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Adjusting to the New Normal

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Happy New Year, readers, and welcome to 2015, a year that should prove rewarding and challenging for the oil and gas pipeline industry. As everyone knows, the price of oil has been in steady decline since last summer, and some analysts say it could still drop lower.
While that’s nice for folks filling up their gas tanks, it’s not so nice for North American petroleum producers targeting higher revenues to support drilling operations. Pipeline owners are already starting to balk at the new market, with companies such as Enterprise Products Partners calling it quits on a 1,200-mile, 30-in. project destined to transport oil from the Bakken shale to facilities in Cushing, Oklahoma.

Since the recession, the oil and gas industry has been riding a wave of booming business brought on by hydraulic fracturing in the various shale deposits, renewed activity in legacy oilfields and ongoing development of the Canadian oil sands. Likewise, demand was on the rise for increased pipeline capacity, such as in the Northeast to ease heating concerns during the winter or to the Canadian coastlines to bulk up export capabilities.

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However, now that oil has dropped below $50 per barrel for the first time since 2009 — a shocking plunge from the triple digit prices seen just six months ago — the urgency for building new infrastructure seems to be waning.

But that’s not the message of hope we want to start off this next lap around the sun. To be sure, there will be challenges in the next 12 months, but this isn’t like the doom and gloom of 2008 when economies all over the world were in decline. Instead, this is more like a market correction.

After record highs in new oil and gas production in North America, it was time for a bit of contraction. Those who have been in the oil and gas industry a long time know that this market is cyclical. Now is the time to lean on the efficiency lessons we learned in those recessional times to shore up profits and wait out the storm.

Employing technology to improve operations is one way to help the bottom line. Take our cover focus, for example. Assistant editor Mike Kezdi takes readers through the high-tech world of fleet tracking and telematics systems (page 20), which can help pipeline contractors realize a number of cost savings just by tracking operational hours, fuel consumption, operator behaviors and other data.

The North American Oil & Gas Pipelines team prides itself on finding these tools and other methods to help strengthen business practices. Over the next few months, as we seek clarity in the oil market, it is our promise to deliver you the important industry insight you need to make the best decisions for your company.

Brad Kramer - signature

Brad Kramer
Managing Editor
bkramer@benjaminmedia.com
Twitter: @NAOGP1

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