At a time of unprecedented change in the upstream oil sector, digital technologies provide additional opportunities for oil companies to adapt to “lower for longer” oil prices. The conditions of the past 18 months have seen considerable headcount reductions in the upstream (more than 27 percent in the UK North Sea oil and gas sector1) and substantial spending cuts (estimated at $1 trillion by 20202). The current downturn, however, allows companies to leverage new ways of working that place technological innovation at the heart of leaner and more efficient operations.
Accenture’s Tech Vision 2016 has three particular components—intelligent automation, platform economy, and digital trust—which are very relevant to the digital conversation in today’s oil and gas industry. Focusing on the first, intelligent automation, has at its core the shift to cognitive decision making, using technology not just as a tool to support the speed of decision making but also to execute decisions. The prevalence of robotics and deep learning (a branch of machine learning based on algorithms that attempt to model high-level abstractions in data) is also growing. When coupled with the internet of things (IoT), analytics and movement to the cloud, these technologies are becoming more accessible and insightful.
Despite a longtime focus on engineering innovation, the oil and gas industry currently sits behind the curve in terms of digital innovation. Digital, however, is radically altering other commodity industries. For example, digital is already a staple in mining, where companies routinely automate fleets and embrace real-time 3D imaging. The utilities industry is also enabling greater efficiencies by equipping workers with access to IoT data or wearables for quicker work execution.
To gain traction in the oil industry, however, the reality is a digital agenda must enable efficiencies to reduce cost in the short term while maintaining safe operations. This is especially true for companies with operations in high-cost areas, such as the UK North Sea.
There are multiple solutions to increase traction, with analytics solutions most immediately applicable. Connected production operations (CPO), for example, can be cloud-based and deployed at low-cost. CPO can help in enabling management of field operations by exception and proactively minimize uncontrolled downtime, thereby boosting production at reduced cost. The North Sea sector is already benefitting, with one operator using CPO to help reduce the tripping of injection pumps through onshore monitoring and faster collaborative decision-making, thereby lessening production delays due to operational issues.This month the Society of Petroleum Engineers conference on Intelligent Energy offers opportunities to discuss digital advances. I will be at the event in person and would be delighted to meet with industry colleagues also planning to attend. In upcoming blogs, I intend to explore additional opportunities for intelligent energy—enabled by digital data, analytics, IoT and the cloud—that address tomorrow’s goals as well as today’s market pressures.
1 “Oil price to cost 124,000 UK jobs by the end of 2016, study warns,” June 10, 2016, Independent Online © 2016 Independent Print Limited, via Factiva.
2 “Today's downturn sets markets up for a dramatic oil price spike,” August 4, 2016, Oilprice.com © 2016 Oilprice.com, via Factiva.