Digitalize, act, and enable - these three pillars lie at the core of spurring companies’ digital transformation. Have no doubt that digital tools are energy companies’ allies – ones that we must collectively leverage.
The pressure cooker is intensifying as unpredictable supply-demand dynamics spurred by COVID-19, the global energy transition, net zero targets, and geopolitical uncertainties take their toll. Amid this mist of guesswork, the value of harmonized data across supply chains and real-time analysis for agile decision-making is a beacon of opportunity.
The upstream part of the supply chain, which focuses on exploration and production, has historically been a digital leader in the energy market. Workflow integration and data use have been the norm, meaning there is a lot of knowledge and practice to use as a springboard for the next chapter – one the industry most certainly needs.
Opportunity for more
Economic opportunity abounds, which is especially pertinent when oil prices are steady if relatively low at $75 a barrel. Using advanced connectivity to optimize drilling and production throughput and improve maintenance and field operations could add a staggering $250 billion to the oil and gas industry’s upstream operations by 2030, said McKinsey.
Even better news is that up to 72 per cent of that $250 billion could be realized with the oil and gas sector’s existing infrastructure – saving time and money. For offshore operations alone, greater connectivity for digital tools and analytics could cut costs by up to 25 per cent per barrel of oil.
We have seen the benefits of proactively engaging in the digital world firsthand. Among our seven digital programmes is the DigitUP, where the lighthouse Digital Subsurface facilitates the management of exploration and development projects by simulating our assets in 3D models (digital twins). This is cutting our field development time by 75 per cent by 2025 and reducing our operating expenditure per field development plan by up to $18 million.
As part of the programme, the Digital Rig of the Future will see future wells planned in one day, drilled by a robot, and controlled by people – cutting by 90 per cent the well planning time with $18 million in annual savings by 2025.
Such economic savings following a year of pandemic-spurred strain are extremely coveted. The International Monetary Fund (IMF) said 2020 was the worst economic squeeze since the 1930s. Against this backdrop, it is no wonder that 51 per cent of respondents to an Accenture survey cited artificial intelligence (AI) and machine learning as the top digital technologies they plan to invest in over the next three to five years.
Clearly, digital investments can provide much-needed relief.
Holistic ways matter – a lot
But investing in technologies is not the sole route to success; there is a bigger picture to consider. For one, internal digital dexterity is crucial. This means companies must promote positive cultural change and develop future skills to foster an innovative mindset. Yes, this is a long road of effort, but it is the only viable route for those wishing to remain competitive in what are rapidly evolving energy markets. Consider the consequences of not having a digitally able workforce when Seagate expects the global datasphere to grow by 300 per cent in six years, from 45 zettabytes in 2019 to 175 zettabytes by 2025. The risk of being left behind is very real.
Harmonization across different data methods and skill sets is also pertinent for upstream companies operating in multiple locations. Within the Middle East and Africa (MEA) alone, we are active in five countries: the UAE, Tunisia, Libya, the Kurdistan Region of Iraq, and Yemen.
Each is home to a different working culture and varying operational norms, so establishing continuity across the board is essential for maintaining safety and efficiency. The greater the level of harmonization at the start, the greater the operational efficiency. In turn, this generates greater the economic, environmental, social, and reputational benefits.
There is a lot of noise in the digitalization arena, with new tools explored and conversations peppered with acronyms. So, for any upstream companies finding the volume too loud and confusing, I suggest you take a brief step back and consider what successful digital leadership looks like for you.
For me, it means acting as an industry role model for sustainable health, safety, security, and environment (HSSE), reducing our carbon footprint and maintaining highly efficient and effective process operations. It also means being customer centric, a business partner of choice, and a reputable employer.
Once you have a firm idea of what your ‘ideal’ is, then you can craft a bespoke package of digital tools that specifically support your needs. Slipping into a one-stop-shop package risks expensive backtracking later on.
Tailoring your needs may take more time to start, but it will result in a truly effective digital journey – not a short-term bandaid.