Best Ways to Accelerate Digital Transformation in the Oil and Gas Industry

Digitalization in the oil and gas industry requires holistic transformations that will allow companies to quickly adapt to changing market conditions and remain competitive.

According to a report by Accenture, 70% of leaders in the oil and gas industry view enterprise-wide transformation as key to remaining competitive.

In this article, we’ll explore the best ways to accelerate digital transformation in the oil and gas industry and look at some practical tips. We will also discuss technologies that help companies digitize their processes.

What is digital transformation in oil & gas?

Digital transformation in the oil and gas sector involves the adoption of digital tools and technologies across an entire value chain. The key goals of oil and gas digitalization include cutting costs, boosting output, and increasing efficiency while also empowering companies to become more sustainable.

A few examples of using digital tools to improve oil and gas processes include applying data analytics to optimize production, leveraging drones for exploration and maintenance, and applying virtual reality for staff training.

What are the 5 ways to accelerate digital transformation in oil & gas?

To speed up the digital transformation journey, oil and gas companies should incorporate a set of practices and tools, including breaking down data silos, fostering a culture of innovation, implementing advanced analytics, establishing technology partnerships, and utilizing digital twins.

Let’s explore each in greater detail.

1. Breaking down data silos

In large companies, data is often spread across different departments, which leads to missed opportunities and lack of valuable insights. However, by breaking down data silos you can integrate data from multiple sources and make it accessible throughout the entire organization.

This approach will empower you to create a more cohesive understanding of operations and workflows, leading to improved decision-making, better team collaboration, and accelerated digital transformation.

2. Fostering a culture of innovation

In oil and gas companies, every step in the value chain is defined by rules and regulations, which generally poses a major obstacle to digitalization in the sector.

A new generation of leaders and decision-makers must work towards creating a culture of innovation that supports the adoption of digital technologies such as machine learning, data analytics, the IoT, and blockchain. You should establish company-wide training programs to make sure that staff at all levels clearly understand how these tools could improve their performance.

3. Implementing advanced analytics

Advanced analytics enables you to quickly analyze large amounts of data from disparate sources, identify patterns, spot trends, and make informed decisions.

However, implementing advanced analytics is a challenging process that requires significant expertise to develop the necessary algorithms and infrastructure. Your analytics initiatives need to be carefully planned in order to maximize benefits.

4. Establishing technology partnerships

To accelerate digital transformation, oil and gas companies should establish collaborations with partners specializing in advanced technologies, such as cloud computing and analytics. Such partnerships will help you bring specialized expertise to your organization and gain access to cutting-edge technologies and tools.

5. Utilizing digital twins

Digital twins are virtual models of physical assets that provide a real-time 3D representation of an asset. Digital twins allow you to simulate and optimize different aspects of operations, from production to pipeline management.

For example, you can leverage digital twins to quickly identify leaks or blockages, optimize maintenance schedules, identify potential safety hazards, and improve employee training by allowing staff to practice in a virtual environment before working with actual equipment.

What technologies help accelerate digital transformation in the oil & gas industry?

A variety of digital technologies and tools support digital transformation in the oil and gas industry, including artificial intelligence, manufacturing execution systems (MES), blockchain, augmented and virtual reality, internet of things, and data analytics.

Let’s take a closer look at each.

Artificial intelligence

Artificial intelligence and big data make data analysis more effective and can help you increase operational efficiency. You can leverage this technology to identify operational patterns, spot shortcomings, and automate various functions across your organization.

The use of AI models is particularly beneficial in such areas as:

• Predictive maintenance. Using the data from monitoring devices, AI models can predict which equipment is likely to fail, thus giving you time to proactively address possible issues before they cause downtime.
• Supply chain management. AI models can improve supply chain workflows, including scheduling shipments and predicting demand.
• Safety management. AI models can provide you with safety insights and predict potential safety hazards. For example, they can warn you about potential safety violations.

It’s worth noting that artificial intelligence requires significant investment from a company and solid expertise to be implemented effectively. You’ll need to have the right infrastructure in place and perform regular training, monitoring, and tuning of your AI models to ensure their accuracy and reliability.

