Oil and gas companies worldwide are facing widespread change. One aspect is significant price volatility, as shifting geopolitical dynamics see the supply-and-demand equations diverge in various geographies with, for example, US production rates at an all-time high and pressure on Opec countries to cut back.
Another is the need to comply with increasing environmental regulation designed to support de-carbonization, pushing the industry’s growth imperative towards expanding the natural gas and renewable energy businesses.
Meanwhile, a further escalating trend is for oil and gas companies to create partnerships and collaborative arrangements, often aimed at capitalizing on emerging opportunities in areas like supply chain integration, logistics, trading and payments.
As they navigate through this fast-evolving environment, oil and gas companies are continuing their digital transformation journeys with a view to drive growth, productivity, efficiency and safety across their operations, while also maintaining their efforts to explore and forge new business models.
Against this background, four key technology trends are playing a big role in shaping companies’ strategies for delivering growth amid today’s pervasive change.
• The Rise of the “Cloud-First” Strategy: Most upstream oil and gas companies are now moving to cloud-based platforms where they can host their business applications related to areas like sub-surface, land and production systems. Any new workload and innovation projects are mostly being taken up in the cloud, where IT is enabling infrastructure management, data interfacing with on-premise legacy systems and security management.
With the business expecting ever greater control and self-service to be provided by applications using analytics and artificial intelligence (AI), the trend is towards 100 percent cloudification of all new applications within a couple of years.
• Operationalizing Digital Representations of Physical Assets: Asset performance management (APM) and “digital twin” initiatives are set to converge, driving the development of innovative new solutions for managing critical assets across upstream and downstream operations. As companies’ approach to asset management comes to focus increasingly on risk and reliability, long-term programs and initiatives are being launched to source, ingest, manage and interpret asset operational data and performance KPIs in real time.
These initiatives span areas from sub-surface visualization to well-drilling, from production field assets to mid-stream pipeline corrosion and static refinery assets, and more. Augmented/virtual reality technologies are playing a significant role alongside the APM tools and applications. And real-time asset and worker tracking solutions are becoming mainstream, as companies take worker safety and productivity ever more seriously.
• Higher Adoption of IoT Devices and Edge Computing: Oil fields and downstream plants will continue to increase their adoption of sophisticated sensors, with a large proportion of the resulting data being collected from edge computing devices and managed by “data historians” as the core data system.
New interoperability and data interface protocols will be created to enable the data from the legacy instrumentation to be shared and synergized on the IoT platforms. IT will play a growing role in managing the device connectivity, data processing and application workloads both on the edge IoT platforms and the cloud, as well as their inevitable two-way interactions with other Enterprise IT and OT systems.
• Renewed and Holistic Focus on Data and Data Technologies: Today, business analytics and AI systems are scaling rapidly, with increasing availability of historical labeled data for model training and testing. Within a few years, assets will be deployed with self-diagnosing and healing capabilities. Asset maintenance decisions will be made by AI bots/operators with minimal to no human intervention.
All these developments and trends are leading to a multiplicity of challenges for companies as they seek to manage an increasingly complex data landscape. Issues such as data veracity concerns, bias in models, data security threats and a lack of metadata management may significantly impede a successful digital transformation.
IT can play a major role in bringing new innovations around data discipline, and in administering the data foundation holistically for all business intelligence (BI), analytics and AI applications in close collaboration with business. Applications using blockchain technology are gaining momentum in oil and gas companies, especially in areas like supply chain, logistics, trading, joint ventures and production accounting. This development is redefining the remit of data governance that IT is supposed to administer.
As the tech trends described above play out for oil and gas companies, they will help to influence innovations in many areas of the business—with the relative timing and costs of these innovations varying widely.
However, as the industry’s adoption of these technologies continues to advance and the resulting benefits flow to the business, oil and gas companies will feel increasingly confident about investing in their long-term growth and innovation agendas. Put simply: Business growth and technology innovation will complement each other and will go hand-in-hand.