I still remember those times (way before 2013/2014) where anyone in the investing world you spoke to, went on a rant about how oil prices were bound higher. They predicted $100 per barrel as the “new norm” for crude oil. After all, they gushed; oil was a natural commodity and like other natural commodities there is only so much available. And with our increasing consumption, their prices were bound to rise.
BUT what they failed to foresee was that- the oil capacity they were using for their forecast calculation was based on the data that was available at that time- i.e. based on the oil deposits that were already discovered.
Now when we think of an Oil and Gas company, typically we do not think of technology or software applications. And this is where the oil forecasters made their grave and expensive mistake!!
Back when breakeven cost for oil production was in the $50-$60 per barrel range, at that time, the OPEC countries (i.e. the official oil cartel) controlled the global oil price by controlling their output. Saudi Arabia could easily produce oil at below $20 a barrel and still make sizeable profit when their oil sold for $60 per barrel in the global market! But others could not compete, and OPEC continued to rule the global oil scenario.
Big Data has allowed these oil companies to better utilize “information” technology. It has allowed them to introduce higher efficiencies and reduce production-process wastes as well as foresee issues and challenges; ultimately lowering their overall production costs.
When you start leveraging technology, it can help you to introduce process efficiencies that you probably never thought possible!! All this while not spending an arm and a leg- Better utilizing technology needs comprehensive understanding of these applications and their integration points, proper methodology as to how to better utilize such existing applications and finally a wise and willing team of decision-makers, who want change and are willing to make it happen! These leaders take responsibility and commit to introducing meaningful change within their organization!