HOUSTON—The oil and gas industry is facing many challenges, but perhaps none more than the struggling oilfield service sector, a leading oil and gas analyst said on July 18.

“Oilfield service has not benefited from this upturn at all,” said John England, partner in Deloitte’s oil, gas and chemicals practice, at Shale magazine’s State of Energy luncheon. “In fact, as the industry has become more efficient, that’s actually hurt their margins.”

Consolidation is necessary, England said, for the sector to regain pricing power.

“The space screams for consolidation,” he said.

Other challenges the industry must grapple with include a negative public image and a necessary, but so far somewhat awkward, embrace of Big Data.

“Our society has become very data-centric,” said Jason Reed, vice president for oil and gas products at Drillinginfo. “Unfortunately, I think that energy has lagged behind. We’re finally catching up, slowly but surely.”

Digitization of energy is absolutely critical, he said, because the upstream needs optimization to be successful and optimization requires robust, sound and trustworthy data.

Digital Transformation

“What’s the shape of the decline curve?” Reed asked. Being able to predict outcomes allows a producer to optimize engineering designs to develop better wells and get more product per unit with less cost.

“You can’t do that without really, really rich data and really sophisticated tools to help you better predict what the next steps will be in that optimization curve,” he said.

But if the industry is slowly figuring out how to use data, it by and large remains at a loss in its efforts to convey its message effectively to the public. In this arena, reliance on data is a mistake.

Public Image

“It’s no longer sufficient for us as an industry to say we need to build this because supply needs to get from here to here,” said Allen Fore, vice president for public affairs at Kinder Morgan, who has abandoned corporate talking points in favor of a direct approach to dealing with the public. “Maybe that worked a few years ago, 10 years ago. It doesn’t work anymore.”

Fore is focused on telling a compelling story for each of the company’s projects. He said he begins with a micro perspective–how it will impact a landowner’s property–and takes it to the macro perspective–the role that pipelines play in American energy independence, job creation and revenue generation for education and public safety.

“If we can explain why we’re doing it and how we’re doing it, folks will understand,” he said.

But he urged industry members to get out of their echo chamber and comfort zones, and bring their message to forums where people oppose what the oil and gas industry represents. It’s not easy and it’s not always pleasant.

For example, Fore participated in a town hall in New Hampshire that was called to inform citizens about a Kinder Morgan natural gas pipeline project. The region is desperate for natural gas and the project helps to alleviate tightness in the market.

However, the first speaker during the Q&A portion did not see it that way.

“This local person said, ‘how can you justify murdering my children?’ and then walked off,” Fore said. “And the whole place went crazy with cheers.”

The experience taught Fore that he needed to be forceful and direct in telling the industry’s story, because the story of providing energy for society to function as it does is a good one.

“We’ve got to use traditional and non-traditional platforms to do it,” he said. “We’re getting the heck beat out of us on social media.”

Which is why telling the story in the halls of government of Austin or Washington isn’t enough. Mainstream America, Fore said, is populated with people more inclined to support the industry.

“This is a long game,” he said, “and we’ve got to be better at it.”