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The Last Barrel Standing

Operating model implications for upstream Oil and Gas

There are operating model implications for each of the positions available to upstream oil and gas companies along the oil and gas Energy Transition spectrum. This article identifies three levers that support lean operating models and discusses areas of internal transformation that can help companies maximize opportunities and minimize risk during the shift to a low-carbon future in upstream oil and gas. The winners—the last barrel standing—will be those oil and gas upstream companies that adopt and apply a forever-lean mindset across the entire asset lifecycle.

Choosing a strategic position for sustainable oil and gas operations

Upstream oil and gas leaders are taking strategic and bold steps to move their organization through the accelerating oil and gas Energy Transition. In a recent Deloitte survey, 80 percent of Energy & Resources (E&R) executives reported that they either already have a plan in place or are developing a strategy to reduce reliance on fossil fuels. Thirty percent of those executives already have a fully developed plan in place. Still, many important decisions remain to be made; among them, choosing a strategic company position along the oil and gas Energy Transition spectrum. Should a traditional upstream operator remain an oil and gas (O&G) specialist and compete for the remaining value in hydrocarbons? Shift entirely to the green energy space? Balance the two extremes by investing in green energies adjacent to hydrocarbons? We see four strategic positions available to upstream exploration and production (E&P) organizations and national oil companies (NOCs) along the transition spectrum (figure 1).


Who will be the last barrel standing?

While many upstream oil and gas operators have already taken big strides to reduce costs and optimize operations, break-even improvement has generally plateaued. Company leaders will need to rethink their operating models to maximize asset productivity and further drive down break-evens to be fit for any oil price and create sustainable value in the post-transition, low-carbon, and new-energy future.

More insights on Last barrel standing

Tom Bonny shares his insights on “Last barrel standing” on the Industrial Talk podcast with Scott MacKenzie. Listen to the full podcast.

It's not a debate around if the energy transition is happening, the discussion is more around the pace of when that will happen.

Get in touch

Tom Bonny
Managing Director
Oil & Gas
Deloitte Consulting LLP
Noemie Tilghman
US Oil, Gas, and Chemicals Consulting Leader
Deloitte Consulting LLP
Samrat Das
Senior Manager
Oil & Gas
Deloitte Consulting LLP

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