How Oil and Gas Industries Benefit from Digital Investments?
Many oil and gas companies have had a difficult time in recent years as oil prices have fallen to record levels. Although the recovery began in 2017, companies in this sector need to realize that they need to step up to take advantage of the benefits of precursor status. New pricing models, digital investments, and compliance solutions are examples of initiatives that will pioneer the top winners of the year 2018.
Industry Recovery will Boost Digital Investment
The cost and staff reductions achieved in recent years have come to an end, which has a beneficial effect for both the industry and their supplier ecosystem. Global demand for oil is increasing in the West and China. The OPEC has, however, recently said it would increase its forecast of 1.35 million bpd to 98.12 million. With macroeconomic data indicating that this rise could continue for the next decades, the oil and gas companies are in a process of intensifying their activities, especially in the digital field where the axis of progress is more palpable.
In this industry, companies have a real need to exploit digital technologies such as Cloud, Internet of Things (IoT), Big Data, advanced scheduling and scheduling, and automation to become smarter , more agile and more efficient in oil and gas extraction. This is partly explained by the downsizing that has occurred in recent years.
Other potential investments can be made, such as the use of beacon technology, to improve safety by alerting crew members when they are in a regulated area.
In addition, advanced visualization and planning solutions can, for example, help oil and gas companies accelerate the drilling permit application process and maximize productivity by better delineating areas, where they are already allowed to drill.
Investment in Compliances will Increase
With global pressure from governments for pollution abatement, 2018 will see a growing demand from oil and gas exploration companies for ways to minimize emissions of carbon dioxide and nitrogen oxide and to prove them via compliance documents. We are thus likely to observe the gradual abandonment of diesel in the platforms for clean alternative energies. When you know that a platform produces as much CO 2 every year as 5,000 cars, there is a real economic as well as an environmental issue.
Advanced compliance and risk management solutions will become a critical requirement to automate the monitoring and reporting of emission rates to replace inefficient manual processes. Although not easily connected to the internet, platforms can still access cloud systems to support their efforts, thanks to satellite communication technology.
Oil and Gas companies will Adopt A More Service-Oriented Organization Model
Faster and more efficient extraction involves a change in the way companies pay their suppliers and subcontractors. The traditional “daily rate” – the flat rate at which the subcontractor is paid per day for its operations or maintenance operations – is evolving more and more into a performance-based system.
Thus, when an oil company offers a contract to a subcontractor of $ 300,000 for 100 days, it can add a bonus in case the mission is carried out in a shorter period. This creates new opportunities for suppliers that can become more efficient. Again, IoT and data analysis are key enablers because sensors are able to respond to various environmental and drilling conditions to maximize productivity. However, technology alone cannot achieve the desired objectives unless companies break traditional silos between the different teams that monitor equipment, analyze weather conditions and those that are operational.
These trends can also be seen in terms of servitization. Moreover, an IFS study on the benefits of servitization for oil and gas companies shows that those seeking to add innovative services to their offerings can reduce their CO 2 emissions by 10 to 15% and the maintenance costs of 25 to 30%. For this last position, classification can be a key lever. Every five years, offshore platforms must be decommissioned for thorough and documented maintenance checks. For companies whose daily turnover is between $ 300 and $ 400,000, three weeks of shutdown can result in tens of millions of loss.
Advanced planning and scheduling technologies will therefore change the game for these manufacturers by helping them better plan and document maintenance abroad without the need to transport their ships and platforms as frequently. These innovative solutions maximize on-board human resources and integrate key asset risk assessments to ensure that maintenance operations are performed and recorded in a strict schedule.
So what should oil and gas companies do to make the most of the opportunities in 2018?
Many of them need a “digital cleaning”. Many existing tools, technologies and processes remain operational and are an obstacle to innovation. Automation, for example, cannot work if only error-prone manual processes are automated. In the aforementioned IFS study, only 7% of companies worldwide successfully exploit their data and gain a competitive advantage. This level is the lowest among all industrial sectors.
Fortunately, the industry is on track to recover from recent years of under investment. Companies in this sector know what they need to do to take advantage of the current recovery to become more modern and more competitive. But to reach this next level of growth, improve margins and turn to new organizational models, they will need to invest in both new digital skills and new technologies.