By Emmanuel Egobiambu
With the slump in oil prices dating back to 2014, many oil and gas companies have started tapping into the powers of modern technologies to maximize profits. As the days roll by, more technological innovations are introduced for different activities in the oil and gas sector – drilling, exploration, production and refining of crude oil – to name a few. Although oil and gas companies were slow in leveraging modern technologies in their production processes, they are now gradually adopting them in their businesses.
Oil and Gas Firms Embracing Digital
Many oil firms now understand that their future is greatly tied to digital technologies. Giant tech firms are on the other hand teaming up with companies in the oil and gas sector. Total in France (2018) reached a deal with Google Cloud for the development of AI solutions. These AI solutions will be applied in subsurface data analysis for the exploration and production of oil and gas.
The same year, Anadarko Petroleum Corporation signed an agreement with Google Cloud for the scaling of data science models and boost real-time surveillance and monitoring of ongoing drilling, completion, and production operations.
With digital technologies, the energy sector globally has more capacity to unlock its potentials and fast-track growth. Microsoft’s Chief Executive Satya Nadella once said that “There is an enormous opportunity to bring the latest cloud and AI technology to the energy sector and accelerate the industry’s digital transformation.”
Oil and gas companies have already begun collaborations with several oilfield services providers and Big Tech firms to transform their operations using digital technologies.
Such partnership was when oil and gas firm Chevron liaised with tech company Microsoft and oil services company Schlumberger to increase the creation of innovative Petro technical and digital technologies.
The terms of the partnership among the companies stipulate that the firms will jointly build Azure-native applications in Schlumberger’s DELFI cognitive E&P environment initially for Chevron.
With the move, these companies will be better positioned to process, visualize, interpret and get insights from many data sources.
“We believe this industry-first advancement will dramatically accelerate the speed with which we can analyze data to generate new exploration opportunities and bring prospects to development more quickly and with more certainty,” Chevron Executive Vice President Joseph Geagea (Technology, Projects and Services) said. “It will pull vast quantities of information into a single source amplifying our use of artificial intelligence and high-performance computing built on an open data ecosystem.”
Digital Trends Shaping Oil and Gas Future
An Accenture report in 2017 identified distributed ledger technology, AI, extended reality, and quantum computing as the four major technological innovations with the ability to tap the latent potentials in the energy sector.
McKinsey’s duo of Harsh Choudhry Azam Mohammad identified four major areas that digital technologies can help in unlocking benefits in the oil and gas sector. They listed the areas as follows:
Operations of the future: With drones and equipment sensors, monitoring and maintenance have witnessed a massive revolution in the oil and gas industry in recent times. Also, advanced analytics are deployed in procurement and have proven helpful in decision making. In fact, the use of analytics for predictive maintenance can crash cost by 13 per cent. What this means it that vital equipment can be repaired even before they become faulty.
Reservoir Limits: Companies have the capacity to reduce their upstream and downstream capital expenditure by close to 20 per cent and increase reservoir limits just by integrating some digital applications. Already, some energy firms have started deploying 4-D seismic imaging to put a time-lapse dimension to traditional 3-D imaging and thus help them gauge and predict fluid changes in reservoirs.
Better Marketing: Many oil and gas firms across the world now have a better idea of their customers. All thanks to digital technologies, they understand their behaviours and habits to optimize pricing models and also manage their supply chains better.
With geospatial analytics, for instance, many oil and gas companies are now better off in supply and distribution networks via location planning as well as route optimization. This, in the long run, reduces costs on one hand, and at the other end, hikes revenue significantly.
Interestingly, the use of digital technologies in the drilling process has created room for precision. According to the Nigerian National Petroleum Corporation (NNPC) in a 2017 report, digital innovations have helped in the accurate targeting of smaller pockets of fields that have already produced for close to fifty years.
The agency argued the technologies have reshaped the oil and gas sector, altering the way oil and gas reserves have been identified, developed and produced.“It has taken the drilling process from a ‘let’s try over there’ guessing game to the precise targeting of ever-smaller pockets of fields that have already produced for half a century, as well as areas that have produced nothing before,” the NNPC said in the report.
“The 21st-century natural gas and oil industry is supercharged by innovation and technology. It has dramatically altered the manner in which oil and gas reserves are identified, developed, and produced. Advancements in technology have also improved environmental protection and conservation of natural resources.”
Similarly, a 2017 report by the World Economic Forum (WEF) estimated that digital technologies have the capacity to unlock $1.6 trillion for the industry, and the world at large.
This figure can rise to $2.5 trillion if existing organizational and operational limitations are eliminated, the report further stated. Specifically, the WEF said, “digitalization has the potential to create around $1 trillion of value for Oil and Gas firms. Digital transformation in the industry could create benefits worth about $640 billion for the wider society.”
Cleaner Environment, Healthier Workforce
Deployment of modern technologies in the energy sector can save customers $170 billion, $10 billion of productivity improvements, $30 billion from reduced water usage as well as $430 billion from lowering emissions.
A Professor of Exploration Geophysics at the Federal University of Technology, Akure (FUTA) in Ondo State, Nigeria, Mary Olowokere while harping on the need for oil and gas companies to adopt digital technologies in the operations, concurred that they will reduce cost. Professor Olowekere argued also that the deployment of new technologies in the energy sector will help in reducing health hazards faced by workers.
“Most of the oil and gas activities in the past have traditionally relied on manual, expensive and risky methods,” she said. “Carrying out most of the operations requires expensive, bulky and slow technologies in addition to specialized skills and equipment. Some of these expose the workers to several safety hazards such as toxic gases, falling, fire, accidents and others.”
Digital technologies come with immense benefits such as being able to reduce CO2 – equivalent (CO2 e) emissions by 1,300 million tonnes. They will conserve 800 million gallons of water and prevent oil spillage equal to 230,000 barrels of oil.
Bumpy Road Ahead
Despite the massive gains that digital technologies and innovations will bring with them to the energy sector, the industry has many hurdles to cross. One of such is the almost-static regulatory frameworks which are not adaptable to these modern technologies.
Several top executives in the energy sector are dilly-dallying in the acceptance of digital technologies and the values they bring to the table.
They are concerned about safety issues and other changes that modern technologies will come with, thus, not eager to go the whole haul most of the times. This conservative mindset is a severe inhibition to digital revolution in the oil industry.
Just like other industries, the oil and gas sector is greatly limited in its adoption of modern technologies with millennials facing the daunting task of replacing the ageing workforce.Despite the rough road ahead, the oil and gas market needs to look in the direction of digital technologies to stay in business. As oil prices keep fluctuating, the adoption of digital technologies may well be the defining factor in the survival of oil and gas firms across the globe.
Photo Credit: GoContractor