Why region’s oil majors need predictive analytics
Already, more than half (57) of the world’s 100 largest oil firms are using or have plans to use predictive analytics
As the world’s biggest oil companies, including the UAE’s Abu Dhabi National Oil Company and Saudi Aramco, ramp up investments in production capacity amid $75 oil prices, they are eagerly eyeing new digital tools that could deliver millions of dollars in savings. Enter predictive analytics – the closest an industry beset by uncertainty and technical complexity can get to a crystal ball.
Already, more than half (57) of the world’s 100 largest oil and gas companies – several in the Middle East – are using or have plans to use predictive analytics, according to Lloyd’s Register’s latest technology
radar special report, titled Predictive analytics in oil and gas:
the future in focus, which will be released in Abu Dhabi on the eve of Adipec this week.
One tool, machine learning and predicting failures has, for example, been found to generate savings of many hundreds of thousands of dollars per drill rig and multiple millions on gas pipelines in eastern United States. Giving predictive analytics the cold shoulder would be a costly mistake for Middle East oil, especially when you consider there are 160 offshore rigs alone operating across the Arabian Gulf.
This advanced form of analytics expands on the digital journey established by artificial intelligence, big data and others. It promotes visibility – the bedrock of reliability and efficiency in global energy security. How to glimpse into the future by leveraging predictive analytics will be at the top of the digital agenda of boardroom conversations in the Middle East in 2019.
Within the top 100 companies, evidence of predictive adoption is most extensive upstream, in oilfield equipment and services, exploration and production.
The largest companies, mainly in integrated oil and gas, appear to have advanced furthest. Midstream and downstream can also significantly benefit in the region, especially since it took the aged refining reins from Europe to establish one of the world’s most sophisticated and flexible hubs.
Imagine the enormous impact on profit and loss accounts, balance sheets and competitiveness, if predictive analytics can be properly applied to the large number of ageing refineries around the region and to the raft of new facilities being planned and soon to come on line. This has durable value, as the International Energy Agency expects the region to have the world’s biggest growth in refining capacity up to 2023.
Over the next five years, this cutting-edge digital tool can bolster production while streamlining costs and cutting risks. That’s a very good deal for those willing to grab the opportunity.
“Data diamonds” are key to unlocking the most valuable insights via predictive analytics. The global data sphere will grow to 163 zettabytes (ZB) by 2025, which is a trillion gigabytes and a staggering 10 times the 16.1ZB of data generated in 2016, according to the International Data Corporation. To try to get an idea of how big a zettabyte is, according to US tech major Cisco, if each gigabyte in a ZB were a brick then 258 Great Walls of China (made of 3,873,000,000 bricks) could be built.
As data volumes surge, tools like predictive analytics will enable companies to focus on the quality of information rather than an overload. Quality over quantity will prevail. The more data is intelligently gathered and analysed, the more lessons are learnt and more efficiencies and visibility can be achieved.
This intelligence will be a much-needed release valve in what is an increasingly intense pressure cooker in the Middle East and beyond. Energy stakeholders face tall orders on every front. Energy consumption in the Middle East alone is expected to rise by 54 per cent up to 2040, according to
BP Outlook, while the near-30 per cent gain that the United Nations expects in the global population by 2050 is also echoed in most Gulf countries.
Demanding environmental regulations spawned by the Paris Agreement and cross-border geopolitical tensions that hinder collaborations are also upping the ante. The pressure cooker cannot afford to blow.
Smart solutions that maximise the clout of digital revolution are the safest answer in an industry renowned for its myriad of unknowns. The Opec+ agreement (the deal between Opec and non-Opec members to curtail output), the US’ sanctions on Iran, trade wars and environmental regulations such as the International Maritime Organisation’s sulphur cap of 0.5 per cent on bunker fuel from 2020, are all potential triggers for volatility in the Middle East oil market.
The multibillion-dollar savings identified in Lloyd’s report have the power to help stabilise Middle East oil stakeholders’ balance sheets and spur much-needed research and development to commercialise digital innovations. The latter is especially relevant to many Gulf nations’ plans to become knowledge-based economies, the UAE included.
Primary players from energy and technology companies, government to academia and financial institutions must lower the brick walls that crimp the flow of knowledge sharing.
Predictive analytics are essentially an intelligent heads up that can enable proactive action to be taken affordably and efficiently, saving millions of dollars and potentially even lives. While Middle East oil stakeholders’ digital tools have been shedding light on the dark corners of operational inefficiency for years, predictive analytics gives them a powerful spotlight to see every detail. They must be patient and persevere; the 20/20 vision will be worth it.