The impact of digital change can be seen all around us from online retailing, smart wearable devices to Uber and alike… According to Moore’s law, the processing power doubles roughly every two years. Yet the consumers expect tangible technology improvements by the day. This thirst for easy access to everything at the tip of our finger is pushing all sorts of businesses towards a digital transformation.
Digital know-how in the oil and gas industry
Though the oil and gas industry has already been leveraging on digital technologies for some time, it has mostly focused its efforts on increasing efficiency, reducing costs and maximizing standardization. While giving priority to processes for service optimization seemed to be a good maneuver in adapting to a weakening economy, the industry has yet to gain added value from the digital transformation. Only modest progress has been achieved in terms of exploitation and analyses of the huge and fast-growing amount of data stored. Such transformation should lead to an unprecedented impact on the sector by reducing unplanned downtime and optimizing production without compromising HSE. This could in turn improve the productivity of existing assets which might generate significant benefits to an industry slowly adapting to low oil prices and high cost levels.
Even though the investments in O&G industry went only upwards in the last decade, the average production efficiency has dropped. At just $40 a barrel and less, the whole supply chain is being forced to cut spending, sell assets, shed jobs and delay projects as the oil slump shows little sign of recovery. With only few new-build projects in sight industry-wide, costs are essentially cut by reducing the size of projects, renegotiating supply contracts and using less complex technology.
For a sector which collects enormous amount of data, the greatest opportunity lies in exploiting its “bites capital” adequately, but the O&G struggles to maintain data quality, to aggregate data and conduct meaningful analyses. As to the main players with expertise in the wide field of big data, turning analyses into relevant business assets has been challenging and has not yield to satisfactory results. A true multi-disciplinary approach has led to game-changing transformation in sectors such as transportation, health and manufacturing. Following the same path does not necessarily lead the oil and gas industry towards a radical transformation; with common efforts, it could be a more a matter of seamless transitioning.
Digitalization offers ways to reduce cost, increase flexibility and boost value from production. Analytics and cognitive computing technologies made available through mobile devices can support decision-making, allowing optimized production and safer operations. It can create mobile gateways for inspection enabling operators and surveyors to establish a direct connection to an asset. Real-time data analytics could help in predicting breakdowns. The integration of digital technologies can and will help the industry in gaining efficiency in work processes and standardizing the delivery models.
Many opportunities for the industry can be derived from collaborating, sharing and learning from within the sector and across a whole range of domains. In our industry, data sharing has not been common practice, but now more and more actors are opening up and are transferring knowledge with one another. Nurturing a culture for sharing could also lead to the explosion of standard products and would provide open arenas for experience exchange. This cultural transformation will act as a platform for running collaborative projects and the sector might witness unexpected partnerships arising.
The prerequisite in achieving a smooth transformation is visionary leadership. Today’s leaders can only make the right call for generating added values if they fully grasp the deployment of IT advancements, follow trends and foresee their implications. While the leaders shall anticipate the mindset and competences needed, the main challenge could consist in accessing the right skills and experience. Some lay-offs in the last years have created a vacuum. In addition, a big chunk of today’s workforce will retire around 2025. The knowledge they possess has not yet been digitized. Our current decision-makers need to work towards creating a framework that values collaboration and a more systematic transfer of knowledge among the staff.
Digital transformation is inevitable and necessary for most businesses. The oil and gas industry is slowly adapting to this new reality. The necessary mutation shall not consist of a technical shift but also of both a business model shift and a skill shift. Technological advancement per se is not going to transform our industry. The success of this transition will be determined by the degree to which individuals are empowered to embrace constant change. Then only there will be a fertile ground for growth and innovation.
By Prashant K. Soni.
Bussiness Development – Digitalization