In recent years, the oil industry has faced its fair share of challenges. A drop in oil prices combined with a loss of jobs in the oil industry had everyone shaken up. However, it appears that the oil industry is beginning to look up again. As oil prices dropped, companies have found ways to implement cost cutting measures. It looks as if these measures are working out in a great way, as BP reported a recent quarterly profit of $144 million. It doesn’t appear that oil will be reaching $100 per barrel prices. However, companies are enacting cost cutting measures to be ready when the price of oil begins to increase.
How Oil Companies are Reducing Spending
One way that companies are looking to save is through reducing oil exploration costs. In recent years, companies would have had a vast amount of equipment made to find oil. The changes in the oil industry are seeing major companies use more standard methods for extracting oil. BP recently sent a massive oil platform they created to be scaled down. The end result of scaling down the Mad Dog saved BP nearly $11 billion.
It’s not just oil companies that are cutting costs. Companies that supply oil companies with equipment are finding ways to save costs for their businesses. One supplier of underwater equipment is working to make the switch from hydraulic power to electricity, a move that could cut operating costs by nearly 30%. One study shows that exploration companies in North America spend 25% more than in other locations. You can greatly reduce the cost of storage through implementing above ground field erected tanks. Tanks for rent are helping many companies save in storage costs. Making use of above ground field erected tanks provides a business with a long lasting storage solution.
The recent lower oil prices have made companies rethink the way they use technology. Certain oil companies are ditching older systems in favor of software. This software lets companies have a clearer picture of where oil and gas are found underwater. Technology is also being used to help oil companies place workers in optimal situations. Companies are working to reduce costs associated with flying employees overseas by keeping a number of them in the United States.
The Positive Results from Cutting Costs
It appears as if these measures are helping the oil industry vastly cut costs. The good news is that these measures now change where an oil company breaks even. Research by RBC Capital Markets finds that it now only costs $55 per barrel for an oil company to break even, a much lower figure than the previously used $97. Implementing above ground field erected tanks can help a company save money. A business owner determines the storage needs and then the piece is erected at the site. Field erected storage tanks are helping businesses across the nation.
In summary, the oil industry is bouncing back from facing tough recent challenges. These companies are bouncing back by implementing various cost cutting measures. Larger oil companies are working to scale down projects using standardized technology. Suppliers are joining cost cutting measures including using electrical power over hydraulic systems. One study finds that, in 2015, people in the United States used 7.08 billion petroleum filled barrels which is about 19.4 million barrels a day. The oil industry is working hard to ensure that the previously mentioned goals are met and exceeded. Custom made tanks are providing storage solutions for businesses that are suited to their needs. Oil companies implementing these cost cutting measures are preparing to thrive when oil barrel prices reach the $100 mark once again.