Oil producers return focus to operational efficiency

With OPEC's decision to maintain oil output despite falling crude prices, many analysts began to ponder the fate of the domestic shale industry. In the past five years, U.S. production has increased from 5.4 million barrels of oil per day (MMbopd) in 2009 to 8.6 MMbopd today. U.S. Energy Information Administration Administrator Adam Sieminski was quoted last month saying that by 2015, domestic production could reach even closer to 9 MMbopd.

However, the sliding price of crude has caused a reduction of capital expenditures in many operating budgets for 2015, Reuters reports. ConocoPhillips is expected to cut its capital budget by about $3 billion, or 20 percent, and refocus its efforts on activity in its Eagle Ford and Bakken shale plays. 

"Companies will come out of the growth-at-all-costs mode and begin looking for real value in the portfolios," R.T. Dukes, senior analyst for upstream research at Wood Mackenzie, told Rigzone "Companies will seek to drive down costs and improve productivity, and try and remain within their cash flow limits or the funding sources available through today's capital markets, which are now tighter than they were a few months ago."

While it is impossible to accurately predict what oil prices will reach in 2015, the current price dip will certainly impact productivity. With the unpredictable nature of the market, oil drilling companies' success will be measured by how well they can adapt to trends and improve operational efficiency. Development is expected to continue, but having a particularly productive play will not be a guarantee of success. Oil and gas strategy consulting can help to identify inefficient processes, and help organizations better leverage existing capital for maximum return.