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Remodelling the upstream industry: How digital is driving a new operational design

Upstream oil and gas companies that are willing to think differently are gaining a digital advantage.


Rich Holsman, managing director and Global Energy lead for Accenture’s Digital and Technology business discusses how oil and gas companies can use digital technologies to add tangible value to their businesses.

What opportunities does digital offer upstream companies in the current low oil price environment?
Most oil companies have already taken dramatic cost cutting measures to help manage through these turbulent times. Even with these actions, however, many are struggling to effectively operate with their current organizational structure and legacy technology footprint. And cost cutting alone is not enough to position upstream companies to be successful in the future.

That is where digital technologies can help. In the recent “2016 Upstream Oil and Gas Digital and Technology Trends Survey,”* ninety-one percent said that they were already getting value from their digital initiatives, and cost reduction was identified as the most important business challenge that digital can help address today (by 72% of respondents) .  Over the next three to five years respondents expect the focus to shift to areas that deliver greater long-term value, such as helping them make better and faster decisions. Digital can help upstream companies re-wire themselves to thrive in the new volatile market that we live in today.

How can oil and gas companies use digital to help reduce costs in the short term?
For short-term cost reduction, oil companies are implementing digital across a variety of areas. For example, many are moving to "as-a-service" cloud models to reduce IT infrastructure costs; many are adding more mobility in field operations to increase worker productivity and reduces costs; and many are implementing cognitive computing robots in back-office operations to reduce costs and increase efficiency.  In addition, some are deploying low-cost Internet of Things (IoT) technologies with analytics in field assets to optimize asset operations and reduce costs.

What can upstream oil and gas companies do to create even more value long term?
Taking lessons from lean start-ups and from digital native companies, upstream companies have the opportunity to redesign their operating models to be radically lower cost and significantly more agile. Current upstream operating models have served them well over the past few decades, but today there are more efficient models available. If upstream companies can move to this next generation of operation models, they will be able to manage through current challenging times and create the agility and new capabilities to better thrive in the industries future challenging times.

Upstream companies have long been pioneers and innovators, pushing boundaries using technology. Today, digital provides the opportunity for upstream companies to redesign their traditional operating models and re-position themselves for future growth and new opportunities.  With the current challenges and the pace of change moving faster than ever, now is the time to act.

*The "2016 Upstream Oil and Gas Digital and Technology Trends Survey," was sponsored by Accenture and Microsoft and conducted by PennEnergy Research in partnership with the Oil & Gas Journal.

"With the current challenges and the pace of change moving faster than ever, now is the time to act."

About the expert

Rich Holsman

Rich is the Global Energy Digital and Technology managing director. Rich has more than 20 years of experience in helping companies change to be more successful. He has focused most of his career in the resources industries sectors.