The industry has the ability to succeed in digitalisation and can deploy the latest, cutting-edge technologies in order to sustain the sector's four values of safety, innovation, transparency, and efficiency
Digitalisation can be a key enabler for the oil and gas industry, which currently faces one of its biggest challenges, that is, to produce energy in a more reliable, affordable, and responsible manner.
Despite fluctuations in oil and gas prices over the last five years and alternative sources of energy becoming mainstream, oil demand continues to grow.
With the question of how to secure the industry’s future, digital transformation could provide answers.
Every industry is using digital technologies to rewrite its operating landscape, and the oil and gas industry cannot afford to stay behind.
The benefits of going digital are clear: Increased productivity, safer operations, and cost savings. Digitalisation could unlock up to $2.6 trillion in the Mena region by 2025, while even a 1 per cent gain in capital productivity could mean savings of about $40 billion.
For example, drones and autonomous robots can reduce drilling and completion costs by 20 per cent in deep water areas and 25 per cent in costs associated with inspection and maintenance of assets.
Although some segments are ahead of others in data-driven analytics, for example, seismic exploration is ahead of development drilling in analysing and visualising information, the production segment is still grappling with sensorising its decade-old wells or making sense of the stored production data.
In general, the industry can draw lessons from digitally leading capital-intensive industries that are influencing a big change in their physical assets and capital models.
For industry players, who are already grappling with fluctuating oil prices and moderating operational gains, one of the biggest advantages of adopting digital technology could be the resilience these technologies offer to weather the downturns that the industry is prone to.
The industry has the ability to succeed on the digitalisation journey and can deploy the latest, cutting-edge technologies and applications in order to sustain the sector's four values of safety, innovation, transparency, and efficiency.
However, that would require it to continue to engage, go through all sectors, renovate, and develop solutions for a successful industry.
Digital transformation can help create a sustainable E&P sector, help enhance crisis management capabilities, accelerate decision making, and have a long-term effects on operational efficiency and the return on investment (ROI).
However, rapid changes in the digital world, a complex web of interdependencies between technologies, and even many names for the same technology often make it difficult for the industry to enable its digital transformation.
A report by the Deloitte Center for Energy Solutions says what holds the industry back from achieving digital maturity is not the technicalities; it is often the digital muddle that’s deterring companies.
MORE THAN JUST DEPLOYING NEW TECHNOLOGIES
Currently, there are serious discussions going on in the industry on digital transformation, which is the most important aspects of its future.
And while digital transformation may seem to be just about deploying new technologies and optimising processes of a new system, it is in fact going through all, as it requires fundamental integration of technologies into all areas of the business.
Digital transformation doesn't only mean digitisation. Oil companies are sitting on massive amounts of data that are mostly in silos. Digital solutions can use this data to create value, increase efficiency, and save costs and time.
Accordingly, digital transformation is about enabling process transformation to play a key role in enhancing the sustainability of business operations.
The real edge of digitalisation and digital transformation (is not just) to have the data but to use the data (and) transform it into a solution.
Infrastructure is also one of the factors required for successful digital transformation. However, establishing the infrastructure is not a problem for the oil and gas sector.
Building the infrastructure for digitalisation can be much faster [and] easier than building the physical infrastructure.
Typically, in the oil and gas industry, the digital thinking and narratives stop at data-driven insights.
But to become a digital leader, a company should consider making a change in its physical world by modernising its core assets (in this case, rigs, equipment, platforms, and facilities).
This phase starts with robotising facilities and progresses to the crafting of new products to improve precision, reliability, and design aspects of physical assets.
Ultimately, the phase ends with virtualising the entire asset base by creating digital twins and the digital thread, to not only extend the life of assets but also to adopt new business and asset models in the long term.
A digital twin/thread vision would inevitably trigger the thinking and necessity to enable cross-organisational and cross vendor workflows, the biggest bottleneck for many digital transformations.
Once this physical-to-digital-to-physical loop has covered an asset, the loop can be restarted and widened to include a system of assets in a particular business line or geography, then the organisation and, ultimately, the entire supply chain and external stakeholders of a company.
Digitalisation also has a key role in the oil and gas industry’s energy transition. Without digital transformation, the industry will lose the opportunities to improve sustainability, better processes and reduce carbon emissions.
Digitalisation has an impact along the entire energy value chain, ranging from generation to transport, distribution, supply and consumption. A system-wide approach and the support of governments to promote the cooperation between digital and energy stakeholders are needed so that the digitalisation of energy can better contribute to global net-zero goals.
CYBER SECURITY AT THE CORE
A comprehensive cyber risk management program that is secure, vigilant, and resilient, and an organisational culture–or digital DNA–that would enable this transformation remain at the core of the model. The challenge that we all will face with digital transformation is actually cyber security.