else

  3. Governments

Governments can make or break an industry, governments all over the world trying to go fully renewable can and is transforming the oil industry, governments of various countries form an alliance to keep the prices stable by not overproducing.

Europe is going full renewable and some of its countries almost already are like Germany and France. Electricity is conventionally produced by coal and petroleum but by going solar for example, the oil industry will take a big hit, when full Europe will go electric the oil demand will face turbulence.

OPEC or the organization of petroleum exporting countries limit their oil production to keep oil prices stable. This clearly is not working as well planned as once thought but cooperation is expected to improve and hence oil production will be checked by them.