A new paradigm for oil and gas Oil and gas companies are about to enter a new paradigm. It is being shaped by a combination of factors that are flipping the energy industry on its head. Hydrocarbons’ dominance in the energy mix will fall by some estimates, from 80 percent today to just above half by 2060

2. A NEW PARADIGM FOR
OIL AND GAS
HYDROCARBONS’ DOMINANCE
in the energy mix will fall by some
estimates, from 80 percent today
to just above half by 2060
Source: Accenture Strategy analysis
TECHNICAL ADVANCES
HAVE SWELLED
RECOVERABLE RESERVES
BREAKEVEN COMPRESSION
HAS ESTABLISHED LOWER
PRICE CEILINGS

3. Billions of dollars in new sources of
Are waiting for US oil and gas
companies that take the
RIGHT
ACTION
NOW
PROFITABILITY

4. As margins shift from
upstream to other
parts of the value
chain, diversified
energy companies are
reaping the rewards
THE RESOURCE REVOLUTION:
SUPPLY
Average return on capital investment
comparisons across oil price cycles
Full-cycle
2010-2016
Oil Up-
cycle
2010-2013
Oil Down-
cycle
2014-2016
Downstream IOCUpstream
4%
7%
10%
9%
6%
13%
(6)%
8%
3%
FollowersBest PerformerSource: Accenture Strategy analysis
UPSTREAM RETURNS
will be less significant than
today possibly dropping
from 80 percent to a
fifth or less

5. THE RESOURCE REVOLUTION:
DEMAND
U.S. CUSTOMERS
WANT CLEANER
Electricity, petrochemical
and gas-powered solutions
LIQUEFIED NATURAL GAS
is set to make up ~20 percent
of all gas production by 2035
The use of gas
for electrification is projected
to grow 50 percent BY 2035
Source: Accenture Strategy analysis

6. THE RESOURCE REVOLUTION:
RENEWABLES
6
Solar and wind are on track to be
than coal and gas by 2035
30% CHEAPER
Cost of energy from
are nearing parity with fossil fuels
SOLAR AND WIND
Source: Energy BP Outlook 2017, Accenture Strategy analysis

7. Cheap renewables may set the
stage for an irreversible decline in
HYDROCARBON CONSUMPTION
INDUSTRY
BOUNDARIES
ARE SURE TO

8. RESOURCE
REVOLUTION
To capture value from these disruptive forces,
oil and gas leaders in the United States need
to:
TRANSFORM
their core capabilities with
the help of digital technologies
RE-IMAGINE
where they compete and how
they will harness future growth

9. TRANSFORMING
THE CORE
THE IMPERATIVES
These attributes
require a new
ENTERPRISE DNA
FUTURE DNA ESSENTIAL
CAPABILITIES
PORTFOLIO
MANAGEMENT
VALUE CHAIN
INTEGRATION
CONNECTED
ENTERPRISE
TECHNOLOGY
INNOVATION
ECOSYSTEM
MANAGEMENT
RISK
MANAGEMENT
CUSTOMER
ORIENTATION
Maximize the value
of every molecule
Embrace digital technologies
for hyper-efficiency
Work across functional areas
and with external partners to
deliver new solutions
Source: Accenture Strategy

10. PIVOTING TO THE NEW
Nearly One-third of oil and gas
leaders believe their primary
source of growth in 2020 will
come from existing products
and services
TO ACCESS NEW SOURCES OF VALUE, US
OIL AND GAS COMPANIES WILL NEED TO DO
NEW THINGS, IN NEW WAYS…
Almost half see new products
and services as most critical
to their future growth
From dominance
to diversity
From extracting
energy sources to
extracting value
From resources
to relevance
Source: Accenture Strategy revenue growth research

11. CUSTOMER
CENTRICITY
GLOBAL
ENERGY FLOW
Electricity demand is set to double by 2040.
Demand for petrochemical solutions is on track to surge by 75 percent
The shifts of energy flows will profoundly affect how resources
are sourced, managed and used
FROM DOMINANCE
TO DIVERSITY
WISE PIVOT #1
Source: IEA WEO 2016, Accenture Strategy analysis

12. Four opportunities hold particular potential.
OIL AND GAS LEADERS IN THE UNITED
STATES WILL ADOPT NEW ROLES
LIGHT GAS VALUE CHAIN
INTEGRATION
Retail provider,
high-frequency trader, etc.
CONSUMPTION-LED
PETROCHEMICAL SOLUTIONS
A “materials” company,
joint venture participant, etc.
CUSTOMER-CENTERED
ENTERPRISE
NexGen retailer, connected
home manager, etc.
POWER
MARKET ACCESS
Wind farm operator,
storage provider, etc.
WISE PIVOT #2
FROM EXTRACTING ENERGY
SOURCES TO EXTRACTING VALUE

13. Ride-sharing companies arbitrate
supply and demand
Online retailers manage vast
ecosystems of suppliers
Media companies deliver the
streaming content users want, based
on granular assessments of viewing
habits and entertainment needs
Placing customers
at the center of
investments is critical
Use customer insights
to develop new hyper-
relevant services
WISE PIVOT #3
FROM RESOURCES
TO RELEVANCE
WHY CAN’T OIL AND GAS
COMPANIES DO THE SAME?

14. GETTING
STARTED
Establishing a framework
for funding, evaluating and
developing businesses
Incubating an
innovation culture
Channeling the right
talent and leadership
Rethinking the
capabilities you
need to flourish
A WINNING APPROACH REQUIRES...

15. GETTING
STARTED
The days of extracting value from
new business models and changing
customer behaviors have just begun
The days of focusing solely on
EXTRACTING RESOURCES ARE OVER

16. JOIN THE
CONVERSATION:
@AccentureStrat Follow us on LinkedIn
Learn more about how oil and gas companies
can pivot to the new energy landscape.
Read the full report:
THE WRITING’S
ON THE WELL