Long-Term Business Viability Hinges on True Digital Transformation
True digital transformation is the way forward, and companies that actively embrace and manage digital transformation will make their businesses smarter, more efficient, and vastly more profitable.
The pressures to increase efficiency and sustainability continue to mount as oil and gas operators strive to preserve human resources and capital and accumulated knowledge—while also reducing risk. Digital solutions have never been more important for the upstream than they are today.
The oil and gas industry is at a crucial turning point, pushing companies to refine and retool their businesses to find even greater efficiencies while they grapple with optimizing their operations for sustainability. Digital transformation is essential to making this leap successfully, and the companies that are the most proactive in adopting digitalization to permanently change the way their businesses operate are the ones that will thrive for the long term.
Many in the industry have yet to fully utilize data and technology in a truly optimized way, leaving their businesses more vulnerable to the dynamics we are witnessing. Digitalization made important inroads into the oil and gas industry 40 years ago; however, the nuances of the industry have hindered true digital transformation. Companies are inherently project-focused and safety-conscious, and, because the industry has used automation and data processing for decades, many operators believe they are already up to speed with digital technologies. This misconception has caused the sector to be slower than others to innovate with transformative, data-driven solutions.
The sheer volume of data companies must now manage has exponentially increased over the years. With such wide-ranging data sources such as well live streams, seismic, endless production and drilling files for automated modeling, and prediction technology, the amount of data a company possesses is astounding.
While oil and gas businesses are often data rich, data accessibility is almost always poor. Significant value can be accessed for those companies that implement digital across their businesses rather than taking a piecemeal approach. In a 2019 article, Boston Consulting Group stated that introducing digital across oil and gas companies’ businesses has a major effect: a 50–60% reduction in data-interpretation time and cost in the exploration phase, up to 70% reduction in engineering hours in the field-development stage, 20–30% faster well delivery and more productive wells in the drilling stage, and 3–5% increase in production.
The inability to easily access this abundance of subsurface data creates barriers to greater profitability and efficiency because data is often siloed between different departments and different software programs. This leads to isolated work flows, poor utilization of data and derived knowledge, and thus compromised decision making. Accessing and utilizing these volumes of rich data can redefine the approach to the entire oilfield life cycle, from appraisal to decommissioning, to be more sustainable.
While the need for oil and gas companies to drill smarter and safer with less capital expenditures and human resources has never been more important, the key that makes this possible—digital transformation—continues to challenge many operators because of the perceived complexity. For an industry that is often reluctant to change, this is a massive challenge. A standard playbook does not exist when it comes to digital transformation, which is why experienced cloud and data analytics subject-matter experts are key partners in the process.
When the correct technology, defined processes, and an empowered culture are applied to technical subsurface challenges, meaningful efficiencies are experienced. When silos are eliminated, faster and more-accurate decision-making is possible. With greater data visibility and accessibility comes greater opportunities—and cost savings. Digitally native tools that integrate data-driven geoscience solutions enable operators to run different scenarios to determine potential outcomes and protect and preserve available resources for only the best opportunities. This agility creates a distinct competitive advantage.
Long-term business viability in the oil and gas industry is underpinned by digitalization. True digital transformation is the way forward, and companies that actively embrace and manage digital transformation will make their businesses smarter, more efficient, and vastly more profitable.