Almost every industry’s operational landscape has gone digital, and the oil and gas industry is no exception. The falling cost of digitalization has resulted in ever-expanding connectivity that is allowing many companies greater competitive advantages while saving millions through operational gains. Despite developments made in seismic exploration, the field of analytics and computation, specifically in the oil and gas industry, can draw many lessons from digitally advanced industries.
The benefits from going digital in the oil and gas industry can be seen through increased productivity, safer operations and cost savings. Going digital makes sense allowing resilience and better efficiency measures to withstand the price downturn during a period of low oil prices.
The recent digital transformation brought about by innovation in prominent technologies including; artificial intelligence, machine learning, robotics, and blockchain technology etc., are now rooted in many sectors, particularly capital-intensive industries. Consequently, trial and error methodologies have outlived their use and are no longer relevant for the oil and gas industry as such ventures are not compatible with upgrades to digital assets while such investments incur sunk costs.
Although digital maturity varies from company to company, and from segment to segment, in general, the exploration and production segment in the oil and gas industry is relatively advanced. The application of advanced imaging technologies is steeped in eight decades of developments in oil and gas exploration and has now become a standard application around the world to track and classify geological data. Companies such as Exxon Mobil benefit from this technology in fracture distribution estimates.
This advanced technology has made great strides in the oil and gas industry over many years and now 3D technology used in geological and velocity modeling, as well as in-depth imaging, are some of the newer applications for this segment.
In the years to come, advanced visualizing modeling and techniques, new developments in seismic modeling through 4D technology, and new development drilling applications to improve data integration are set to further enhance results.
A digital leap towards advanced analytics is forecast to bring as much as US$30 billion of cost savings if the oil and gas industry fully embraces this technology, suggested the Deloitte Center for Energy Solutions in 2017. Despite the nascence of some of the recently developed technologies, the oil and gas sector has already benefitted from technological advancements made so far.
When it comes to production operations, technology in production data monitoring has made great achievements since it allows companies to monitor as much as 60 to 70 percent of the discovered wells. The only downside to this development is contingent on its high cost since only super major and major companies currently use it.
Another technology that has been tried and tested is electrical submersible pipes and real-time data analytics that have been used in over one thousand wells in the Middle East. This predictive approach brought great progress without the need to reinvest in engineering analyses or conduct pilot testing.
Undoubtedly, a digital transformation will bring great cost reductions estimated at $2.3 billion for the exploration and production segments of the oil and gas industry. However, the property, plant and equipment field is now in line to benefit from digital improvements, the absence of which was estimated in 2016 to incur $35 billion in cumulative net losses.
Should advanced technology be applied to property, plant and equipment, the level of safety is anticipated to increase; the cost of replacements is expected to decrease, all the while extending the life of equipment and ensuring the safety of assets and employees. At present, digital solutions in this segment are almost non-existent, but the industry has started to attract investment, although so far this has only scratched the surface, and the window of opportunity for greater investments is massive.
To obtain a competitive edge, it is necessary to keep the digital wheel turning by endorsing the standardization of digitalization in the industry. This will bring about economies of scale in the long run in the exploration, production and in the property-plant-equipment segments.
Opinions expressed in this piece are the author’s own and do not necessarily reflect Anadolu Agency's editorial policy.