The oil and gas industry needs to break the barriers thwarting digital transformation.
Over the past few years, the oil and gas industry has been on a tumultuous journey. Especially the fluctuation in the Brent Crude Oil benchmark has sent the industry into a frenzy mode. When the Brent crude oil prices suddenly plummeted in 2014, which is considered the biggest oil drop that the industry has ever witnessed, it took more than two years for the industry to recover from the economic loss.
Undoubtedly, The global oil and gas industry can be redefined using disruptive technologies like electromagnetic locating. When the USA instilled stricter sanctions over Iran, the Oil industry faced the challenge of asset management down the supply-chain segment. In April this year, COVID 19 outbreaks and the stricter restrictions to travel disrupted the export and import of oil and natural gas, leading to the highest crude oil prices.
The oil industry is heavily governed by inter-continental trade and caters to the demands of suppliers, buyers, and retailers. When the incidents like the fire in Saudi Arabia’s Aramco plant, the world’s largest oil processing factory happens, it has a significant global impact on the oil and gas community.
Though many economic and geopolitical reasons collate to the fluctuating oil prices and disruption in services, industry leaders have realized that the sales and pricing will not alone save the oil and gas industry from such unprecedented incidents. A strategical approach must be adopted to improve asset performance. Henceforth oil and gas industry is listed amongst the sectors leading in the adoption of disruptive technology.
A report named “From Barrels to Bytes” by the research firm Deloitte cites the digital transformation of the oil and gas industry using disruptive technology.
Digital Operations Technology
The report cites the digital operations technology model as the frontier of digital operations, which puts the cybersecurity and organization’s digital traits at the core. This model decodes the digital deluge. The first step in establishing this model includes mechanizing the process using hydraulic, pneumatic, or electrical control systems, which allow companies to anticipate and prepare for failures and unusual conditions. The next step includes capturing information from the physical world by sensorizing equipment and transmitting data generated in the field using IT networks. By doing this, an O&G company can respond to field conditions and monitor operations remotely.
For a company to break operational silos, it must focus on hidden productivity gains, improve existing data usage, and identify new areas of value creation. Moreover, with many companies failing to benefit from the installed digital ecosystem the transformation can be catapulted by integrating diverse data using cloud-solvers, servers, and data standards. Analysis and visualization of data using big data analytics and wearables to augment decision-making will also contribute to the progress of the transformation.
The paper recommends that the companies aiming to become digital leaders must reap the maximum benefits from their digital assets. This implies automating/ robotizing facilities and crafting the new products for improved precision, reliability, and design aspects of physical assets. By creating digital twins and digital thread, the asset base gets virtualized so that asset life gets extended, the new businesses get adopted, and asset models can function in the long term.
Moreover, the digital twin/thread vision approach will undoubtedly enable cross-organizational and cross-vendor workflows, which is the biggest bottleneck for many digital transformations.
Seismic imaging has been part of the oil and gas industry since the early 1980s. Many organizations are leveraging data analytics, and geological data and formats to analyze the geoscience data of wells in a few seconds. Moreover,
Seismic imaging is deployed to predict the distribution of fractures in tight reservoirs for enhancing the flow and optimizing well placement. However, when the oil and gas industry is investing in digital technology, a burrowing gap is observed between good and bad resources, which promote the valuation divide between the buyers and sellers of upstream assets. To rectify this, the report suggests that companies can move toward the augment stage, where machines reveal the geology through iterative learning and independently adapt using several factors, patterns, relationships, and scenarios.
To continue operations effectively, breaking the data silos becomes imperative. Undoubtedly digital transformation attains in reducing the cost of operations, but many companies in the O&G industry are far from employing disruptive technologies. For example, development drilling, which is the embryonic stage of data analytics, is not employed by many companies. Additionally, the upstream service companies and oilfield service companies need to align with digital technologies to thwart cyberattacks. By leveraging disruptive technologies the industry leaders can focus on maximum value creation in several areas of drilling like optimization of trajectory, rate of penetration, frictional drag, drill string vibrations, equipment performance, and more.
Lastly, performance analytics will assist the companies to achieve optimization in the drilling process. The performance analytics includes establishing new key performance indicators, analyzing high-frequency signatures on drive systems, and assessing usage intensity on key assets.
The digital value for development drilling will ensure a cost-saving of over US$30 billion for upstreaming players.
The global oil and gas industry can be redefined using disruptive technologies. However, while some companies have embraced digital transformation, others are yet to employ disruptive technologies. One of the greatest advantages of digital transformation is that it limits the cost-effectiveness of the process. Apart from being cheaper, digital transformation also provides accurate outcomes. The industry leaders must identify the gap that is delaying digital adoption. Undoubtedly the oil and gas industry has a promising outlook with digital transformation.