British Petroleum (BP) is a company that actively uses AI and ML. It has established a partnership with Microsoft to create autonomous platforms for employees to manage their day-to-day operations remotely with the help of AI. BP also relies on artificial intelligence to promote predictive maintenance, improve decision-making about scheduling transport ships, and forecast the recovery factor of potential oil and gas reservoirs.

MES

Manufacturing execution systems will allow you to link individual pieces of equipment to your company’s enterprise resource planning system. MES can provide accurate operational data, such as production rates and equipment utilization. This will help you facilitate the coordination of workflows and improve efficiency.

MES is capable of tracking inventory levels in real time, thus enabling you to minimize waste and ensure that required materials are available at the right time. Oil and gas companies also use MES to ensure regulatory compliance by tracking data and documenting all processes and procedures.

As an example, Backer House, a global oilfield services company, uses MES systems to optimize its drilling operations. Recently, the company partnered up with Capgemini to integrate an Industrial IoT solution that would help them transform the manufacturing execution system and add greater visibility into its manufacturing processes.

Blockchain

With blockchain, each asset would have its unique identifier and would be tracked on a decentralized ledger. This would allow businesses to have a more accurate and transparent view of their assets, and it would make it much easier to track and manage them.

Oil and gas companies can also utilize blockchain in conjunction with the industrial internet of things platforms to track the history of devices and ensure enhanced security. For example, companies can use blockchain and the IoT to track the movement of goods and ensure their authenticity.

Shell and BP use a blockchain-based trading platform called VAKT to facilitate trading in crude oil. VAKT is a joint venture of major energy companies, including, but not limited to, BP, Shell, Total, Koch, Saudi Aramco, and Chevron.

AR & VR

One of the main applications of AR and VR in the oil and gas industry is staff training. The oil and gas sector always needs experienced workers. However, training workers offshore is an expensive and dangerous process. With VR, this problem can easily be solved: VR headsets can provide workers with practical training without the need to visit offshore plants.

Predictive maintenance is another prominent application of AR and VR tools in the industry. AR headsets can significantly improve maintenance efficiency by providing graphical information and step by step instructions.

Aramco, one of the world’s largest oil companies, uses VR to reduce the cost and duration of staff training in safety and operations. Meanwhile, ExxonMobil, a leading energy company, has developed immersive VR simulation modules to train operators on basic and complex tasks.

IoT

IoT is another technology widely associated with digitalization in the oil and gas industry. By connecting field assets to an industrial IoT platform with smart sensors, oil and gas companies can ensure automated monitoring and diagnostics.

IoT-enabled sensors enable remote access to maintenance data on heavy machines that are installed for offshore drilling. It’s especially beneficial in remote areas with extreme conditions.

IoT sensors can also be installed to monitor pipelines. A leak, or other damage caused during oil and gas extraction, can cause huge financial and environmental damage. IoT technology ensures effective monitoring of pipes, pumps, and filters in the system and provides real-time data to avoid possible leaks.

Woodside, an Australian oil and gas producer, is using IoT sensors and data analytics to improve liquefied natural gas production operations. The company leverages sensors to monitor key parameters, including pressure, temperature, and flow rate.

Data analytics

With the help of data analytics, oil and gas companies can easily extract valuable insights from large volumes of data generated during the production process. This helps organizations quickly identify inefficiencies and areas for improvement.

Some of the most common scenarios where data analytics can be applied include supply chain management, predictive maintenance, reservoir modeling, and production optimization.

Let’s consider Exxon Mobil as a case study. The ExxonMobil Manufacturing Support Data Lake project collects and analyzes all operating data from the company’s chemical plants. Exxon Mobil then uses this data to increase the efficiency of its manufacturing plans and to reduce emissions. In its 2023 Advancing Climate Solutions Progress Report, Exxon Mobil states that it managed to reduce methane emission intensity from assets it operates by more than 40%.

Closing thoughts

Accelerating digital transformation in the oil and gas industry will involve learning how to quickly adapt to changing market conditions, and using best industry practices, such as breaking down data silos, implementing data analytics, and establishing technology partnerships.

Digital transformation in the oil and gas industry is simply not possible without the effective use of advanced technology. From using IoT and data analytics and monitoring and optimizing operations, to leveraging AR and VR and conducting employee training, the incorporation of digital technologies will help companies gain a competitive edge.

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