CIOs who work in the oil industry are used to seeing ups and downs sweep through their IT departments. However, nothing could have prepared them for the arrival of the Covid-19 pandemic. This virus caused everything to shut down and send all of their workers home. Now, after cutting thousands of jobs during the coronavirus pandemic, oil industry CIOs are accelerating their embrace of remote drilling and fracking, changes that will reshape its workforce permanently.
Coivd-19 Causes Permanent Changes
CIOs in the oil industry don’t really like change any more than the rest of us do. However, Schlumberger Ltd., Halliburton Co.. and Baker Hughes Co. the world’s three largest oil-field service providers, are starting to shift more tasks from drilling specialists at well sites to remote engineers working from offices or, increasingly, their homes. The CIOs at these companies, which do much of the on-the-ground work for oil and gas producers, say they are retooling for what they project will be a leaner U.S. fracking market. However, the changes are poised to be lasting, an example of how the pandemic is pushing industries to rethink how they do business.
Prior to the arrival of the pandemic, many oil producer CIOs had been wary of moving away from traditional means of drilling, with on-site specialists to steer drill bits deep into the earth or interpret real-time well data. But the current situation has prodded them to look for new ways to reduce costs while minimizing the risk of spreading Covid-19. CIOs report that it’s been an eye-opening experience for a lot of CIOs working from home. The pandemic has proven that operating remotely isn’t necessarily as challenging as it looks.
What this shift means is that more oil-industry workers will have to adapt to new technologies, and companies will eventually focus on hiring more data-analytics specialists and subject-matter experts to remotely support multiple operations. Some traditional roles in the oil patch, particularly manual field, operational and manufacturing jobs, will gradually disappear. The virus has been a catalyst for a sped-up adoption of automation and other technologies in many industries, including at companies like meatpackers which have shifted more work to robotic butchers, and manufacturers who are putting money behind machines that can assemble products faster.
The Future Looks Different
In the oil patch, more than two-thirds of Schlumberger and Baker Hughes’s second-quarter drilling activity was supported by remote operations, up 25% for Schlumberger and 20% for Baker Hughes. Halliburton, the largest U.S. fracking company, said it has cut the number of engineers monitoring fracking jobs by shifting work to its real-time operation centers. The companies said relocating operations and closing facilities has helped them save money at a time when work continues to be scarce in the oil patch following a crash this spring in crude prices. The coronavirus led to a historic drop in the world’s thirst for oil, as millions around the world stayed home and avoided flying and driving, and demand is still recovering.
Before the meltdown in energy prices, U.S. crude production had climbed above that of Saudi Arabia and Russia, even though American frackers had fewer working rigs and fewer oil-field workers than they had in 2014, when oil traded above $100 a barrel. According to Bureau of Labor Statistics data, employees in support activities for oil and gas operations at the end of 2019 numbered 26% lower than at the most recent peak six years ago. Many jobs didn’t come back because the U.S. shale industry had figured out how to extract more oil with fewer people after prices plunged in 2015 and 2016. CIOs believe advances in remote drilling and automation could now leave the industry’s workforce leaner still, as companies are forced to innovate to survive yet again.
One of the reasons that oil company CIOs had been slow to adopt remote operations in recent years was because cellular infrastructure was often inadequate in far-flung regions where they were drilling wells, and many were uncomfortable with having fewer people at rig sites to deal with any problems that arose. Remote drilling also has enabled specialists to make faster decisions and has made it easier to communicate lessons learned across teams. They’re steering more than one well at a time, and they’re chatting over Microsoft Teams.
What All Of This Means For You
Oil industry CIOs were hit by the Covid-19 pandemic just as hard as everyone else was. Their IT operations were disrupted and all of their staff were sent to work from home. However, these changes are causing these CIOs to start to adopt remote drilling more rapidly than they had been and this may end up transforming the industry into the future.
The largest firms in the oil drilling business are starting to shift more tasks from drilling specialists at well sites to remote engineers working from home. Moving more workers to working from home has allowed CIOs to reduce their costs. It has turned out better than they had expected. CIOs will eventually focus on hiring more data-analytics specialists and subject-matter experts to remotely support multiple operations. By relocating operations and closing facilities CIOs are able to save money for their companies. In the past remote work was hard to do because the cellular infrastructure was often inadequate; however, that is no longer the case.
The oil industry, just like almost every other industry out there, does not like to change. However, the unplanned arrival of the Covid-19 virus has required oil industry CIOs to adjust and provide support for more workers to work from home. These changes may be temporary while the virus is with us, but their impact on the oil industry is expected to be long lasting. CIOs are going to be dealing with a novel new workforce for the foreseeable future.
– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World IT Department Leadership Skills™
Question For You: What do think that the drawbacks to allowing oil workers to work from home might be?
Click here to get automatic updates when The Accidental Successful CIO Blog is updated.
P.S.: Free subscriptions to The Accidental Successful CIO Newsletter are now available. Learn what you need to know to do the job. Subscribe now: Click Here!
What We’ll Be Talking About Next Time
When the Covid-19 pandemic struck, all of sudden everyone who had been coming into the office started to stay at home. That left a lot of workspace wide open. This once-in-a-lifetime opportunity got the people in the CIO position thinking. How could the workplace be made better for everyone in the IT department so that they could share the importance of information technology? In the past few years a lot of organizations have adopted the “open office” organizational approach. However, is there a better way to set things up?