Oil and gas companies are striving for resilience and agility to enable them to survive in a dramatically changing and increasingly complex landscape. The most significant challenges faced by the industry relate to the response to climate change, but are also being driven by a changing workforce, financial pressure, and shifts in the structure of vendor partnerships.
In this context, rapid advancements in Artificial Intelligence and other technologies are driving the biggest trends in the industry, helping it respond to these multiple pressures. Physical and digital tools are being employed that will dramatically improve operational efficiency, altering the day-to-day running of companies, automating complex processes, and improving the safety of oil and gas workers—but that digitalisation itself creates challenges.
A Challenging Landscape
Oil and gas companies are coming under an increasing number of social and environmental pressures. This is posing some thorny questions about what role fossil fuels will play in a future energy economy, while presenting an existential challenge for the companies that extract them.
As climate change becomes a more pressing concern and global discussions become more intense, companies are focusing on a reduction in carbon emissions. Many of them have already committed to targets of net-zero greenhouse gas (GHG) emissions at some point between 2030 and 2050. They are now investing in alternative sources of energy like solar and wind to eventually replace reliance on fossil fuels.
However, twinned with this pressure (largely coming from the Global North) to decarbonise energy supply, comes a rising demand for energy from economies in the developing world. Furthermore, following the drop-off in energy demands during 2020 (as a result of the COVID-19 pandemic), a large number of oil and gas firms have had to reduce operating expenditure, including laying off staff, leaving them with overstretched workforces.
Oil and gas executives need to find a way to remain competitive in the face of all this, and trends indicate that the solution is being found in innovative technologies.
Technological Solutions Driving Current Oil and Gas Trends
The scarcity of both financial and human resources has pushed companies across many sectors to embrace digital technologies, to help them increase productivity, manage risk, and improve efficiencies.
A 2021 survey by Gartner revealed that up to 50% of oil and gas CIOs have plans this year to invest further in technologies such as Artificial Intelligence, machine learning, data analytics, Internet of Things devices, automation, and cloud services. It’s significant to note that these technologies are interdependent; relying on one another to bring maximum return on investment. For example, data is useless unless used in conjunction with other technologies such as advanced analytics and connected devices—companies need to have the appropriate infrastructure in place.
Artificial Intelligence (AI) and Big Data
Artificial Intelligence is programming that enables machines or algorithms to mimic human cognition, behaviours, and actions. By harnessing a computer’s processing power, an AI is able to perform tasks far more rapidly and accurately than a human. An AI can be trained to perform a basic task, to free up human labour or increase efficiency, or used for complex functions to augment human skills. Through ‘machine learning’ (ML), an algorithm is exposed to vast amounts of data to improve its accuracy and intelligence. In conjunction with big data and advanced analytics, AI can be a hugely powerful tool in maximising the efficiency and production in the oil and gas industry.
One use case for AI is monitoring equipment and plant assets, where it can predict machine failures early to reduce downtime and minimise risk. Another is in oil exploration itself, where AI’s ability to process and find connections in huge datasets can help assessing the value of reservoirs, or even in the identification of new oil hotspots. Yet another is in operating remote equipment.
Internet of Things (IoT), Automation and Remote Sensing
More and more companies are using remote tools and devices to supplement traditional systems, using IoT technology and sophisticated automation. One of the most obvious benefits of this is in safety. Many of the daily functions carried out in the field can be very dangerous for humans, with a high risk of death or serious injury. If the riskiest of these tasks can be delegated to IoT devices, whether automated or remotely operated, worker safety will be improved, as will efficiency.
Sensors are another aspect. Remote sensing enables huge leaps forward in data collection. Coupled with the improvement in data processing thanks to AI, oil and gas companies are finding smart ways to increase efficiencies across multiple functions, optimising exploration and drilling operations, as well as transportation, logistics, and workplace safety.
Remote operations are already well-established for many firms, so the trend we’re currently seeing lies in the adoption of related technologies, including wearables and augmented reality (AR), to make more effective use of these tools. ‘Digital Twins’ are another big development in this area. Effectively a digital ‘proxy’ for a physical asset (like a truck), a digital twin streamlines communication with a connected device, improving efficiency, while reducing downtime and maintenance costs.
Of course, the IoT tools required to operate these connected devices are just one part of the new technologies that relies on the cloud.
Gartner’s survey indicated that 79% of oil and gas CIOs are strengthening the “change leadership culture” in terms of IT, with 85% of them committing to the creation of a “change-enabling technical platform”. This platform relies on cloud technology.
The adoption of cloud platforms is another major trend. They are the enabling factor for most of the new aforementioned technologies, providing organisations with real-time insights and smart dashboards, as well as centralised reporting. They can help oil and gas firms improve business agility, providing them with tools to respond more rapidly to changes in the market or environmental conditions. The cloud is important for connecting remote workers and vital for aggregating huge datasets, as well as providing a business solution for new key vendor partnerships and managing the workforce.
The multiple digital developments occurring simultaneously in the sector is creating one of the most significant new trends in the industry. Technology does not remove the need for human resource; it simply changes it. It’s essential, for example, that firms employ skilled data scientists who are able to make the best use of AI and data analytics.
When incorporating AI and related technologies into operations, firms are now thinking in terms of augmented workforces. Oil and gas CIOs are rethinking their HR and operating models to ensure that there is appropriate remuneration and genuine career development within IT, rewarding premium digital skills with premium employment opportunities.
The oil and gas industry is increasingly complex and currently faced with multiple challenges, including a pressing need to look after its workforce and, above all, the need to make a 180-degree turn from fossil fuels to renewables.
Oil and gas companies are going to need new technology, infrastructure and talent to fulfil the changing requirements. As a result, we’re going to be seeing a continued adoption of the latest technologies, serving to improve efficiencies, increase safety, maximise revenues, and facilitate the necessary changes across the industry.