Oil and gas companies were pioneers of the first digital age in the 1980s and 1990s. Long before phrases such as “big data,” “advanced analytics,” and the “Internet of Things” became popular, oil executives were making use of 3-D seismic, linear program modeling of refineries, and advanced process control for operations. The use of such technologies unleashed new hydrocarbon resources and delivered operational efficiencies across the value chain.
Thanks to the latest technological advancements, we are now poised for a second digital age that could further reduce costs, unleash unparalleled productivity, and boost performance significantly—if executives can harness the right technologies to support their business strategy. Making better use of existing technology can deliver serious returns: up to $1 billion in cost savings or production increases. Executives that make their organizations embrace digital resources will be well-positioned to pursue new growth opportunities.
Every segment of oil and gas is hoping for digital transformation, but each segment has unique challenges and opportunities. Exploration and development have a long history of being driven by technology and data.
These segments continue to be early adopters and help other segments. Production assets have gradually been adopting data standards based on supervisory control and data acquisition (SCADA) and programmable logic controller (PLC) systems.
Gathering and distribution systems have installed sensors and data transport for remote monitoring, compliance, and response dispatch. With all this digital data collection in place, production and transport are positioned for rapid changes and cost improvements. The marginal costs to reduce production and transport expenses with technology will be small, so the returns on these transformation efforts will be large.
The Digital Oilfield
There are five technical components. First, data must be sourced. This might be data from equipment or people. Second, the information must be transported. This might be easy if connectivity is available or hard, like an electric submersible pump 15,000 feet below the surface and 50 miles offshore. Third, information must be processed and analyzed. Fourth, action must be taken. This might be a decision by a human or an automatic response. Finally, data analysis and actions need to be stored.
With the current oil and gas market, companies need to reinvent themselves to improve productivity. While capital expenditures or acquisitions might give executives pause, investing in digital technologies is a no-regrets move that could increase production from existing operations. Since these technologies are readily available and have proved their value in the form of reduced operating costs, increased efficiency, and revenue generation, oil companies should move quickly to embrace digital. It could be the difference between leading the next wave of industry innovation and being left behind.