Just a few months into a new decade and the impact of the COVID-19 pandemic, combined with oil market turmoil, is causing undeniable concern for the wellbeing of the workforce and future oil and gas operations. Now, more than ever, safely managing the role of digitalization and demand for decarbonization, while efficiently balancing the books, will be critical for companies to survive and thrive.
At the core of such an evolution are the people who drive the industry forward to deliver safer, cleaner, and more efficient energy to the world. The industry’s economics have shifted significantly, and we will be grappling with challenges for some time. New ways of working that leverage the right mix of talent and technologies will be more important than ever as we look toward the future.
Traditionally, many companies have worked in silo on their own solutions, services, technologies, and capabilities. Such a mentality can have an impact on operations and employee morale. A new mindset is required for greater collaboration and transparency if the sector is to play a decisive role in enabling the energy transition.
Fragmentation to Fusion
A deeper and broader “ecosystem” approach can help establish strategic partnerships across the value chain. Together, this will not only develop new technologies and commercial models, but also unify the industry as it looks beyond the downturn to more stable and sustainable operations.
For example, in June 2019, Baker Hughes and C3.ai began a joint venture (JV) agreement to deliver artificial intelligence (AI) solutions for the oil and gas industry. BakerHughesC3.ai brings together energy technology expertise with digital knowhow in solutions that optimize productivity and accelerate the energy transition. The alliance demonstrates a more collaborative approach to the digital transformation business. Five months later, Microsoft joined the alliance to support the suite of enterprise-scale AI applications on the Azure cloud computing platform.
Shell is already utilizing the C3.ai platform to hasten digital transformation by focusing on AI and machine learning to improve overall operations starting with predictive maintenance.
When the JV was announced, Shell Group CIO Jay Crotts said, “The fusion of existing oilfield technology and emerging digital technology will create new solutions that truly address oil-and-gas specific challenges with powerful advanced analytics technology.”
While the number of pilot projects around digital and AI may be increasing, a major challenge has been difficulty getting traction to quickly transform them to scale. Interestingly, a survey found that more than 80% of organizations have implemented a digital initiative within the past 5 years but only 16% of those stated a successful improvement in performance (McKinsey & Co. 2018).
It is an area where we not only need to work together to try and achieve better results, but also take inspiration and best practices from other sectors which are already well ahead on their digital journey.
This theme will be a focal point at ENGenious 2020, the sister event to SPE Offshore Europe.
Scheduled to be held in Aberdeen from 22–24 September, ENGenious is to move from a face-to-face conference and exhibition to a virtual conference format. Simon Marshall, exhibition director of ENGenious 2020 and SPE Offshore Europe 2021, said, “Times like these present great challenges but also opportunities. ENGenious stands for ingenuity, innovation, and digital leadership in energy, and using a virtual platform aligns perfectly with these goals and indeed broadens our ability to connect with stakeholders globally.”
Harnessing Digital Power for Change
In a world in which every major company has rapidly shifted to remote working, digital technology has come to the forefront. AI will have an increasingly strategic role to play. The importance is becoming amplified due to macroeconomic conditions requiring heightened cost competitiveness, productivity, and efficiency.
While there may be the best technologies on offer, nothing is going to be successfully implemented unless the right behaviors are present in order to accept and adapt to the changes and new ways of working this will bring. In the oil and gas industry, the convergence of information technology (IT) and operational technology (OT) is an important factor. While we have seen those worlds getting closer together, combining and in some cases colliding, this can sometimes lead to challenges in optimizing behavior to work with the new technology.
There is also the conundrum of marrying the experience of more traditional operating asset engineers with new approaches from data scientists to understand the value and insight that digitalization can bring from the desktop to the drilling deck. The behavioral aspect is important to get the two worlds to communicate effectively and we are already seeing some areas of success.
“As a symposium focused on the digital future for the energy industry, we have the opportunity to be even more relevant as we deliver the content, networking, and discussion virtually. The format will feed into our plans for SPE Offshore Europe 2021 where we will ‘go big’ on digital,” added Marshall.
