The digital disruption is here, or is supposed to be. Panelists at a session discussing the digital disruption, at the Offshore Technology Conference in Houston on 3 May, related various ways the oil and gas industry is using digital technology and expects to be using it in the future. However, the panelists were largely unconvinced that the industry is thinking of how it can use the disruption in full to achieve a fundamental transformation.
Eric Abecassis, chief information officer (CIO) at Schlumberger, said that the industry has “the opportunity to rethink and take advantage of the digital transformation that is happening everywhere. And this is the opportunity not only to work on efficiency, but from making the work more efficient to transform the work itself. That, I think, is the challenge we have before us.”
The industrial revolution focused on how to amplify the human muscle through automation, and this has been extended by robotics. “My central vision is that what will be happening in the next few years is that we amplify the human brain,” Abecassis said. I think that machine learning and artificial intelligence will be the most disruptive of the technologies.”
Machines Learn by Themselves
Machines are now learning by themselves and can have an advantage over humans in some types of decision making because humans think by analogy, but a machine that gathers and processes information is free of that influence and may be able to find a more efficient solution, he said.
As an example of how Schlumberger is applying digital technology to transform the services it provides, Abecassis pointed to seismic surveying. Advanced computer capability and cloud computing are enabling the future development of seismic processing that will occur in close to real time while surveys are in progress.
Archana (Archie) Deskus, vice president and CIO at Baker Hughes, asked, “Are we using digital to digitize our companies or are we using digital to bring about a disruption in our companies and our industry?”
Digital, she said, is the main reason that more than half of the companies on the Fortune 500 have disappeared since 2000. Disruptive companies such as Uber, Netflix, Amazon, Apple, and Google have some common trends. “They create incredible value for individuals, enormous leaps in efficiency, they all have value chain vision, and in many cases they operate with minimal physical assets,” Deskus said.
Think About End Consumer
Companies become disruptive by thinking about their end consumer and about whole businesses, new value that they can create in the market, she said, adding that she struggles to name companies in the oil industry that fit that description. Having started late as an industry, “we are doing lots of different things within our own organizations,” Deskus said, “but I don’t think they’ve become true disruptiveness yet.”
Discussing digital technology applications at Baker Hughes, Deskus cited its FieldPulse analytic software that connects thousands of wells to enable a more proactive and predictive approach to management by operators and service companies across an entire asset base.
However, disruptive digital technology will involve more than solving problems internal to companies or between them but will require “thinking about it from the ultimate value that we can bring to our consumers,” she said “The bottom line for digital that can really make a difference is how we think about what matters in oil and gas, and it’s really taking that molecule and how to bring it to people to improve life.”
The digital disruption in the industry “is not here yet,” Deskus said. “It’s on its way, and whether we will be the disruptors or be the disrupted is truly up to us.”
How Business Model Will Change
Thomas Moroney, vice president of deepwater wells and water technologies at Shell E&P, said, “I don’t think we have really thought about how the energy business model will change over the next several decades. …. Thinking about how digitalization will disrupt the business model and where capital will go is something that I don’t believe we’re paying enough attention to as a big disruptor.”
Moroney said that Shell has many examples of digital technology adoption across its value chain in areas such as worker mobility, interfacing products with mobile apps, and well management. “So at any point along that chain, yes, we have adopted digital strategies,” he said. “But have we truly digitized the end-to-end value chain across the business? I think there’s a lot more room for us to be much more bold in how we’ve adopted some of these technologies.”
Adeeb Gharouzi, principal of digital practice at Accenture Strategy Energy, said that digital disruption was equally applicable to companies in business-to-business sales as to those in business-to-consumer sales that have received most of the attention in digital-disruption case studies. “The change we are seeing will never be slow again,” he said.
USD 1 Trillion in Added Value
The World Economic Forum has projected that digital technology could add more than USD 1 trillion in value to oil and gas companies in the next decade, Gharouzi said.
A handful of oil and gas companies, he believes, have recognized the value and are taking measures to achieve its full potential by pursuing a holistic rather than a piecemeal approach, democratizing information rather than structuring it by domain, demonstrating a willingness to apply digital in high-risk applications where rewards are also high, and emphasizing collaboration outside the company.
Setrag Khoshafian, chief evangelist and vice president of BPM technology at Pegasystems, said organizations need “to digitize and automate the value stream involving things, involving humans, involving enterprise applications—the orchestration of all of that.” In this process, organizations should identify key performance indicators related to their specific objective, whether return on investment, regulatory compliance, or another goal.