To think the taxi business would serve up lessons for oil and gas would have seemed unfathomable a few years ago. Yet, after landing at an airport in Oklahoma City—an epicenter for unconventional oil and gas—we saw directly how digital disrupted the taxi industry and we thought: Digitization and low-price pressure can “Uberize” exploration and production as well.
Built on a digital platform and accessible via smartphones, Uber globalized supply points, enabling almost any vehicle owner to become a driver. The higher base of suppliers caused demand-fulfilment times and price points to plummet. It is ushering in the slow death of the traditional taxi model.
While some tech-savvy oil and gas operators have increased reliance on automation and data to drive real-time operations, they are using only a fraction of the available digital capabilities.
The unconventional industry is ripe for disruption, similar in scale as the one that propelled it to prominence. In the past year, more than 90 percent of unconventional operators have reported negative earnings in all four quarters.1
What if the field operated like Uber, with wells as “customers?”
A new operating model could help drive out inefficiencies in operational decision-making. Drawing a parallel to Uber, we see the well as the demand center, like the taxi customer. Multi-skilled technicians, along with high-tech gadgetry (mobility apps, smart glasses and more), are supply points equivalent to drivers. An unmanned, artificial-intelligence (AI) center (“The Brain”) is an app that runs diagnostics across wells, directs technicians or vendors to wells, and aggregates ratings feedback on service quality.
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Four key elements in our Uber for the Field model shift the focus from "pumpers" visiting wells near-daily to a lean, highly skilled, AI-powered workforce:
Liquid workforce. Multi-skilled technicians (internal or external vendors) are summoned by the Brain to address issues and work plans optimized across activities.
Dynamic analytics. SeIf-learning, predictive algorithms provide insight and suggest proactive actions for improved performance.
Connected operations. Flexible architecture aggregates data, equipment and sensors for the AI engine, providing continuous linkage and results from geological and geophysical to production.
Smart equipment. Digitally-enabled equipment (e.g., drones to sense methane leaks) assume manual and routine activities.
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While rising prices have provided some relief, operators must do more to assure long-term survivability. Even in the Permian, considered the most attractive basin, the breakeven remains higher than recent prices.2
By turning to digitally-enabled operating models, we have observed some operators boost base production rates (7 percent or more), reduce lease operating expenses and capital costs (up to 20 percent), and increase estimated ultimate recovery (upward of 20 percent). It’s time to achieve more by fully embracing digital … or risk the fate of the yellow cab.
To learn more, visit www.accenture.com/us-en/insight-energy-company-future-rethinking-everything
1 Accenture analysis of quarterly income statements for eight North American oil and gas operators.
2 Forbes, June 19, 2016. “Permian Basin Break-Even Price Is $61: The Best of a Bad Lot”