The Oil & Gas industry plays a major role in the energy market and continues to influence the global economy as it produces the world’s primary fuel. The processes and systems involved in producing and distributing oil and gas are highly complex, capital-intensive and require state-of-the-art technology. With the maturing digital landscape, the industry is set to witness the emergence of cutting-edge technologies.
Volatility in price and demand/supply and ever-changing geopolitical conditions are not new to the Oil & Gas industry. The increasing focus on net-zero goals and the push toward clean energy sources have made it a challenge for Oil & Gas companies to run operations, requiring advanced infrastructure and supporting services. The current focus on production, with continued investments in oil and gas reserves, is more of a stop-gap arrangement to sustain in the short and medium term, while the investments toward energy transition are for the long term.
The Importance of Data in the Oil & Gas Industry
The role of data in the Oil & Gas industry is more important than ever before. Recent developments in technology are generating large volumes of data around well logs, drilling and computer-aided design (CAD). Oil & Gas companies are facing the challenge of deriving actionable insights from the data to make better and more informed decisions. In this environment, it is increasingly relevant to convert the data into smart data using advanced technologies such as deep learning, cognitive computing and AR/VR.
These technologies integrate various types of data, quantify uncertainties, identify hidden patterns and extract useful information ― accelerating the time it takes to process it. The resulting information is used to predict future trends and behaviors and respond to complex queries that may be impossible with traditional tools and techniques. Organizations are increasingly unlocking value from their sensitive data while, concurrently, leveraging volumes of externally sourced data that have traditionally been off limits.
Cloud Technology in the Oil & Gas Industry
Cloud technology enables companies to move rapidly, show more agility and drive innovation. Asset-intensive industries such as the Oil & Gas industry generate a significant volume of data from their equipment and machinery, which is essential for making timely decisions for uninterrupted operations. A typical drilling platform has around 80,000 sensors, producing over 10 terabytes of data per day. Storing and managing this data requires significant investments in infrastructure. Cloud technology has significantly reduced the need for such investments and the additional cost of maintaining this data.
Cloud is one of the key technologies in this industry and remains the backbone for digital transformation, especially in areas such as digital oilfields. Connected operations enabled by cloud implementations have reduced the inefficiencies that are characteristic of siloed operations.
According to a recent study by Bain & Company, effective analysis and timely insights on data can improve production by over 10%. Cloud implementation also allows for effective collaboration between platforms, stakeholders and departments and quick approvals that increase agility. At present, cloud implementation is slow due to the latency issues faced by Oil & Gas companies, with a minuscule number of these companies moving back to on-premises data servers.
The Cybersecurity Imperative for Oil & Gas
From exploration to retail distribution, the Oil & Gas industry uses a wide range of complex systems and interconnected technologies and assets. Heavy dependence on technology and information systems, particularly for managing the supply chain, has left companies vulnerable to operational disruptions and economic losses arising from potential cyberattacks.
According to Statista, the Oil & Gas industry reported 21 global ransomware attacks in 2022. It is the fifth among the industries most affected by ransomware in the past couple years. The use of digital systems to assist in the extraction, transportation and refinement of oil and gas products makes it an easy target for cyberattacks. Investments in technology are continuously increasing the need for robust cybersecurity; the trend of increased investments to secure assets from security vulnerabilities has been gaining momentum.
Oil & Gas companies have already started gathering dark web intelligence to protect their assets and operations against cyberattacks. These companies are taking cues from the security practices implemented in industries such as Banking and Financial Services, Manufacturing and Transportation. For the Oil & Gas industry, the trend of implementing strong cybersecurity practices will remain critical in the short to medium term.
The Role of Digital Twins for Oil & Gas Enterprises
The need to improve productivity and performance, accrue real-time actionable insights and realize the value of digital transformation through the use of technologies such as AI and ML have led to increased innovation in the Oil & Gas industry. Although the industry is perceived to be conservative and risk-hesitant, it is committed to addressing complex business challenges through technology and innovation.
The industry is increasingly recognizing the relevance of digital twins, backed by strong cybersecurity practices, as one of the key solutions to improve safety and reduce risk; they do so by providing real-time information and insights on remote assets, enabling timely and efficient management and fostering uninterrupted operations. With the renewed focus on energy transition and accelerated investments, digital twins remain key enablers, supporting a smooth transition to new energies and improved emission management through simulated scenarios.
A tech stack is a set of technologies used to develop an application, including programming languages, frameworks, databases and front- and back-end tools. For the Oil & Gas industry, ERP software is the centerpiece of any tech stack. Digitalization, which enables faster communication, efficient resource management and data-backed insights, involves complex tech stack implementations. Integration with legacy systems remains a key challenge, with investments to upgrade infrastructure remaining cost intensive.
Advances in technology and proven implementation experience from similar industries have enabled system integrators to ensure seamless integration with legacy systems specific to the Oil & Gas industry. Industry initiatives such as the Open Subsurface Data Universe (OSDU) forum have been critical in developing a common open-source architecture, which enables Oil & Gas companies to make minimal investments in their existing technology infrastructure. A tech stack enables efficiency in the total experience ― involving customers, employees and processes and the areas in which they intersect ― and is an integral part of an Oil & Gas company’s strategy.
ISG helps Oil & Gas companies manage the demand for increased investments in energy transition initiatives. Implementation of some of the technologies noted above are key to enterprise strategy in this industry. ISG knows how to seamlessly introduce digital applications, counter new challenges in the market and find a competitive edge. Contact us to start a conversation.