Energy giants in new embrace of the digital world

WHEN Chris Blackford started pitching Sky-Futures, the drone company he had co-founded, to oil and natural gas companies, there was not much interest.

The London-based startup flies unmanned aircraft around offshore platforms, oil rigs and other sites, collecting high-resolution videos and images that can spot potential infrastructure problems and, according to Blackford, costs roughly 80 percent less than traditional inspections.

But for many in the energy industry, the technology was still new and untested. That started to change after Talisman Energy, the Canadian oil and gas explorer, gave the fledgling company a chance on one of its offshore sites in 2012, leading to significant time and cost savings. Other energy companies’ reluctance then quickly turned into a growing demand.

“If you name a global oil company, we’ve probably worked for them,” said Blackford. Since 2014, the startup has branched out from mere drone inspections, offering clients access to sophisticated data analytics and algorithms that examine gigabytes of sensor information, for onshore and offshore sites, to flag potential problems that can’t be detected by the human eye.

“In the last six to 12 months, we’ve seen a spike in people’s interest in the data that we can bring to the table,” he said, adding that his team can, for instance, analyse the amount of corrosion to be expected on an oil rig over the coming year. “We can take the data, measure it and look for trends.”

Where engineers often manually monitor oil wells, companies like Exxon Mobil and Petrobras, the Brazilian energy company, seek to automate these processes with tiny sensors that cost a fraction of what they did even five years ago. Whirring supercomputers – some 70,000 times as powerful as an everyday laptop – can quickly crunch geological and seismic data, helping energy-makers find savings amid low oil and natural gas prices.

And more advanced efforts – like riginspecting drones and even autonomous vehicles – are being tested as the sector tries to catch up with other areas of the economy that have more readily embraced technological advances. The reams of digital data collected from offshore platforms, refineries and oil rigs, among other sites both onshore and off, may better detect energy deposits, find more efficient ways to produce refined oil products like petrol and even predict where future breakdowns are likely to happen.

“IT is back in fashion,” said Kenneth Vareide, director of business enhancement at DNV GL, a Norwegian consulting firm. “Companies already have taken out a lot of costs from their operations. Digital offers a new opportunity that really hasn’t been tapped yet.”

For many in the energy industry, such predictions may sound all too familiar.

Over the past two decades, companies have put hundreds of millions of dollars into new digital technologies, often with limited results. In about 2008, when oil hit a record $147 a barrel, analysts said many oil majors spent big on data centres and advanced software programs, only to see such projects be outpaced by those from IBM, Amazon and Microsoft, which could offer similar computing power at a fraction of the cost.

The recent protracted slump in global energy prices – the average oil price is still down about 60 percent since 2014 – has focused minds on more basic restructuring, with job cuts and asset sales taking precedence over sensors and data science. A longstanding scepticism about untested technology also has pushed the industry to the bottom of the class compared with other sectors when handling all things digital, according to the Boston Consulting Group.

“In the 2000s, resistance to technology was everywhere,” said Nate Clark, an energy partner at PricewaterhouseCoopers, in Houston.

“People tried to do too much, too fast.”