Climate Goals
Within the relatively closed confines of oil and gas, industry leaders, innovators, and decision-makers are taking action and seeing results. The industry is also reacting to greater efficiency and its role in a lower-carbon energy future. Equinor has committed to significantly reduce greenhouse gases across its operations, while Repsol, Shell, and BP aim to be net zero by 2050 or sooner.
Baker Hughes has already seen the impact of its energy-efficiency efforts over the past decade. Its overall strategy to develop and deploy the technologies to take energy forward saw the company pledge to achieve net-zero carbon emissions by 2050. In supporting digitalization and decarbonization, Microsoft announced in January that it will be carbon negative by 2030 and by mid-century will remove all the carbon the company has emitted from the environment either directly or by electrical consumption since it was founded in 1975 (Microsoft 2020).
The industry’s drive to digitalize and decarbonize is stepping up but lags behind other sectors like aerospace and automotive. This “race for second,” a mantra used when developing and deploying new technologies, can have a direct impact on adoption and implementation crucial to optimize productivity and operations and overcome the demands of the climate change agenda.
The value of strategic partnerships and ecosystems can deliver much shorter time to value and up to 40 times less cost and effort with a digital platform. Those that remain in silos will not benefit compared to their counterparts who are more open to teaming and collaborating in strategic ways.
Care and Ingenuity in a Crisis
Forward-thinking companies are exploring how to leverage digital technology to make not only their operations safer, cleaner, and more efficient, but their local communities too.
This community approach is evident in the innovative and agile response made by many oil businesses to the global COVID-19 crisis.
In addition to using its additive manufacturing facilities for spare or necessary parts on assets, Baker Hughes and its additive teams in the US, Germany, Scotland, Italy, and Saudi Arabia are engaging with local hospitals, industrial consortiums, and partners to print hundreds of face shield pieces and other high-demand medical equipment. Critical personal protective equipment is also being donated to healthcare facilities, including thousands of face masks and goggles. From the frontline to the front doors, staff have organized donations such as hand-sanitizing stations for schools, laptops for students who need to learn remotely, and supplies for local food drives.
Playing to their technology strengths, Microsoft and C3.ai announced a public-private partnership to use AI in battling COVID-19. C3.ai has also published a COVID-19 data lake, aggregating and providing a single image of all available COVID-19 data for analysis and insights.
To reduce unnecessary travel and support remote working across all industries, Microsoft’s Dynamics 365 Remote Assist is available free of charge for up to 6 months, allowing technicians to collaborate with colleagues and experts from different locations.
Both authors serve on the ENGenious 2020 Executive Committee.
References
McKinsey & Co. 2018. Unlocking Success in Digital Transformations.
Microsoft. 2020. Microsoft Will Be Carbon Negative by 2030.
Joanna Mainguy is energy industry solution manager for EMEA with Microsoft. She has over 15 years of industry experience in process industries and oil and gas in particular, including work as business development and sales representative for major system integrators and software companies. Mainguy brings experience in the entire oil and gas value chain, from exploration through refining and chemicals to marketing and distribution. She holds a masters of science in drilling, Oil and Gas Department, from AGH University of Science and Technology, Cracow, and a master of arts in economics, American Studies Center, from University of Warsaw. She has recently accomplished energy transition and new energies trainings from IFP and Grenoble School of Management.
Sak Nayagam is global marketing director at BakerHughesC3.ai. BakerHughesC3.ai is a joint venture that brings together the technology expertise and fullstream portfolio of Baker Hughes with C3.ai’s unique AI software for enabling digital transformation of the oil and gas industry. He has significant digital, technology, and carbon management experience across the energy sector. Prior to Baker Hughes, Nayagam was an advisory partner with EY in South East Asia. He was also previously head of climate change for Accenture across Europe, Africa, and Latin America. He is passionate about the energy transition and the potential for digital to help make oil and gas operations safer, cleaner, and more efficient for people and the planet.