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New Beginning for US Oil & Gas Sector and the Role of Global Sourcing
Sean Manchanda & Pradeep K. Mukherji
As one of the most capital-intensive industries in the world, the oil and gas sector requires continuous investments to maintain and grow reserves in the face of accelerating depletion rates from the world’s known oil fields. Oil and gas companies that fail to renew their resources on a continuous basis suffer from a diminishing market value and possible obsolescence if their reserves run dry.
When oil prices reached a record high of almost 0 per barrel in July 2008, industry stakeholders recognized that prices would ultimately pare down. Very few, however, predicted the severity of the fall in early 2009, where prices dropped to about per barrel. Upstream companies that had committed themselves to Capital investments found themselves saddled with unsustainable production costs. While retrenchment and cost containment are seemingly prudent responses to weaker economic conditions, such a reaction in this industry can result in long-term pain since they cannot afford to be sidetracked by short-term trends. They need to take a long-term view while deploying cost-cutting and process-improvement initiatives and more importantly identify viable options to grow their business by exploring new reserves and next generation technology .The North American Shale gas revolution has not only transformed the US natural gas reserves but is gearing to emancipate the economy from the clutches of global meltdown. In this paper, we outline how United States is at the cusp of being an exporter of natural gas in near future by addressing the imminent need of skills development and knowledge management through global sourcing of services.
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