Sustained low prices for oil and gas are stressful for producing countries that rely on energy-related revenues to support education and social-welfare programs, amongst others.
The energy industry remains a huge contributor to Norway’s economy, so the global oil price drop has had a major impact. This development follows a period with significant cost increases and reduced returns, with companies shifting focus from top line growth to bottom line and cash flow improvements. The recent oil price reductions have further exacerbated these challenges. In the good years, the industry accounted for roughly a fifth of gross domestic product and almost half of national exports, a figure that has shrunk to seven percent. In 2014, the industry employed nearly a quarter-million people, but, in the past 18 months, more than 21,000 have lost their jobs.
However, Norway may be more prepared than some other countries to survive the shocks. In addition to a strong sovereign-wealth fund, the country’s workforce is highly educated and digital savvy with a relatively low cost for highly qualified personnel.
Oil and gas companies in Norway have been leveraging digital technologies for some time to optimize production and operation:
Improved oil recovery (IOR). A number of methods have been used in Norway to boost recovery and net present value oil and gas fields. Additional progress can be made by leveraging extensive digitalization of equipment, thereby enabling closer monitoring and surveillance for improved outcomes.
Improved collaboration technologies have enabled more work to be run from onshore operational centers.
The adoption of new digital technologies offers additional ways to reduce cost, increase flexibility and increase value from production, thereby enabling:
Optimized IT operation. Digital technologies enable more efficient IT processing, which can be scaled flexibly through the cloud. This agile approach provides affordable storage and access to huge amounts of data being collected throughout the value chain. In addition, IT gains flexibility to scale services up and down with economic cycles.
Insights from big data. Aggregating data from multiple sources and applying analytics can identify opportunities to improve a wide range of processes. Analytics and cognitive computing technologies—made available at the point of need through mobility devices—can lead to fresh perspectives on ways to extract oil and gas more efficiently. Analytics-powered insights can also help energy producers streamline their supply chains.
New collaboration solutions. Digital solutions and mobile devices enable faster and more productive collaboration among vendors, suppliers, contractors and employees. In addition, digitally-enabled mobile tools can help field workers carry out complex tasks while remaining connected to experts as needed.
Production slowdowns provide opportunities to step back and re-examine familiar operating procedures.
Digital technologies can help producers boost the recoverable portion of their oil and gas reservoirs. Additional applications of investing now in digital solutions include:
Predictive maintenance of offshore equipment
Preventive approaches to failure of critical assets
Automated scheduling of work orders
Incident-driven well diagnostics and online collaboration to rapidly resolve problems
Critical equipment failure prevention
Optimization of the supply chain
Real-time data for faster management of health, safety, security and environment issues.
End-to-end integration of digital and mobile technologies can help oil and gas companies in Norway—and throughout the world—increase production, control costs, manage risks and widen margins in difficult times. What Norwegian oil and gas companies do next will determine their future success.