Digital technologies- opportunities in the E&P sector

A perfect storm created by low oil prices together with skill shortage and increased competition from substitute technology and led by renewables, has opened the floodgates for digital technologies in the E&P sector. E&P firms under significant pressure to improve their performance, are increasingly seeking out new frontiers of productivity improvement and cost reduction. Many E&P executives are pointing out the need for radical changes in the industry’s operating model underpinned by greater adoption of digital.

A recent report on digital transformation from World Economic Forum identifies Big Data/Analytics, Internet of Things, Mobility and Cloud as the top priorities for technology investment in the oil and gas sector. It also highlights robotics, artificial intelligence and wearable technology as the fastest area of growth for the sector. It’s not only the market surveys but also on-the-ground interactions with the E&P firms that confirm the sector’s increased focus on digital.

That said, digital is not new to the oil and gas industry. The DOF (Digital Oil Field) revolution that started in 1990s saw E&P firms making significant investments in instrumentation, analytics, visualization and workflow automation technologies. So one may ask how the digital transformation is different from DOF or its many variants such as Intelligent Fields, Integrated Operations or Smart Fields. The answer is “not much”. The management and organizational practices learned through DOF experiences over the years are still applicable to digital transformation. If anything different, it’s the technology that has emerged as a new force to reckon with.

In the last few years, computing technology has broken new ground. Today storing and analysing data of any size is no longer a constraint as it was many years ago. Computing breakthroughs involving billion and trillion cell reservoir simulation runs have become a reality. Artificial Intelligence is creating ripples across the business sectors including E&P. Drone usage is gradually “taking off” and Blockchain has surprised many with its sooner than expected uptake. Integrating these technologies into existing systems and cultural fabric presents a new set of challenges that E&P firms need to contend with.

For starters, E&P firms will have to manage the tightrope walk between business demands for innovation and speed, and IT group’s need for standardization in a dynamic technology environment. Second, we can expect to see a more intense collaboration between man and machines than ever before with significant cultural and organizational implications. And finally, E&P firms will have to rethink their competence model having to make decisions on which capabilities to nurture in-house and which ones to outsource.

While navigating these challenges can be daunting, E&P firms who are up to the task can expect to reap significant benefits. Research work across sectors, acknowledges the competitive superiority of digital firms over their non-digital counterparts. This presentation explores the opportunities for digital applications in the E&P sector with some practical examples. It will also discuss the practical challenges that E&P firms need to address in order to unlock the full value of digital technologies. And lastly we’ll revisit the lessons learned and best practices collected from DOF experience.