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How Reenergizing a Cost Reduction Drive Saved an Oil Company Billions

An international oil company had been paring costs for years—but the effort seemed to be losing steam at a time when oil prices had fallen and efficiency was more important than ever. The company needed a way to identify the best cost-cutting options based on an accurate assessment of the dollars that could be saved and the timeline required. BCG helped the company stress-test a long list of cost reduction options and identify future actions to drive even greater efficiency.

The detailed analysis and revamping of the cost-cutting effort was put on a fast track—five weeks from start to finish. The effort quickly zeroed in on 20 of the most promising initiatives from across the company, determining if the cost-saving estimates and the timeline were realistic. This included examining whether the business units responsible for each had the right teams in place to execute the project.

BCG also helped the company identify industry best practices related to efficiency—and share those across the organization. This included everything from the optimal way to manage transportation of employees to and from offshore platforms to insights on how to negotiate for more favorable terms for insurance coverage on company assets.

A Sustainable Efficiency Effort

The firm ran a series of workshops—both for individual functions within the business units and for cross-functional teams—to peer review cost-reduction initiatives and conduct brainstorms to find new, previously overlooked opportunities. And BCG provided coaching and training for project managers and other cost-cutting champions, helping them identify and address red flags on projects to ensure effective execution.

The effort ultimately helped the company build a sustained and disciplined efficiency effort. This included billions of dollars in annual savings, as well as the selection of a handful of future, high-priority areas for each business unit that could drive additional cost improvements.

Oil & Gas
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