The oil and gas industry has faced significant disruption over the past decade. One main driver for this disruption is that the price of oil has been in flux for years. For example, Brent crude oil was up about 90 percent in 2016, to just over $50 per barrel – yet it is still well below the $115 per barrel we saw post-recession in March 2011. There is a dramatic need to innovate in this industry, which is sparked by a growing global population and urbanization. The global energy demand is growing by 80 percent and is expected to double by 2050. So how can oil companies keep up and simultaneously keep their customers happy?
As oil companies look to increase production, digitization can help them expand their reserves, which keeps prices down for consumers. In fact, BP predicts that technology could double global oil and gas reserves by 2050. Transforming the industry will reap benefits for both oil companies and consumers alike.
Gain Efficiency With Next-Generation Technology
We are already beginning to see the formation of a digital energy network that connects workers, suppliers, customers and assets through a reimagined business model. This new model involves hyper-connectivity, allowing everything to be connected through one network. There’s also holistic monitoring of oil fields and assets that support the integration with third party applications and integration of workflow to execute actions.
By leveraging Internet of Things (IoT) enabled devices, the oil industry could turn insight into action. By using connected instruments from wellheads or pipelines to an integrated data repository, data sources will have increased insight into their production. Today, we know the processes for gathering data can be rather manual and driven by spreadsheets. By implementing an IoT solution, the data can be aggregated from different sources to improve production visibility, yield (for petroleum products) and accuracy. By leveraging advanced technology, the information can go straight from the field locations to the business decision-makers.
Oil companies are looking for cloud solutions that provide total cost of ownership reduction, while also enabling them to drive innovation and to adapt to unpredictable market conditions. From a workforce management standpoint, a cloud solution can provide oil companies with the insight into where their workers are located and what skills they need for the field. While 63 percent of companies of all industries are reshaping their workforce strategies to align more closely with the gig economy, the oil industry in particular relies heavily on flexible workers and the gig economy more than other industries. A cloud-based solution that aligns with talent as well as procurement provides integrated support to the supplier network, creates increased efficiency and cost savings.
More Efficiency Means More Energy
By modernizing and digitizing internal processes, oil and gas companies will be able to streamline production and distribution, allowing for increased oil production. The oil and gas industry can achieve this through project orchestration – allowing companies to optimize project planning, execution and collaboration along the project value chain. By capturing data across the full project lifecycle, oil and gas companies can use algorithms to improve program delivery. Something as simple as integrating activity planning allows for the cost, revenue and profitability to increase for oil and gas companies. As companies invest and expand their use of IoT on a project basis, they’ll be able to optimize field production and reduce downtime.
Innovations within hydrocarbon production include solutions to manage the convergence of maintenance, engineering and financials. This allows for reliable data to capture and validate current data on wells and surface equipment. Since these insights are in real-time, the solution provides the analysis of geospatial and sensor data to identify underperforming assets and determine root causes of issues. The oil fields themselves are also being connected to establish end-to-end production management to allocate the right resources to the right activities at the right time.
With improved forecasting and planning, oil and gas companies can receive real-time visibility into the value of raw material from acquisition to sale. This helps cut risk with scalable supply chains for hydrocarbon logistics. Aside from cutting transportation and distribution costs, it will also help minimize disruptions by predicting failures. IoT also fuels the point of sale systems of oil and gas companies by providing real-time promotions and increased customer loyalty at the convenience stores.
Increasing the World’s Oil Reserves While Investing in Renewable Energy
By optimizing processes and using existing hydrocarbons efficiently, oil companies will have more time and resources to invest in technology to help increase oil reserves. One example is that horizontal drilling and hydraulic fracturing in shale and other tight rock formations has proven to increase oil and natural gas reserves.
If companies can leverage their solutions and investments to take advantage of IT-OT convergence, as well as process digitization, they can increase oil production from the fields in their portfolio. This is a higher industry priority than investing in renewable energy. In fact, the improvements attained by expanded production and profits will allow them to invest more than they have in the past and also examine potential areas where renewable energy might assist their portfolio in the future. Through reductions in finding and lifting costs for hydrocarbon production, oil and gas operators can maintain profitability even in reduced price environments, thus freeing additional capital for more research into alternative energy resources.
With advancements in next generation technologies, digitization is going to increase the world’s reserves and this is beneficial to both the industry and consumers. With more transparency, efficiency and reliability, companies are able to use innovation to increase our use of renewable energy options. The benefits don’t only impact the bottom line – they also impact the health of our planet.