Oil & Gas In­dus­try’s Un­tapped Dig­i­tal Op­por­tu­nity

Forbes Middle East - - CONTENTS - By Bart Cor­nelis­sen

With ex­ter­nal forces pres­sur­ing rev­enues and costs, op­er­at­ing within a tra­di­tional and con­ven­tional mind­set is no longer a vi­able re­course for up­stream oil & gas com­pa­nies. Stand­ing still is not an op­tion. Fail­ing to em­brace dig­i­tal is cost­ing the oil & gas in­dus­try as much as tril­lions of dol­lars in po­ten­tial rev­enue.

We are stand­ing at an in­flec­tion point in dig­i­tal tech­nol­ogy. Costs of sen­sors, data stor­age, and pro­cess­ing are fall­ing. Al­go­rithms are more so­phis­ti­cated, and pro­cess­ing power is in­creas­ing rapidly. The fu­ture is driven by data and an­a­lyt­ics due to a need to bet­ter un­der­stand prod­ucts, cus­tomers, and the mar­ket.

When seen from the lens of in­no­va­tion, dig­i­tal and an­a­lyt­ics go hand in hand. With an­nual data gen­er­a­tion es­ti­mated to rise by 4,300% by 2020, the op­por­tu­ni­ties to make use of data dif­fer­ently are preva­lent. In­sights such as pub­lic sen­ti­ment anal­y­sis, weather data, gov­ern­ment and mar­ket in­for­ma­tion are be­ing com­bined with AI and cog­ni­tive tech­nolo­gies to bet­ter an­a­lyze and pre­dict de­mand and in­tro­duce new ef­fi­cien­cies that were pre­vi­ously not pos­si­ble.

Dig­i­tal­iza­tion can rev­o­lu­tion­ize the en­tire oil & gas value chain, from ex­plo­ration to pro­duc­tion and onto cus­tomers. With an em­pha­sis on data pow­ered by an­a­lyt­ics, dig­i­tal­iza­tion can be lever­aged for the full au­to­ma­tion of pro­duc­tion rigs, the con­sis­tent mon­i­tor­ing of the flow of crude and its com­po­si­tion, greater cer­tainty in the dis­cov­ery of new re­serves, vis­ual in­ter­ac­tion with vir­tual rep­re­sen­ta­tions of the field, and the con­tin­u­ous pro­cess­ing of data with au­to­mated de­ci­sion-mak­ing ca­pa­bil­i­ties. It can also min­i­mize hu­man in­volve­ment in high-risk ac­tiv­i­ties across the field, in­te­grate sup­plier and op­er­a­tor ecosys­tems to de­liver more eco­nom­i­cal out­comes, and repri­or­i­tize ac­tiv­i­ties by us­ing in­tel­li­gent sys­tems that use real-time, dy­namic an­a­lyt­ics.

The struc­ture of the in­dus­try is be­ing chal­lenged by in­ter­nal and ex­ter­nal forces, in­clud­ing: pres­sure on rev­enues from price volatil­ity, an ac­cel­er­ated en­ergy tran­si­tion due to de­mand for lower car­bon al­ter­na­tives, and in­creased com­plex­ity in tech­nol­ogy and global trade flows. In light of these struc­tural changes, there is now a need for, among oth­ers, per­va­sive vis­i­bil­ity and in­sights on cost and pro­duc­tion, ag­ile field de­vel­op­ment, and an in­te­grated sup­plier and op­er­a­tor ecosys­tem to drive re­turns.

Some oil & gas com­pa­nies have al­ready jumped on the train of dig­i­tal evo­lu­tion as they have fun­da­men­tally re-imag­ined and changed how op­er­a­tions are con­ducted and man­aged across the en­tire value chain. Shell has em­ployed an­a­lyt­ics and AI to pre­dict when main­te­nance is needed on equip­ment and to lever­age real-time data to help ge­ol­o­gists boost pro­duc­tiv­ity and re­duce drill wear-and-tear. Saudi Aramco has em­ployed dig­i­tal sur­face and sub­sur­face tech­nolo­gies to op­ti­mize field de­vel­op­ment and op­er­a­tions and has also de­vel­oped tools de­signed to help en­gi­neers bet­ter plan and man­age fields and reser­voirs.

Just as anal­y­sis of cur­rent mar­ket seg­ments or op­er­a­tional pro­cesses can re­veal op­por­tu­ni­ties to change the sta­tus quo, so too can in­no­va­tive ap­proaches to an­a­lyt­i­cal so­lu­tions help to en­sure all data sources and pre­dic­tive in­di­ca­tors have been built into the model.

But only fo­cus­ing on dig­i­tal tech­nolo­gies whilst ig­nor­ing com­po­nents of an or­ga­ni­za­tion's op­er­at­ing model, can­not lead to a quick adap­ta­tion of, and cap­i­tal­iza­tion on, the gains of dig­i­tal­iza­tion. Or­ga­ni­za­tions need to de­fine a strat­egy for dig­i­tal trans­for­ma­tion rather than plac­ing em­pha­sis on the im­ple­men­ta­tion of tac­ti­cal dig­i­tal so­lu­tions for in­cre­men­tal gain. More im­por­tantly, with in­vest­ment in the right mix of skillsets, up­stream oil and gas com­pa­nies can ac­cel­er­ate and sus­tain dig­i­tal trans­for­ma­tion in the long term.

With ef­fi­ciency still the fo­cus, oil & gas com­pa­nies should be bold and strive to cre­ate a cul­ture of ex­per­i­men­ta­tion where the model is driven by “fail fast and learn faster”. A dig­i­tal strat­egy based on strong lead­er­ship, com­bined with skilled and ca­pa­ble re­sources, and an ef­fec­tive op­er­at­ing model, can then al­low or­ga­ni­za­tions to har­ness the full ca­pa­bil­i­ties of dig­i­tal and gen­er­ate sig­nif­i­cant value for all stake­hold­ers in­volved.

Newspapers in English

Newspapers from UAE

© PressReader. All rights reserved.