These Oil Project Startups Want To Do Things Differently In The Oil Industry
Investing in the oil industry right now seems counterintuitive, considering that the world is aggressively planning to shift to electric vehicles and renewable energy. However, a closer analysis reveals that there are still opportunities to cash out from oil for the next few decades before the full transition from oil occurs.
Although the oil industry’s future is currently looking grim, many industries, including the airline industry, will continue to rely on oil production to sustain their operations. It will likely take some time before alternative energy sources for those industries are developed. Startups are known for bringing innovative and disruptive technology into a segment. So, what do the new oil industry startups have to bring to the table?
1. Phoenix RDS
This is a Scottish company that provides drilling optimization through practical experience and theoretical concepts to reduce the risks associated with drilling in turbulent conditions in the sea. Turbulent conditions are responsible for a variety of oil and gas drilling challenges such as downtime or even damage to expensive equipment.
Drilling optimization involves offset well analysis to determine potential risks and hazards. Phoenix RDS’ approach seeks to help minimize and manage the risks associated with drilling, especially in n turbulent oceans or seas.
2. Crude Oilfield Solutions
Oil and gas drilling traditionally takes place vertically, where drill rigs work their way downward. However, vertical drilling might be impractical in some cases, thus the need for alternative methods. Crude Oilfield Solutions focuses on directional drilling, gaining popularity thanks to technological advancements in the oil drilling field.
Crude Oilfields Solutions is a U.S startup that creates solutions, including equipment for directional drilling. This includes equipment that offers real-time monitoring on complex offshore projects. Its solutions are designed to provide faster delivery while maximizing returns through higher efficiency levels.
3. Raptor Rig
Accidents on oil and gas rigs can be quite severe. They often occur due to faulty equipment, harsh weather at sea, or even fires breaking out. These accidents often cause severe injuries such as spinal injuries, burns, and fatalities in some cases. Raptor Rig is one of the startups working towards reducing accidents on oil rigs.
The company is a Canadian startup that makes fully automated drill rigs for gas and oil mining. The automation means the rigs do not need workers on the floor, thus eliminating associated risks. The rigs are also designed to be faster and more efficient, thus maintaining a high productivity level.
4.Kinetic Pressure Control
It is a U.S-based company that makes pressure control and wellhead equipment ideal for sealing and well control. The solutions are ideal for subsea drilling activities, which is more challenges than onshore drilling. Drilling under the ocean has huge challenges, but Kinetic Pressure Control is one of the startups that are working on solutions that make subsea oil and gas drilling easier and more cost-effective.
5. HARBO Technologies
HARBO Technologies is an Israeli-based startup that targets efficient damage control in the oil industry. The company makes the most effective and fastest rapid response system for oil spillage. Accidents and spillage from oil mining activities in large water bodies can cause devastating damage to aquatic life, thus the need to act swiftly in case of a spillage.
HARBOR Technologies has a unique approach to damage control in case of oil spillage in the ocean. The company uses its T-FENCE system, which can be rapidly deployed without necessitating heavy machinery. The system also requires few people, making it both effective due to deployment speed and affordable since logistics are not as tricky. The system’s properties make it easy to deploy in extremely remote areas.
The impact of these oil startups on the oil industry
The above startups may not save the oil industry from its eventual downfall as the predominant energy source. However, they are strategically positioned to make a huge impact on the industry. For example, the innovative method for cleaning oil spillage may help oil drilling companies to minimize their negative ecological impact.
New innovating mining approaches offered by the other startups will also introduce notable efficiencies. Directional mining will make it easier to tap into difficult to reach areas in the ocean, while better security measures will help eliminate some of the challenges in the industry or at least help to minimize them.
Recovery to pre-covid levels
Oil prices have recovered to north of $60, which is great news for the industry. The price reached negative levels in 2020 due to the coronavirus pandemic and the resulting economic downturn. This means that the prices are almost at the $70 level, which was last observed before the pandemic. Unfortunately, the world is having a tough time getting the virus under control despite vaccine rollouts, limiting economic recovery.
The coronavirus pandemic has such a big impact on the economy because it touches most industries that rely heavily on fossil fuels. Lockdown and closed borders mean people will not travel as much; thus, most airlines will be operating under capacity due to grounded flights. Demand for fuel from the airline industry is still low. The same case applies to commuting since many people are still working from home.
Unfortunately, the oil industry’s ability to recover to pre-covid levels depends on many other factors. One of those factors is that global governments are changing their stance on energy in favor of renewable energy. Some countries such as China have implemented hefty taxes on automotive purchases involving fossil fuel-powered vehicles. Some plan to ban the sale of ICE vehicles as early as 2030.
The shift to renewable fuels is currently the biggest threat to the oil industry. The year 2020 was a tipping point that demonstrated how lower demand will affect oil prices; in this case, low demand means prices may continue falling. Prolonged exposure to unfavorable market conditions caused by the pandemic have facilitated the shifting of the energy conversation in favor of renewables.
The renewable energy movement will continue to grow, meaning oil will continue to be marginalized. Industrial segments may facilitate its continued use, but then the industry will be facing an oversupply and few buyers; thus, oil prices may not have a lot of upside potential.