In theory this is a great pairing: a highly innovative industry and the latest digital technologies. The iconic image of “roughnecks” — overall-clad workers with oil-stained faces handling equipment on a drilling rig — has not changed much over the past few decades, even as the industry is recognized for its technological innovation. For an industry that has been on a market rollercoaster in recent years, it is now looking to digital technologies and agile methodologies to improve operational efficiencies to underscore its future. But it will. As assets become increasingly connected to the network, it is important to protect critical digital infrastructure against cyber-attacks — by monitoring threats, identifying vulnerabilities, building robust controls, and promoting a culture of security awareness. Eni has developed its own supercomputer, the HPC4, which is used to process data on oil and gas reservoirs. We cover a diverse range of industry sectors and focus areas across the entire natural resources value chain. We will reach a 7% reduction in production costs thanks to: advanced algorithms to ensure reduced asset downtime and higher production rates; and, predictive analysis systems, based on big data, which allow us to optimize maintenance, logistics and well operating costs. Customer Logins Obtain the data you need to make the most informed decisions by accessing our extensive portfolio of information, analytics, and expertise. The industry produces Big Data, but advances in analytics, including machine learning and artificial intelligence (AI), provide new ways of interpreting this data, producing previously unknowable insights. And E&P companies will likely not be the ones to develop new digital technologies and solutions; these will likely remain the preserve of the largest players with deeper pockets. Offshore oil production began with the Argyll field in the Central North Sea (CNS) in 1975. This transformation requires all aspects of the operating model (vision, strategy, process, culture, and behaviors) to encompass digitization. We've extracted oil from deep underground in the harshest offshore environments. What’s new is a number of technologies that have emerged over recent years outside of the oil and gas sector. In the not too distant future, the image of oil workers manipulating drill pipe on platforms could be replaced by something dramatically different. That era also saw the development of a number o… Those companies that simply view digitization as a technology play and fail to transform are likely to become digital dinosaurs and risk extinction. Distribution of injuries and illnesses with days away from work in drilling oil and gas wells, by event, 2007. Our own experience confirms this significant potential. Identifying opportunities to spend more efficiently yields powerful savings, but PowerAdvocate also worked with this customer to help them to identify ways to hold costs steady in rising markets. Unconventional players in the US, driven by the overall cost competitiveness of that market, are probably the furthest along the path to realising the benefits of digital transformation. The upstream oil and gas sector is well behind other industries when it comes to being digitally enabled. Identify the greatest business challenges and assess how digital technology can help. Subscribe to our trusted data and analysis for global energy, chemicals, metals and mining industries. This analysis revealed that, in fact, one low-rate wireline supplier was nearly 40% less productive than a more costly, but more productive vendor, identifying a multi-million-dollar opportunity. It has also created a “data lake” of more than 1 petabyte, where billions of data records from global operations are captured and made available to engineers across the firm. But how close is the industry to achieving this? On that basis, anyone in the industry talking about digitalisation may legitimately ask, "what’s new?” What does seismic interpretation deal with if not Big Data? In our latest research, we take a closer look at the likely impact on the upstream sector. The cost curve for tight oil has been materially lowered, and digitalisation has played a critical role. At its heart, digital technology offers the industry, the opportunity to increase predictability, productivity and efficiency at all stages of the upstream value chain. Often during the time of crisis Operator companies such as Shell, Exxon Mobile, ENI, ADNOC, ARAMCO etc. Fill in the form to talk to Greig about digitalisation in upstream. Digital transformation of a company needs to be holistic and address all the elements of the operating model. Many upstream companies have for some time been using elements of digitization, which we define as the strategic business value of data-based technology that includes the Internet of Things (IoT), cloud computing, and artificial intelligence. Despite a deluge of digital advancements, upstream oil and gas companies have been slow to seize the opportunity. The trend toward digital innovation is accelerating across the sector because companies are much more focused on cost and driving operational efficiencies in an era of relatively low oil prices. Based