The U.S. Energy Information Administration predicts a nearly 50 percent rise in global energy demand with volume increases expected to come from unconventional sources. The cost of supplying oil and gas will grow as a result of less accessible geology and new technologies required for extraction. Capital expenditures to fund these new sources of oil and gas grew from $568 billion in 2008 to $825 billion in 2013, demonstrating a huge rise in the size and complexity of capital projects.
This report identifies the root causes of failure in oil and gas capital projects, broadly classified into four types of challenges:
- External: centered on regulations and human capital
- Project: encompassing project management practices, governance models, and contractual and risk ownership models
- Planning: budgeting, forecasting, engineering, and design concerns
- Execution: procurement, supply chain, and technology