A new president in the oval office means new policies. With President Biden, the shifts are expected to be drastic. He has already signed numerous executive orders reversing policies from the Trump administration. Many of these orders impact the oil and gas industries.
Along with technological advances and changing politics, these executive implementations are already making waves. Stay on top of policy shifts and emerging technologies to keep your company adaptive and thriving.
2021 Legislative Shifts
Biden’s policy changes are big news for oil and gas. He signed two important executive orders that impact energy industries:
- Executive Order on Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis. It’s a mouthful, but there is a simple, overarching takeaway for this executive order. It cancels the Keystone XL pipeline permit, previously rejected by President Obama and accelerated by President Trump.
- Executive Order on Tackling the Climate Crisis at Home and Abroad. This decree pauses any new oil and natural gas leases on public lands. It does not target private properties or existing leases.
The Biden administration deemed the latter an indefinite pause. The intent is to review the impact of drilling on climate change before allowing resource exploration to resume. It’s important to note the order has little to no effect on private drilling and fracking operations. Congress would need to legislate any complete ban on private land operations, and right now, it doesn’t look like that will happen.
Digital Communication
Technology continues to evolve for all industries. In oil and gas, ongoing trends in the digitization of communication and operations continue to improve efficiency, accountability, and data. The cost of digital communications keeps dropping, making new technologies more accessible.
Smart devices will continue to give oil and gas companies an edge in several operations areas, especially communication. They allow for remote communication between sites and more efficient operations coordination.
These technologies will also help companies track data more accurately, facilitating setting emissions targets and accountability tracking. As policies change and the public demands the industry addresses climate change, tracking emissions and implementing accountability structures is essential.
Keep up with technological changes and don’t get left behind. To efficiently transition to digital systems, you need more than processes and devices. You need training. Companies that don’t invest in training for workers are likely to fall back into traditional habits. Online, digital processes are the future and worth investments in time and money.
Operations Overhauls
The downside to improvements in communications and digital technology is they require overhauls. Companies should transition to long term digital processes and communication solutions, entailing significant adjustments.
In an industry steeped in traditional processes, the transition to virtual utilities can be a significant shift. Operations are moving online, workers are using mobile devices in the field, and digital solutions and communications replace paper processes.
This shift includes another change in the industry: outsourcing back-office services for oil and gas. Oil and gas companies increasingly turn to these services that assume and consolidate roles like IT, accounting, land administration, and reporting. Companies offering these services integrate solutions so their clients can focus on production and growth.
Wide-Scale Consolidation
Another serious trend impacting the oil and gas industry began in 2020 and is expected to continue: falling prices. As oil and gas prices remain low and fall even further, companies must take steps to survive.
Experts in the industry expect to see wide-scale consolidation in response to lower prices. Companies will merge, and larger companies will absorb smaller entities to merge production. This trend is already happening and is expected the trend to continue going forward.
The companies best suited to successfully consolidate are those that embrace new technologies. They will be able to merge more seamlessly from two to one comprehensive organization.
Accelerated Adaptation for a Changing Industry
The oil and gas industries are changing quickly. Companies producing today will need to adapt to survive. Staying up to date on changes in both policy and technology is essential. The two will go hand-in-hand, and it’s crucial to adapt to these cultural, political, and technological shifts.