on these figures, a graph was generated showing the distribution of fatal and non-fatal accidents in 2007 in the upstream sector. PowerAdvocate, Wood Mackenzie’s sister company, does exactly this. It is a business-led transformation that leverages technology. Here are some guiding principles for operators starting out on a digital journey. Look at what has been achieved. In many such cases, interest in digital transformation was triggered by the perceived threat of new entrants as much as by a desire to cut costs. As operators explore new ways of working, some companies will be pioneers in digital solutions, and others will be fast followers. The oil and gas sector has a relatively long history with digital technologies, notably in upstream, and significant potential remains for digitalisation to enhance operations. Without good information, the other benefits of digitalisation, like lower-cost operations and better decision making, cannot be reliably produced. The prize of going digital is clear, but for most companies, getting there is not easy. This information was powerful. Operational excellence, with assets operated much more efficiently, could be achieved through the use of predictive maintenance and drone technology. Some major companies are already fairly far down this path. In the Upstream Oil and Gas digitization Survey, 66% of those surveyed believe analytics represents a transformational opportunity for their business but only 13% believe their company has fully mature analytics capabilities. More specifically, digital oil field technologies allow companies to capture more data, with greater frequency, from all parts of the oil and gas value chain and analyse it in real or near-real time. The oil and gas industry has always been at the cutting edge of technological innovation. In so doing, it offers increased safety of our operations and profitability of our businesses. He has over 20 years of experience in the oil, gas, utilities and mining sectors, working with the boards… Read More Simon Flowers is Chief Analyst and Chairman for Wood Mackenzie. Aker BP, which aims to become a preeminent E&P independent player on the Norwegian continental shelf (NCS), sees digitization as one of the cornerstones of its strategy to improve efficiency and reduce full-cycle breakeven costs to less than $35 per barrel for new developments. Yet technology and digitalisation are characterised by rapid adoption and fail-fast attitudes, with those able to adapt quickly capitalising. All dimensions of a company and its operating ecosystem (its suppliers and external partners) need to be digitally enabled. The Real-Time Production Optimization solution helps reduce deferred production by moving more oil, condensate or gas from wells to sales export. A coherent road map could help make sense of the digital muddle and drive more value. A petabyte is a unit equal to a million gigabytes. Some challenges in the upstream oil and gas industry can be effectively resolved if we lay emphasis on the new interdependencies between senior management information, operational effectiveness and decision making. The difference between the two images is clear. To a large degree, it entailed digitization and some effort towards digi… Annual cost saving potential in the next five years, based on currently known technologies. Our research finds that the effective use of digital technologies in the oil and gas sector could reduce capital expenditures by up to 20 percent; it could cut operating costs in upstream by 3 to 5 percent and by about half that in downstream. Given the increasingly sensitive nature of offshore operations in terms of health, safety, and the environment, operators need to be sure digital technologies can be deployed without risk to operations. Digitalization is touching every part of Repsol; Upstream, including the development projects, exploration, downstream, the corporate center and it will change how we plan, we develop, we monitor and we are managing our businesses while we are at the same time improving margins and efficiency, lowering costs and delivering long-term value. One key risk will be cybersecurity. Although many oil and gas companies are trying out new digital ways of working, no one can claim to have “cracked it” just yet. While large volumes of data in the past could be a problem, Big Data is now an asset. ICIS 2020. These efforts are far more advanced in the do wnstream context. Yet look at a modern-day automotive manufacturing plant, where lines of workers assembling individual car parts already have been largely replaced by robots. Statoil’s objective is to increase significantly its use of data, analytics, and robotics to improve safety, reduce its carbon footprint, and improve profitability. We believe there are some basic guiding principles that companies should consider when developing their digital business models: In its 2017 Digitization & Energy report, the International Energy Agency estimates that digital technologies could cut production costs by as much as 20 percent. As a result of these activities, PowerAdvocate’s customer found US $1 billion of savings in their third-party spend. Digitization hasn’t quite yet ripened into a