Many industries have changed in the past fifty years, but perhaps none more so than the oil and gas industry. Thanks to the high consumption of energy and a market where price shifts can do a lot more harm than good, providers are constantly looking for new ways to reduce their operating costs to keep profits up. There was a time this was as simple as fighting for new oil and gas reservoirs to tape into. Then it shifted to being a battle for renewable energy. Now, the competition has come down to digitalization and which companies can best adopt the latest cutting-edge technology.
Organizations are investing in the latest hardware and software to best use the available data they have. Properly utilizing data like this means they can reduce their costs on many fronts, including finding new sources of oil and gas and maintaining current ones.
What does Digitalization Mean for Oil and Gas?
Energy companies have a history of being unwilling to try to re-invent the wheel and do something new. They generally aim to implement methods that have been tried, tested, and proven to work by others. As such, we now have an industry that doesn’t know how to take advantage of the data available to it. However, the trend is changing at last and companies getting in on the ground floor with data-driven technologies have begun reaping a host of benefits for their businesses.
Companies have started to place remote sensors on difficult to reach locations, including the polar caps and the depths of the ocean. These sensors let them monitor how their equipment is doing using constantly-transmitted data gathered and sent by the sensors. They can always see how their machines are doing without having to hire – or risk the health of – humans.
There’s more to the digitalization process than just gathering data too. Digitalization includes being able to manipulate the gathered data to learn valuable insights about the assets at a company’s disposal. The latest software for data management even allows an organization to create a virtual image of their equipment. They can then use this image to pinpoint just where the problem – if any – is. This saves a lot of time, energy, and money. It’s much easier to solve a problem when you already know what it is and how to fix it.
The Benefits of Digitalization
There are many potential benefits to oil and gas companies adopting digitalization. Research has suggested that the average cost of unplanned downtimes in oil and gas exploration for off-shore products can reach up to $90 million annually. With digital technology, companies can vastly reduce this cost. Companies that have already adopted digitalization have brought these costs down by around 20% so far.
Another key benefit of using as much data and information as possible int eh energy sector is that operating costs can be reduced by up to 5%. The data improves efficiency, which in turn reduces operating costs by allowing companies to better use their money.
With the increase in production efficiency from data analysis, oil and gas companies in downstream and upstream segments can reduce the overall cost of producing oil. A reduced cost for producing oil means a reduction in fuel prices. Being able to offer oil at a reduced price means getting a competitive edge over other companies and standing out more in the market.
What the Future Holds for Oil and Gas Digitization
Digitalization has already enabled companies across the energy sector to take advantage of the latest hardware and software technology in their business models. An incredible amount of data is constantly being gathered by a lot of different resources. This information allows an organization to make effective use of artificial intelligence and the general Internet of Things (IoT).
Combining the different business-optimizing technologies should pave the way for energy explorers that are able to generate the least amount of waste while maximizing their assets to their full potential.
Early adopters of this latest digital technology have already started to develop more loyal customer bases for the competitive market. The next challenge for digitization in the oil and gas industry will be to set new standards and enact new regulations to give organizations a guideline to digitization they can follow effectively. Doing so will make it easier for companies to offer the best possible services at the best possible prices.