Are you an upstream, midstream, or downstream oil and gas company? It’s high time you started integrating artificial intelligence (AI), big data analytics, machine learning, robotics, augmented and virtual reality, and other similar modern technologies into your operations.
If you have yet to start your digital transformation journey, know that it’s overdue. You need to quickly find a systems and technology integrator with an artificial intelligence service and other solutions that will allow you to use technology to transform your ideas into reality.
Digital Transformation: How It Looks Like for the Oil and Gas Sector
Digital transformation refers to integrating technology into business areas, functions, and processes so profoundly you effectively change how your business operates and delivers value to your clients or customers.
A white paper published in 2017 by the World Economic Forum in collaboration with Accenture takes an in-depth look at digital transformation as it relates to the oil and gas industry. According to this paper, there are four themes to the oil and gas industry’s digital transformation in the next decade.
- Digital asset life cycle management
- Circular collaborative ecosystems
- Innovative customer engagement models
- Movement towards new energies (i.e., transitioning to renewable energy)
The Value of Digital Transformation in the Energy Sector
Is there value to digital transformation for the energy sector? Yes, there is.
According to the value at stakes analysis presented in the white paper by the World Economic Forum and Accenture, digital transformation could unlock an estimated $1.6 trillion of value broken down as follows (approximate figures):
- $1 trillion for oil and gas companies
- $430 billion realised from lowering emissions
- $170 billion realised from customer savings
- $30 billion realised from a reduction in water usage
- $10 billion realised from productivity improvements
This figure can go up to $2.5 trillion if certain current restraints are relaxed and the potential impact of futuristic tech is considered.
Digital transformation also leads to the following environmental benefits (estimated figures):
- Reduction in CO2 emissions by 1,300 million tonnes
- Decreased water usage by about 800 million gallons
- Prevention of oil spills equivalent to 230,000 oil barrels
Digitalisation in the Oil and Gas Industry
In the oil and gas industry, big data analytics offers the greatest opportunity for cost savings, productivity enhancement, and improved safety.
Oil and gas companies are not laggards when it comes to implementing data technologies. However, they were relatively slow at using the data they had gathered.
Therefore, big data analytics is the biggest digitalisation application that could significantly impact the oil and gas industry.
According to Det Norske Veritas Germanischer Lloyd, big data is ‘describing vast amounts of data, arriving at high speed in heterogenous format with a varying degree of reliability.’
In other words, it is making sense of massive amounts of data gathered through various means (different assets and equipment) arriving in continuous streams and in different formats—for instance, data from industrial Internet of Things devices, gadgets, equipment, assets, and systems.
With the advent of robust computing systems, artificial intelligence, and data centre management, big data analytics is now both practical and practicable.
For instance, the industry has 50 years of accumulated well data in U.S. shale regions. However, only after the application of advanced techniques in imaging, data cataloguing and data analytics could hydrocarbon producers unlock sub-surface geological data that revealed new shale production opportunities.
The Benefits of Digitalisation for the Energy Industry
Digital transformation has value for the energy sector. That much is evident from the discussion above. However, what are the specific benefits of digitalisation for this industry?
1. Cost Savings
The International Energy Agency (IEA) says digitalisation can reduce oil and gas industry production costs by 10-20%.
Cost savings typically come from reduced maintenance costs. Sensors continuously monitor equipment so human operators or artificial intelligence-powered systems can address potential issues before they cause costly problems.
Automated systems performing complicated and previously impossible maintenance also contribute to cost savings. Furthermore, the availability of precise seismic data from advanced surveying and modelling technologies minimises exploration costs and improves cost efficiency.
Meanwhile, the IEA says the power industry can save around $80 billion per year or 5% of their annual power generation costs. Digitalisation enables such cost savings by reducing maintenance costs, improving power plant efficiency, minimising downtimes and power outages, and extending the service lifetime of power plant assets.
The rest of the energy sector industries, such as coal mining operations, can save mainly through optimising and streamlining their processes. For instance, coal mining companies can cut costs by implementing robotic and remote mining, automating mining operations, and improving output through mine modelling and simulations.
2. Productivity Enhancement
Upstream in the oil and gas industry, fibre optic sensors can be used to improve recovery rates from a reservoir. Other strategies may also be implemented to boost production. In fact, according to IEA, digitalisation can boost recoverable oil and gas resources by 5%.
The Permian Basin in the United States is a case in point. The use of digital tools unlocked shale production. Consequently, the volume of oil recovered per drilling rig in the area tripled while the volume of gas doubled.
For the energy sector in general, digitalisation improves productivity by minimising downtimes. When equipment and assets on the field can “talk” to the machines and systems monitoring them, problems can be arrested before they arise. With fewer downtimes, productivity rises.
3. Improved Safety
Digital sensors in equipment and wearables can detect harmful gas leaks, warn of hazardous valve pressures, and alert systems and operators about breaks in the pipelines or problems with field equipment. Likewise, simulated environments can be used to provide in-depth training accompanied by minimal risks to the trainees, their handlers, and the facility.
Start Your Digital Transformation Journey
Digital transformation leads to cost savings, productivity enhancement, and improved safety in the energy industry. If you have long been collecting data with your machine-to-machine systems, it’s time to process and analyse them for valuable insights.
If you have yet to embed AI, big data analytics, automation, machine learning, and other cutting-edge technologies into your functions and processes, start doing it now.
