Like many other industries, the oil industry is undergoing a digital shift. Oil companies are now seeing the profound impact of technology in improving productivity, reducing costs and increasing revenues. Apart from reigniting progress, rapid advances in technology, in the years to come, are expected to engineer further growth in this multi-billion industry.
According to Strategy&, the global strategy consulting team at PricewaterhouseCoopers (PwC), the Oil and Gas Industry is facing an intense pressure to improve operational efficiencies as lower oil prices continue to crimp margins. The firm said that since 2014, the capital expenditures on exploration has dropped by 26%, which shifts the focus to maximizing production and throughput by “sweating” existing assets.
“While the industry continues to swing between highs and lows, the operational nature of the business has remained relatively constant. Achieving a breakthrough on production performance demands a fresh perspective on field operations,” Strategy& said in a report titled “Improving oil and gas efficiency through digital,” noting that digital transformation has the critical capability to accelerate operational efficiency and drive margins.
“The need for operational efficiency coupled with maturing technologies represent an inflection point for disruption. The traction of technology trends such as analytics, robotics, sensors, and control systems offers companies the opportunity to accelerate field automation in a pervasive manner,” Strategy& said.
At present, it can be observed that digital transformation is picking up the momentum, helping industry players in a variety of ways.
NeoSystems, a firm providing software solution for managing company’s safety and compliance processes, said that affordable technology, for instance, enables oil companies to gain a competitive advantage.
“Necessity breeds innovation, and in the oil and gas landscape, the major driving force behind the search for new and innovative technologies is the economic downturn that shell-shocked many companies starting in 2014 or 2015. Oil and gas companies are looking to integrate solutions and technologies that will give them a competitive advantage, provide critical insight into core business practices and operations, and above all, reduce costs,” NeoSystems said in its Web site.
“Fortunately, innovative technology is becoming increasingly affordable, and we will see more and more oil and gas companies have access to digital technologies such as real-time data streams, mobile technology and embedded sensors, keeping them constantly updated on their operations.”
Meanwhile, considering data as one of the biggest assets of oil companies, they are becoming more reliant on data analytics to optimize profits.
Using a digital platform to manage, measure, and track all of the data coming from all departments and all operations all over the oilfield, according to NeoSystems, have helped oil and gas companies gained valuable insight and maximized their quality and output.
“With data flowing around the oil field, digitization enables oil and gas companies to reduce costs associated with unplanned downtime and employee injury or illness, while simultaneously reducing risks,” the software solution provider said.
A study conducted by Kimberlite, an international oil and gas market research and analytics firm, showed that oil and gas companies are experiencing an average financial cost of $49 million every year due to unplanned downtime. Operators using a predictive, data-based approach, on the other hand, experience 36% less unplanned downtime than those with a reactive approach, which can result in $17 million dropping to the bottom line annually on average.
Moreover, with the utilization of real-time data, where information are processed quickly and are shared in real time, industry players are now more agile in adapting challenges and different market conditions.
“Effective use of digital technologies can help a company become more productive, efficient, and agile, with the meaningful real-time data and insight to make precise business decisions and reduce financial costs where it matters,” NeoSystems said.
Real-time updates on the conditions of equipment, pipelines, and mechanical systems have also enabled oil and gas companies to instantly determine the root causes of machinery failures, malfunctions and defects, thus helping them be more efficient in their overall operations.
While technology was able to catch up with what the industry needs, the industry itself still lags behind in leveraging some of the advancements.
As for Fotech Solutions Limited, a firm that develops distributed acoustic sensing solutions for the oil and gas, pipeline, and security markets, the oil and gas companies have been too slow to seize the opportunity presented by digitization.
“As emerging technologies continue to reshape the landscape of other legacy industries, the oil and gas industry has generally been more cautious and slower to embrace change,” Fotech said in its Web site. — Mark Louis F. Ferrolino