The 2014 oil price bust very quickly changed the agenda of the oil industry, prioritizing efficiency as a tool of keeping costs down. This emphasis on efficiency was the best outcome of the crisis that pushed the larger part of the industry into survival mode.
Now the crisis is over, or at least sector players have more or less become used to the new price normal, and growth is once more on the agenda. The industry’s best pal in this new stage of its evolution seems to be digital technology: connected devices, the cloud, and data analytics.
An earlier piece from Oilprice.com highlighted the potential of cloud computing and the challenges that the oil industry faces with its adoption, such as the critical importance of data protection due to the sensitive nature of much of the information an oil company handles. The benefits, however, seem to outweigh the risks, according to cloud backers, providing oil firms with powerful data processing capabilities and connectivity, which would in turn enhance the performance of a company’s various divisions by improving communication.
The cloud is just one facet of the digital revolution that can benefit the oil industry, however. The head of GE Oil and Gas’ digital products department, Binu Matthew, recently told Energy Voice that the energy industry must urgently adopt digital technologies if it wants to maximize its efficiency and, ultimately, returns. Related: This Nation Just Created A New Corporate Superpower In Oil & Gas
According to Matthew, embracing cloud connectivity and data analytics will cut capex for the oil and gas firms by about a fifth, and operating expenses by between 3 and 5 percent. In an environment where every additional dollar per barrel is cause for cheer, these reduction rates certainly look impressive.
Right now things aren’t looking too good, with just 1 percent of the data collected from sensors on offshore rigs used in decision-making. Only 3-5 percent of oilfield equipment is connected, Matthew says. The oil industry seems to be really behind others in its adoption of modern technologies, despite the huge amount of data it produces on a daily basis. The data is produced but almost never analyzed and interpreted – all this at a time where everyone is swearing by data analytics and its impact on better decision-making.
Among the immediate applications of such digital tools as connected equipment and cloud computing are better asset performance management, better production optimization, and maintenance – all crucial elements of oil and gas production.
For now, the industry is wary in its approach to digital tech, but wary or not, it is coming round. BP late last year launched a digital tool, developed by GE, dubbed Plant Operations Advisor, which would improve the performance, efficiency, and safety of BP’s operations. The tool is right now being piloted on a platform in the Gulf of Mexico, preventing unplanned downtime and enabling engineers to respond to problems immediately. Related: Latin America Growing More Dependent On U.S. Oil
We’re bound to see more solutions like these: the oil industry simply has no choice. The whole world is going digital, and while the pros and cons are always a subject of debate, bucking this particular trend is unlikely to be the smartest thing because there’s new competition on the market.
Renewable energy solutions providers are leaning heavily on digital: they offer smart solutions, connectivity, and real-time services made possible by those very same digital technologies of which Big Oil is wary. TechCrunch calls these clean energy companies enernet (“Noun. A dynamic, distributed, redundant and multi-participant energy network built around clean energy generation, storage and delivery and serving as the foundation for smart cities.”), and argues that they are making the next big splash, after the rise of the Internet in the 1990s. This splash may be in the future, but it pays to be prepared, a painful realization which Big Oil – and small oil, too – must have come over the last two years.
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By Irina Slav for Oilprice.com
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