Digital technology is helping the world tackle the energy trilemma: improving energy security by enhancing production, improving sustainability and helping to cut costs through greater efficiency and risk reduction. In the oil and gas industry, digital tech is making oil and gas operations more predictable, more efficient and safer. “There has been a flip in the industry. People have realised AI and digital tech are not just nice to have, they are something you must have, if you are going to be successful over the next decade,” Shaun Johnston VP, Digital Consulting at Wood, said.
Concepts that were little more than buzz words a few years ago are now reality. Digital Twins, automation and the ability to deploy remote operations in a wider set of circumstances are becoming embedded in the way the oil and gas industry operates. The result is long-term cost savings and a workforce increasingly free to focus on tasks that add value to operations. Large language models and other current AI developments can work wonders for upstream just by automating form filling and other routine admin alone – the potential for further efficiency gains is massive.
A workforce will be more likely to change their working methods and embrace the digital revolution if they see leadership modelling the way. “Generally, people look around to see what the most influential people in the organization are doing and copy them. Often that’s people in leadership positions and, if they aren’t taking action, then change initiatives have less impact. Leaders need to do more than approve change plans and delegate their implementation, they need to demonstrate how they are adapting personally.” Julia Benbow, of Digital Innovation, Fuels & Feedstock at OMV, said.
Incremental introduction of digital processes is more practical, less costly and less risky than trying to overhaul the whole organisation at once. Keeping the scale small increases chances of successful adoption, and still improves your operations – and if a relatively small project does fail, the cost is contained.
A considered approach to introducing digital tech is essential. To be most effective, it should be carefully targeted at a specific problem that needs solving, rather than introducing an expensive answer to a question that hasn’t been asked. It also makes sense to make early forays into digital tech in areas where chances of success are high. “Don’t start with risky digital options. There are tons of low hanging fruit that can check in at 1,000% ROI,” according to Brendan Sullivan , CCO of Viasat, a comms company active in data transfer for the energy industry.
Oil companies have traditionally invested in better hardware to improve the bottom line. The board may need to be persuaded that more effective use of existing data and better analysis of improved data flows from current operations can be just as effective in terms of profitability. So it’s still necessary to make the business case for investment in data and show all stakeholders what value they can get it from it.
Improving the diversity of a company’s workforce in terms of gender, social background and specialisations will broaden the pool of creativity and accelerate digital innovation, Based on AI and machine learning. “To succeed we need to attract diverse talent, skills and experience. Digital innovation gives us a great opportunity to explore and really challenge ourselves to think differently and learn from each other,” Ila Glennie VP, Subsea Operations at bp, said.
Bring in fresh talent with new skills, but don’t lose your existing workforce. They are the lifeblood of the company, whose experience cannot be easily replaced – and there are plenty of examples of oil and gas industry veterans who have successfully added new skills to their CV or completely reskilled to move over to digital operations.
Collaborating on industry standards and, where possible, data sharing is crucial if the potential of digital innovation is to be fully realised. In a highly competitive industry, an initiative such as the OSDU data platform, which allows leading oil and gas sector players to collaborate, illustrates the potential. “We should have competition where it is desirable, but we shouldn’t compete on establishing the plumbing that we all need to run our own businesses,” according to Einar Landre, Lead Analyst IT, and OSDU Focal Point at Equinor.
Digital transformation routinely involves using third party services, such as cloud-based applications, so by definition it can be risky. It could also be very costly, given a breach can cost upstream companies billions of dollars in disruption to business and countering the attack. AI-enhanced attacks by hackers are almost impossible to defend against without AI-driven defensive security. “Oil and gas is the most targeted industry. If you don’t use AI for defence, you are definitely going to be hacked, and soon,” Brendan Sullivan, CCO of Viasat, said.
Oil and gas revenues provide energy companies with the headroom to invest in technology essential to the energy transition. Upstream firms are also accustomed to handling mega-projects that have a multi-decade timeframe, so can bring that experience to offshore wind or the development of the hydrogen economy, if that takes off. The industry believes it can invest successfully in renewable energy, carbon capture, and other forms of tech contributing to sustainability goals, while scaling down oil and gas production over the next two decades.