Far-away shot of a oil and gas rig with mountains in the background

Upstream Oil and Gas

Upstream oil and gas companies are facing a range of opportunities—as well as challenges—that make today the right time for CEOs to chart an optimized path.

Today's upstream oil and gas players are contending with the challenges presented by the growing emphasis on decarbonization and renewable energy around the world, as well as changes in mobility patterns and end-user preferences. To seize the opportunities while navigating the challenges in upstream oil and gas, companies must focus on four domains as they map out a path: ways of working, operations, the asset portfolio, and relationships with ecosystem partners. Within each domain, digital capabilities are key.

Digital Transformation in Upstream Oil & Gas

The upstream oil and gas sector has long embraced technological innovation as a means of increasing profitability, but the industry has been slow to adopt the global business trend of digital transformation. For long-term impact, digitization in upstream oil and gas can help companies capture a tremendous amount of value across the entire upstream oil and gas value chain, transforming all aspects of business operations.

In the context of an abundant oil and gas supply, and uncertainty about the development of demand, operators need to constantly push for greater cost competitiveness and lower emissions—and digital is the lever that can help make it happen. Producers must embrace the latest digital upstream oil and gas technology—including big data, analytics, and artificial intelligence—as part of a multipronged approach that addresses operations, organizational effectiveness and efficiency, the upstream portfolio, and building cultures for long-term business improvement.

Digital modeling and simulation tools can connect reservoir data, field architecture, equipment design, environmental impact, and economics into a single framework to help companies succeed.

Together, these developments have the potential to transform the upstream oil and gas industry’s fortunes by substantially improving capital efficiency, lowering production costs, and reducing methane emissions. For such a transformation to be successful, oil and gas companies need to fundamentally change their DNA and the way they work. A structured and pragmatic methodology that embraces an agile approach and addresses all aspects of the value chain will deliver maximum benefit.

Organization and Operating Models in Oil and Gas

Energy organizations are well structured and process driven, but they lag behind leading companies in other industries in optimizing ways of working to generate superior performance.

Historically, most companies have organized themselves by asset, but today larger players depend more often on a functional model as they pursue controls and consistency across operations and around the globe. Big functional models inherently require a more collaborative workplace—a cultural shift that can be hard to get right. And technological disruption is adding another layer to upstream organization and operating model effectiveness, as companies move toward new upstream business processes, governance, and decision-making logic.

There are several distinct areas on which upstream oil and gas companies can focus in order to lift themselves to the next organizational level.

Meet BCG’s Upstream Oil and Gas Consulting Team

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