The move from analog to digital is affecting every industry. Oil and gas have utilized technology for production and distribution for decades, but now data analytics, cloud computing, and AI are here to change the energy landscape further.
What Is Digital Transformation In the Oil and Gas Industry?
Digital transformation integrates emerging technologies like cloud services, artificial intelligence, and automation into everyday business functions. This means utilizing tools to transform the extraction and distribution process for oil and gas companies.
Why Does It Matter?
Digital technology is the future. Consequently, digital transformation in the oil and gas sector improves the industry in many different areas!
Customer experience has become even more critical, and digital transformation strategies can change how a business operates and how employees and customers interact.
Where Is Digital Transformation Affecting the Industry?
Four key trends have begun to affect all aspects of the industry.
Data analytics and Artificial Intelligence (AI)
Businesses can learn all about their customers through the collection and analysis of data. They can then devote time and money to improve their experience. In addition, they can encourage customers to buy more or stay with them.
Digital strategies and data analytics have been shown to improve performance. It’s estimated that companies that are digital-first in their policies are 64% more likely to achieve their business goals than their peers.
The oil and gas industry has also begun to use AI wherever predictive reasoning and forecasting are needed. For instance, AI in supply chain and inventory management can help plan logistical chains, remap supply distribution, and reduce overuse and overordering.
By creating and understanding patterns, a good model can predict what will be needed long before it runs out and adapt to higher or lower use periods. Many companies in the oil and gas industry rely on AI for predictive maintenance. This is where a methodological approach is taken to equipment checks and the equipment is continuously monitored for faults. While it cannot physically check machines like humans would, AI uses sensors and data analytics to track equipment’s lifecycle and compare it to past models. Consequently, It can also predict maintenance requirements before a machine breaks down or becomes inefficient.
AI is also useful during production for demand forecasting to help limit over or producing less. In other words, this scheme might lead to waste reduction, profit margins improvements, and carbon footprints shrinking. For example, Chevron Corporation uses AI to guide parts of its extraction process and forecast drilling sites before breaking ground. Drilling only in the best spots makes each dig more accurate and efficient. To conclude, they also use AI systems for energy management, enabling them to forecast demand and avoid over or under-production.
Cloud Computing
Cloud computing is a system that allows data storage online. Everyone with access to the cloud can find the data and use it for servers and networks.
The ability to store and deliver information makes it a key component of remote work. In the oil and gas industry, remote work can mean employees working from a location other than the business site.
The collection and storage of data in a space easily accessible by the company and its employees enables work to be done remotely, collaboratively, and with fewer upfront costs.
Cloud computing is an essential driver of digital transformation, and it’s part of the foundation that allows other digital transformation trends to be implemented without prohibitive costs to businesses.
It can be used to implement data analytics and analyze large amounts of data, support AI-based predictive drilling, and operate robotics and automation.
Automation and Robotics
Robotics and automated processes have been a part of the oil and gas production industry in some capacity since the mid-1950s. Only recently have the capabilities been identified, matched with digital technology, and spread across various areas of the rest of the business.
Efficiency has always been the most remarkable measurable improvement to oil and gas production by robotics.
The first automated and robotic processes were repetitive tasks that could replace humans where they weren’t necessary. Extracting oil and gas is a dangerous job, so limiting humans to where it was essential and automating the other tasks has made a big difference.
The industry has moved on from general-purpose robots. These sometimes failed at tasks because they were programmed to do too many different things. Now, specialist robots can perform one task perfectly at a time.
“A digital makeover for the industry is set to create more technology jobs.“
The more robots are used on rigs, the more issues that need to be solved are identified. This need creates greater demand and more money is put into robotics that is then put into development and research.
This research on the rise of robotics has created jobs that come with it, which have led to the creation of smaller, more flexible, more capable of performing their tasks, and more energy efficient.
Automation has also improved maintenance schedules and, therefore, the performance of large capital assets like oil rigs, pipelines, and vessels.
The rise of cloud computing means that data can be stored in the cloud, and automation or robotics can now be run anywhere remotely, even globally.
Cybersecurity
With the rise of digital transformation comes an increased risk and a need to strengthen cybersecurity measures.
Sensitive information is now far more likely to be stored in the cloud, and several businesses have set up remote access for servers. Cybersecurity measures have become an even more critical branch of general business security.
This is logical progress for digital transformation with the creation of many new jobs to go with it. Cybersecurity has always included strong passwords that are changed regularly, and now it also involves risk management, threat intelligence, and incidence response planning.
Strategies currently employed include partnerships with outside organizations with greater knowledge about potential threats.
There is also a greater need for and execution of continuous monitoring, sometimes by humans or a combination of humans and AI, to identify patterns and security threats before they occur.
Digital Transformation Benefits
The biggest benefit to digital transformation is that the customer experience is improved. In the oil and gas industry that might mean businesses or residential homes acquiring energy but an improved customer experience often leads to greater customer satisfaction and loyalty.
- Encourages collaboration between employees
- Increased energy efficiency
- Lowers carbon footprint
- Reduces waste
- Improves profit margins
- Creation of more oil and gas jobs
- Allows for the creation of global oil and gas teams
Challenges For Digital Transformation In the Oil and Gas Industry
Many digital transformation systems require IT professionals to install, manage, and teach current employees to maintain them.
The challenges that IT professionals face in the oil and gas industry are:
- The reworking of legacy systems
- Updating manual processes
- Data management
- Regulatory compliance
- Resistance to change
- Updating traditional energy systems for renewable energy inclusion
Future Trends in Digital Transformation
Artificial Intelligence, machine learning, and an increase in automation are possible trends that could affect all aspects of the oil and gas industry.
These processes can reduce costs, increase efficiency and give data to be analyzed that is essential for the future development of businesses.
They also allow for humans to focus on tasks only humans to do and when fully developed, can do repetitive tasks with the benefit of pattern recognition.
Skills for an Oil and Gas Digital Transformation Career
- Stay informed about new technologies, not just what is being promoted now
- Work with geological software
- Data Analytics
- Proficient in environmental regulations
- Green technologies and carbon capture
- Project management
- Programming
- Computer science
Conclusion
As digital transformation progresses in the oil and gas industry to include greater AI models and machine learning, there will also be greater innovation to create more efficient models.
A digital makeover for the industry is also set to create more technology jobs. It could help progress the sector towards a smaller carbon footprint and include green energy options to supplement traditional fossil fuels.
