At the time of writing this article, WHO estimates suggest that the COVID-19 pandemic has spread to more than 200 countries worldwide, with the number of positive cases inching closer to the 2 million mark.
As the world comes to terms with the “new normal” of life and way of working in a lockdown, businesses are charting new paths to navigate through this unprecedented time. From shaky commodity prices, mounting economic pressures, supply chain disruptions, and unfamiliar work environments, energy operations as a whole are being significantly affected. This impact must be addressed on priority as the energy sector plays a critical role as an essential service for consumers and businesses.
How are the power generation, mining, and oil & gas (O&G) industries getting impacted by this new world?
The power generation industry is witnessing a significant impact of the pandemic since the beginning of 2020, with the demand curve taking a new, unprecedented shape. To maintain electricity supplies, nuclear reactors, along with fossil fuels and renewable power technologies, will play a critical role. The need to reduce the use of fossil fuels due to climate change concerns in favor of low-emissions power sources, continues to be a focus area.
Any breakdown in the supply of power can lead to widespread disruption, as we have seen during outages caused by wildfires and other natural or weather-related factors. Supply chain disruption is likely to push power generation companies to focus on improving reliability and bring operational efficiencies that could help them tide over these challenging times.
Oil & Gas
The COVID-19 pandemic, coupled with the supply-side shock in the form of continued production by OPEC and Russia, has added further pressure on the price of crude pushing it below the critical $40/barrel mark. This makes offshore exploration and fracking economically less viable, and forces O&G companies to look at other avenues such as onshore oil drilling. We anticipate companies to adopt a cautious approach toward capital expenditure in the immediate and short-term while focusing on asset optimization and operational efficiency to derive maximum value in the interim.
Varying degrees of lockdown in countries across the globe combined with disrupted supply chains due to travel and cargo restrictions and the prevalent economic sentiment has brought non-essential industrial production almost to a grinding halt. This includes automotive, aerospace, engineering, and construction, as well as infrastructure development, which is among the biggest consumers of metals. This blow comes at a time when the sector was already dealing with environmental issues and tariff wars in a slowing global economy. While the industry balances the fine line between demand and supply, a key area of focus in the short-term would be lowering the cost of operations.
THE ROAD TO RECOVERY
As energy companies shake-off the initial upheaval and set off on the road to recovery, what are the top priorities for them, and what role will technology play in doing it successfully?
Increased Focus on Workforce Safety
Given the health risks associated with the pandemic, the people-intensive nature of all three industries and the geographical distribution of natural resources across the globe have brought the safety and well-being of the workforce to the forefront. To ensure continued supply, companies will need to innovate remote working models by leveraging digital tools and emerging technologies across their value chain.
The Emergence of New Team Structures
A distributed workforce is a relatively lesser-known concept within the energy sector because of the critical and sensitive nature of the business. Worldwide lockdowns have compelled operators and their extended teams to take unprecedented measures that enable teams to work from their respective locations. This crisis has served as a proof of concept that a diversified, dispersed, and flexible team can ensure quality delivery of engineering and operational services even in such times.
Process Automation for Service Reliability
As operators look to ensure uninterrupted service in trying times like now, it is an excellent opportunity for operators to fast-track their process automation initiatives. Applying disruptive technologies to automate as many processes as possible will be an accelerated focus to ensure environment and workforce safety as well as operational reliability.
Increased Focus on Digital Transformation and Asset Management
As operators focus on lowering operational expenses, existing assets and infrastructure will be under added pressure. Businesses will be required to do more with less by focusing on effective infrastructure management and making their assets smarter and resilient. The application of disruptive solutions, such as connected equipment and predictive maintenance, paired with strong asset management strategies, could hold the key to achieve operational efficiency.
The COVID-19 pandemic will transform industries as we know today. It is critical that companies embrace access to data and technology as a key differentiator to drive safety, automation, and efficiency.