It’s easy to see digital transformation playing a major role in consumer-facing firms. Digital customer experience sits at the core of retail — through Web sites, mobile devices, and increased focus on customer experience across the complete engagement cycle. However, it might be surprising for many how digital technology transforms core process industries like oil & gas.
At Huawei’s Global Energy Industry Summit 2015 — held this past August 19 in Almaty, Kazakhstan — the impact of digital to this traditional industry was the key topic. At this conference I gave a keynote, prepared with my colleague Holger Kisker, on the major industry trends and the challenges and opportunities of the digital business transformation in oil & gas. The current deep price drop for oil has focused firms on rapid and targeted response to increasingly dynamic markets of hydrocarbon supply and demand.
Some roles in the sector have a natural ability to thrive in price drops — like refiners, distributors, and retailers. But the closer you get to production, the tougher it is to stay whole. And this is where digital comes in. Firms that can dynamically react to volatile market needs — with growing operational efficiency — can meet market and customers’ changing expectations and still make money. And digital is at the core of this capability.
These challenges in oil production operations clearly highlight problems, like the aging workforce, leaving gaps across the industry. But filling the biggest operational gap will, at the same time, open the biggest door. Take, for example, the absence of modern remote sensor equipment at the majority of wells. When production falls off, many pumps must be checked by people traveling into the field to determine the cause. It’s costly, slow, and misses critical information like reduced cred pressure and production volumes.
But now imagine fixing that monitoring problem by placing sensors at the wells that can not only report on production operations but can also test for key measurements like flow-rates, temperatures, and pressure. This information — already in being put in place through programs like British Petroleum’s Field of the Future® and Shell’s Smart Fields — can provide information that allows the production firm to take informed and targeted action.
This story came home clearly in the keynote given by Dr. Hatem Nasr, an oil & gas expert and Senior Advisor for Huawei. He presented data from three recent projects in the Middle East in which major savings — as much as 30% — came from just a few months of effort. But this instrumentation opens the possibility of substantive and actionable insights — using sensor vendors like Honeywell, a major sponsor of the Summit, tied together through rapidly deployable wireless technologies, from providers like Huawei.
The real payback will come from learning to use both the new data as well as the old. On average, firms use less than 20% of their data today. But oil & gas companies start to accelerate the usage of more and at higher speed to produce actionable insights — using big data techniques across the globe, including very remote places. For example Chevron uses its iField technologies, with which it already manages assets in six continents in near-real time. The result will certainly include digital operational excellence — but will also allow for the production firms to respond to global market opportunities with rapid and smart changes in extracting and moving product to where capacity and customers demand it. Understanding the real-world complexities — and taking advantage of opportunities that rapidly appear — will constitute the winner in the next-generation competition.