full-fledged revolution in upstream oil and gas. The sector is starting to fully recognize that power, and more and more upstream companies are scrambling to seize it. OEMs and rig owners are also at a crossroads as upstream oil and gas faces digitization. Finding this balance between technical and technology capabilities is likely to prove one of the trickiest challenges for chief strategy officers and chief information officers. Digitization holds key to unlocking oil and gas industry's potential New and disruptive technologies, structural simplification, and the opportunities offered by digitization could potentially transform offshore operations as well as enhancing productivity from existing capacity, making the industry more productive, more agile and more prepared for a sustainable future. As illustrated in Exhibit 1, savings can be realized in operational excellence (such as more efficient maintenance and better operation of assets); in the supply chain; in the use of artificial intelligence; and in the use of integrated platforms (connecting the organization with external partners). This unconventional producer found US $1 billion of savings in their third party spend. Each company needs to develop its own specific digital transformation road map. Digital transformation is not a technology-led solution. Recently, PowerAdvocate worked with a US-based unconventional producer to transform the way the producer understood and analysed third-party supplier costs. Cognite is in effect the oil services player of the future, focused on digital solutions with the objective of accelerating and driving digitization on the NCS. “Not your father’s oil and gas business: Reshaping the future with upstream digitization.”. The analysis unlocked by this dataset was telling: PowerAdvocate found that hundreds of millions of dollars were incorrectly understood. If you would like to learn more about how we use cookies and how you can manage them, see our Cookie policy. What are geophysicists and engineers if not data scientists? The staggering complexity of tasks like these has engendered an industry of innovators and inventors. But how close is the industry to achieving this? Here are a few examples: At the other end of the spectrum, there are smaller exploration and production (E&P) companies starting to explore digital transformation. Best-in-class players do not incur higher costs to improve productio… We deliver real-time and historical data, forecasts, analytical insight, tools and software solutions. We use cookies on the public areas of our website. The customer thought they were spending US $480 million on rig charges... their actual spend was 1.7x higher. literature suggest that the oil and gas industry has begun major digitization initiatives. Two good examples are Cognite, a technology company focused on upstream operations in the Norwegian part of the North Sea, and Baker Hughes General Electric, which was created in 2017 in an effort to industrialize digital capabilities. Mingaleva Z., Shironina E., Buzmakov D. (2021) Implementation of Digitization and Blockchain Methods in the Oil and Gas Sector. As a first step, they are setting up pilots across their organizations to assess how best to apply digitization, as well as to identify the key digital capabilities that need to be developed. Please see www.pwc.com/structure for further details. “Siloed” digitization does not provide the cross-functional insights across multiple assets that are needed to drive efficiency and value at the enterprise level. We also need to appraise and understand their impact on our overall profit margins. BP has stepped up its capabilities by building its own digital workforce and running digital boot camps for executives. Combine these advances in technology with the fact that the sector is heavily focused on making productivity improvements, and it is easy to appreciate why companies are increasingly excited by the potential of digital solutions. Digital solutions need to be holistic. Buy our reports to address business challenges and make better commercial decisions with objective insights, analyses and data. The biggest changes will be automated drilling technology, such as that being developed by Rockwell Automation, and predictive maintenance, like the solution offered by MapR and Mtell. Now upstream companies can maximize oil production while minimizing gas lift, flare, energy consumption or other constraints. Digitization of Oil and Gas Markets in 2019 - Understanding the Impact of IIoT-based Monitoring - ResearchAndMarkets.com December 18, 2019 08:39 AM Eastern Standard Time Further digitalisation in the upstream oil and gas industry in the future is likely to initially focus on expanding and refining the range of existing digital applications already in use. As we’ve discussed, Lower 48 companies are more advanced in their adoption of digitalisation than their conventional upstream peers. With a total impact of $930 billion estimated from oil and gas within the next decade, it’s little surprise that the industry is showing huge interest in leveraging IoT. As illustrated in Exhibit 2, next page, digital technologies could affect all elements of the value chain in a future