India Paid 16% Less for the Same Amount of Oil in FY 2023-24
Modern innovation is helping the oil industry to keep up with the competition by cutting costs, addressing safety concerns, and incorporating better data analytics to continually improve upon existing systems. As we face increased global uncertainty over the demand for oil as well as its price, digitalization and the introduction of new technologies will help the industry to tackle these challenges head-on. Supply chain costs have always been one of the oil and gas industries major costs, a cost that has been rising in recent years. Due to the complexity of the system, the use of third parties, and lack of digitalization, the significant inefficiencies in industry supply chains lead to greater costs and project delays. A 2017 Weforum report stated that the potential value of the digital transformation of the oil and gas industry could be as high as $2.5 trillion, if operation constraints are relaxed to welcome modern technologies.
Furthermore, the digitalization of the industry could have a positive impact beyond financial savings and earnings. New technologies could lead to a significant reduction in CO2 emissions. We can expect to see an estimated equivalent reduction of 1,300 tons of CO2, 800 million gallons of water, and a decrease of 230,000 barrels of oil lost in oil spills.
New technologies are being rapidly introduced by major players in the industry. For example, digital twins provide interactive 3D simulations that engineers can use to maneuver oil platforms and plants remotely when they cannot get to the rig.
Digital twins, although not a recent innovation, are proving increasingly useful during the current global pandemic. Thanks to advances in computing the technology, they are now being used by the mainstream oil industry, allowing engineers to work remotely. They provide a much-needed response to restrictions such as social distancing, Mitch Flegg, chief executive officer of Serica Energy Plc. told Bloomberg.
Additionally, we have seen great advances in the use of data analytics. In an EY Global Oil & Gas survey from earlier this year, 85 percent of respondents said they were already using some form of advanced analytics. Analytics has played a huge role in the digitalization of the industry.
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EY analyzed 500 oil and gas projects of $1 billion or higher and found that 60 percent of the projects experienced delays and 38 percent went over budget. They found that several of these delays came down to poor data analytics systems. Some of the key failures were the lack of centralized and reliable data, ineffective processes, and the need for the manual transfer of data. Delays in reporting and poor communication times also contributed to these failings.
Major companies acknowledge the way to combat many of these challenges is through greater digital innovation. In fact, 80 percent of survey respondents highlighted their intention to invest at least a moderate amount in technology to keep up with industry technology trends. Further, 58 percent said there was a rush to invest in these types of technologies in response to the global pandemic.
While Covid-19 has hindered the oil industry in several ways, reducing demand and production in several areas of the world, it has had some benefits for the industry. For example, the push for greater digitalization and technological innovation is stronger than ever. Companies are rushing to find alternative work options for rig staff due to unpredictable pandemic restrictions. Remote monitoring systems such as drones are being used to survey pipelines and ensure they are in full working order. And economic concerns of the downturn seen earlier this year are being tackled by greater efficiency and automation.
By Felicity Bradstock for Oilprice.com
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Felicity Bradstock is a freelance writer specialising in Energy and Finance. She has a Master’s in International Development from the University of Birmingham, UK. More
Comments
The real reason is that oil is irreplaceable now or ever. Neither the global economy nor civilization as we know and enjoy would exist without oil and vice versa. The global economy will continue to run on oil and gas well into the future.
Furthermore, there can neither be a post-oil era nor a peak oil demand throughout the 21st century and probably far beyond. Moreover, the notions of an imminent global energy transition from oil and gas to renewables and zero emissions are mere illusions.
Oil and gas will continue to be the fulcrum of the global economy and the core business of the oil industry well into the future.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London
I certainly hope that our civilization will exist after we have used.up all the oil, as it is a finite resource.
Regarding when oil consumption will peak, it may do so much sooner.than the 22nd century both due to market pressure and regulatory considerations. The transportation sector takes up roughly half of all oil consumption. For light vehicles it is expected that the total cost of ownership will be lower than ICE vehicles in the following few years, to be shortly followed by lower than ICE purchase prices.
Heavy duty vehicles will follow this trend.
Aviation may continue to be using oil for the next 1-2.decades, although there are also investment and regulatory pressure (at least in Europe ) for alternatives.
I wonder how much disturbance in demand is necessary to create a disruption in long term invesents, thus limiting future capacity growth.
A recent study by Stanford University researchers predicted that the world could be powered entirely by renewable energy in just 20 to 40 years from now. And given that we already have the technology, it’s not that hard to imagine. https://news.stanford.edu/news/2011/january/jacobson-world-energy-012611.html
Already Iceland, Costa, Norway, and Uruguay are close to 100% proving it can be done. Given the costs, economic and otherwise from the pollution of using fossil fuels, I think the political will to accomplish the transition sooner rather than later, will materialize in the coming decade. Oil companies will be smart to take a leading role in the conversion before oil assets are stranded as it happened with coal.
If anyone was paying attention Dow Jones Coal Index was over 740 in 2008, it is crawling at 6.87 today, November 17 2020, having lost more than 99% of its value. Danish Oil Natural Gas was the first fossil fuel company to convert 100% to a renewable energy installer on October 23 2017. Orsted stock on 10/23/27 was 19.98 USD today at 57.96 USD the price is 290% up. Maybe the 20 years that Mark Jacobson of Stanford is predicting in the article cited above may prove too pessimistic.
So there is no use wrecking the economy by switching to more expensive energy too quickly, for little long term benefit.
Being rich and hot, beats subsistence poor and hot. Ask the Gulf Arabs. You know money, money changes everything, sang Cyndi Lauper. It sure does.