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How Digital Technology Will Change Oil and Gas Companies

Steven Toups
Tuesday, 12 July 2016 / Published in Leadership Blog, Uncategorized

How Digital Technology Will Change Oil and Gas Companies

Great insights into how digital has and will change oil & gas companies. I especially liked the authors’ comment, “[m]ost of today’s digital initiatives in oil and gas are incremental rather than disruptive.”

How do you eat the theoretical 800 pound gorilla? …….One bite at a time.

How Digital Technology Will Change Oil and Gas Companies: By Riccardo Bertocco, Lodewijk de Graauw and Dmitry Naberezhnev

Unlike other industries that are enjoying a sudden embrace of benefits from data, the oil and gas sector is well acquainted with analytics. For decades, energy companies have relied on rich pools of data to discover and understand the potential in their reservoirs and other production opportunities.

Even so, most have yet to capture the full potential of their data because they haven’t always been able to generate actionable insights or make better and faster decisions based on data. That will change as oil and gas companies upgrade their digital capabilities and improve the way they connect these insights to their operating models. We expect to see dramatic cost savings and significant improvements in productivity and revenue. One integrated oil company managed to save about 10% on unit costs by digitizing a remote offshore operations center. Another reduced operating costs per barrel by about 10% and recovered more reserves by applying selective applications in intelligent oilfields through collective computing and sharing real-time information at all company levels.

Most of today’s digital initiatives in oil and gas are incremental rather than disruptive. Companies are making improvements in technical or operational capabilities, like predictive maintenance or completed analysis on wells. One reason for this gradual approach is that most companies aren’t ready for a big transformation because they lack the people, processes and capital required to make it happen. In particular, we see three common pitfalls in some oil and gas companies that have begun to invest in digital.

• No long-term digital strategy. Without an integrated, multiyear plan, companies risk investing billions of dollars while capturing few benefits. For example, offshore platforms can generate more than a terabyte of data every day, but the satellite uplink is too slow to transfer all that data – so the operations teams on land can’t keep up with the available data. An integrated plan would spot this and place the analytics resources closer to the data: on the platform.

• Outdated operating model. Valuable information can get stranded if companies neglect to connect information flows. For example, a company might invest in a visual scheduling system with sophisticated routing capabilities. But if it fails to connect it to line management’s scheduling systems, the data winds up stranded.

• Unprepared workforce. As in many other industries, oil and gas teams are mostly unprepared to take full advantage of the potential in digital. Most will need to invest in the capabilities of their teams – in most cases requiring a combination of recruiting fresh talent (including data scientists and other digitally savvy professionals) and teaching new skills to current staff.

As companies put in place specific digital capabilities that can deliver fast results at reasonable costs, executives need to develop a strategic roadmap encompassing the digital strategy, operating model changes and, most important, people capabilities.

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