E&P company. (For more insights on how operational efficiency is achieved through the application of technology, please refer to “Not your father’s oil and gas business: Reshaping the future with upstream digitization.”). The digital transformation in upstream oil and gas Industries are embracing technology to reshape their operating landscape and reap the benefits of improved productivity, higher efficiency, and increased cost savings. Building a digital organization needs to encompass stakeholders beyond the company itself if the full potential of efficient operations is to be unlocked. Businesses stand to benefit from the sharing of data, knowledge, experience and insights as cross-functional teams form. We believe there are huge prizes on offer at every stage of the upstream lifecycle. It is setting up a digital center of excellence with a holistic road map for digitization stretching out to 2020. Drilling, performance monitoring, and production optimization could become highly automated. Benchmarking data also illustrate the broad opportunity for improvement. Drilling for data: Digitizing upstream oil and gas. Submit your details to find out more about how we can help you and your organisation. US $75 billion each year. Putting Digitization in the Pipeline Oil & gas businesses face additional challenges in adopting digital technologies, which is slowing their adoption rate compared to other sectors. Digitalization is touching every part of Repsol; Upstream, including the development projects, exploration, downstream, the corporate center and it will change how we plan, we develop, we monitor and we are managing our businesses while we are at the same time improving margins and efficiency, lowering costs and delivering long-term value. They let you easily navigate your way around the site and allow us to improve its performance, or even recommend content we believe will be of most interest to you. When applied to all major service categories within a play (or a region), this analysis is particularly powerful as it highlights where suppliers’ work rates varied. At the start of the industry in the 1960s and 1970s production was dominated by a small number of very large fields, such as Inde, Leman, Forties, Brent, Ninian and Piper. 2015 marked the worst recession in the Oil and Gas Industry since World War II. But there is a disconnect; the E&P sector is conservative when it comes to adopting new technologies. Companies need to develop their own digital transformations because there is no “best practice” model in the sector to replicate. The companies that really embrace this trend – utilising their data as an asset and scaling the application of digital technologies – will be the ones to benefit the most. The analysis also provided more granularity on how that spending was composed of rig operating charges, rig standby time, and tools, materials, and consumables. Digitization is Fueling Growth in the Oil and Gas Business Digitization is the buzzword in the oil and gas sector as it’s seen as transformative for the future of the industry. And how digitalisation saved one unconventional producer US $1 billion. In the past, capabilities may have focused on technical expertise to deliver excellence in engineering projects. The customer could then understand the competitiveness of their rates and negotiate accordingly. IoT will enable companies to digitize, optimize and automate processes in mid-, up- and down-stream that were previously unconnected. Accenture's energy consulting services in the oil and gas industry can help you company thrive in the digital world. Moreover, advances in cloud computing and edge analytics mean firms do not need a supercomputer or a Supermajor's IT budget to capitalise on this opportunity. Upstream executives are right to be sceptical of promises to transform cost structures; they have been burned before by these kinds of promises. Source: U.S. Bureau of Labor Statistics Digital transformation is proving to be a true game-changer for Exploration & Production. Statoil has launched a centralized and integrated digital improvement program. That’s the cost saving on offer from digitalisation in upstream over the next five years. The company is encouraging its employees to develop apps stored on common platforms to improve workflow processes. Some oil and gas companies still view digital technology as something peripheral to the core business. The UK’s oil and gas sector is dominated by production from offshore areas, which account for virtually all of UK output1. The upstream oil and gas sector is well behind other industries when it comes to being digitally enabled. PowerAdvocate believes that the foundation of successful digitalisation is good data. Innovations in the conventional business take many years to penetrate the sector. Everything from strategy and capabilities to organizational structure and culture will need to be considered and potentially reconfigured to reflect a digitally enabled business. According to research, the three biggest digitalization priorities for the oil and gas sector in 2020 are cloud-based applications (47%), data platforms (44%) and AI (27%). 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