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Felicity Bradstock

Felicity Bradstock

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.

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Digitalization Is A Necessity, Not A Choice, For The Oil And Gas Industry

  • The oil and gas industry was forced by the Covid-19 pandemic to embrace new digital solutions in order to maintain operations when access to labor was limited.
  • This trend towards digitalization is only going to accelerate going forward, with revenue for the oil and gas automation market expected to climb to $24.63 billion by 2025 from $17.17 billion in 2020.
  • While digitalization is already well underway in Europe and the United States, other regions such as North Africa are now recognizing its necessity.

As oil and gas operations were disrupted significantly by the onset of the Covid-19 pandemic in 2020, it became evident that greater digitalization was vital to ensure the maintenance of operations when worker access is limited. With innovative solutions popping up from start-ups around the world and greater interest from oil majors, it is only a matter of time until we see greater digitalization across the oil and gas industry. 

During the pandemic, governments introduced several rounds of varied restrictions on the movement of people and limitations on access to the workplace. Many oil and gas operations were suddenly halted as workers could no longer run oil rigs, processing plants, and other facilities. In addition, the supply chain was also affected, hitting production levels hard and creating an uncertain outlook for the industry, leading many smaller energy firms to file for bankruptcy. 

This sudden change to the energy landscape led to many of the world’s oil majors looking to introduce new digital technologies to create greater automation across their operations. For example, some companies introduced unmanned rigs known as ‘ghost rigs’. These types of platforms can be operated remotely, significantly reducing the number of workers required to be present on the offshore facility.

Now, a recent analysis from Frost & Sullivan suggests that both AI and IoT are expected to play a bigger role as the industry recovers from COVID-19. From a revenue perspective, the total oil and gas automation market is expected to reach $24.63 billion by 2025, up from $17.17 billion in 2020 and growing at a compound annual growth rate of 7.5 percent, the analysis suggests. 

Agustina DeSarriera, research analyst, for energy & environment at Frost & Sullivan explains, “Operational technologies (OT), such as supervisory control and data acquisition (SCADA) systems, distributed control systems (DCSs), and programmable logic controllers (PLCs), are already in place. However, to optimize automation, companies will soon have to include artificial intelligence, Internet of Things, and robotics technologies in their operations.” 

Several innovations can help to make the oil and gas industry more efficient and potentially safer. For example, by using IoT energy firms can automate the monitoring and evaluation of operations to be able to respond in real-time and optimize equipment utilization and maintenance planning. Meanwhile, blockchain technology can be used to track the history of IoT devices and enhance security or to improve accuracy. 

According to a 2020 EY survey on Oil and Gas Digital Transformation and the Workforce Survey, 58 percent of respondents said the pandemic made investing in digital technology more urgent, with the majority planning to invest a great deal (29 percent) or moderate amount (51 percent) relative to their total budget

Now, Huawei is endorsing the change to digitalization as a chief executive at the company, Li Yangming, stated the need for digital technologies to boost efficiency, safety, and productivity in the oil and gas industry. He made this statement ahead of the Nigeria International Energy Summit (NIES), which presented the theme of ‘Revitalising the Industry: Future Fuels and Energy Transition’. 

Yangming highlighted the dangers involved with the operation of oil and gas camps. He explained, “the answer lies in digital transformation. This can help to boost the safety at oil and gas fields, while also reducing costs and improving efficiency. The use of reliable production networks and data ensures that the operations are secure, while technologies such as voice and video interaction between the site and the dispatching center makes daily processes more efficient. A digital approach also enables resources to be used more efficiently.”

Digitalization has become a common means of modernization across Europe and North America, but now other parts of the world are starting to recognize its value too. In North Africa, Egypt is working to become an energy hub – for both fossil fuels and renewables. And now it is looking to digitalize its oil and gas sector to help this become a reality. 

President at Kuwait Energy Egypt, Kamal Al-Sawi, stated in an interview, “Digitalisation has become a must, it’s not an option, especially for the oil and gas sector.” Furthermore, “We didn’t have any interruption of our operations during the pandemic for several reasons. The first reason is that we have in-house technology that can help our workers easily work remotely, whether in the field or in the office.” And “we’ve sought to have remote access to most of our facilities and our wells. Whenever we build a new facility, we make sure that it can be controlled remotely, and, also, with the least manpower possible in order to avoid any interruption in the future,” he added.

An increasing number of energy companies are looking at how to use digital technologies to make their operations more efficient, cost-effective, and safer, as well as to mitigate the risk of further pandemic restrictions in the future. While many oil majors across North America and Europe have already introduced new technologies to their operations, now the MENA and African regions are showing greater interest in digitalization as a means of modernizing the oil and gas industry.

By Felicity Bradstock for Oilprice.com

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Leave a comment
  • DoRight Deikins on March 24 2022 said:
    One faulty sensor can bring a ghost rig down to a non-productive maintenance state until a repair crew arrives. Or the rig can stay up and chance a catastrophe. They work well when they're working.

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