After a tough 2020, the oil and gas industry rebounded well in 2021, with oil prices reaching their highest levels since 2015. Nonetheless, some uncertainty does remain. Also, the industry is still subject to a “boom and bust” economy due to its vulnerability to supply chain shocks, geopolitical uncertainties, and financial recessions. The COVID-19 pandemic and the war in Ukraine are adding to these uncertainties.
To deal with these industries, companies need to overcome supply chain disruptions, improve productivity, and reduce costs. The only way to achieve these goals is through digitization. Digitization enables oil and gas companies to respond effectively to economic and market dynamics. It makes them more resilient, improves their bottom lines, and enables them to prepare for the future.
Digitization can deliver tangible long-term benefits throughout the oil and gas industry. This brief article explores some of these benefits.
Stronger Supply Chains
A strong supply chain is crucial to strengthening the industry’s economic stability and increasing its overall value. That’s why it’s essential to streamline and connect the supply chain. Here’s where digitization comes in.
Technologies such as the Internet of things (IoT), data analytics, and blockchain can help eliminate many challenges in the supply chain. These challenges exist due to the increasing complexity of interconnected supply chains, poor visibility into every stage, and recent upheavals in transport links, material handling, and production sites.
Digital tools can help address these challenges, both upstream and downstream. Companies can improve predictability in the supply chain and reduce operational expenditures from origin to market. They can also ramp up their exploration, production, and refinement activities, and minimize the delays and setbacks that impact supply chains, production, and delivery.
Discover And Explore New Areas For Development
The downstream segment of the oil and gas sector concerns product delivery to the market. The upstream segment is where the actual exploration happens. Here’s where companies conduct geological surveys to find exploratory sites and do production activities like onshore and offshore drilling.
These activities, which have been around for decades, are frequently inefficient and plagued by low productivity and high costs. Digital tools and software can streamline these processes and make the upstream part of the supply chain time- and cost-efficient.
For instance, with remote sensor imaging solutions, operators can accurately find and analyze areas before exploration. By analyzing geological and seismic data, they can remotely assess areas suitable for development prior to pouring in huge funds for actual exploration. They can thus improve site discoveries, save time, and reduce costs.
Further, technological interventions in the form of digital twins and AI-based tools could improve project predictability and increase the amount of recoverable oil and gas assets by as much as 5%. Other tools and technologies such as unmanned aerial vehicles, cognitive computing, robotics, augmented reality, and nano-technology could automate remote operations, visualize complex exploratory equipment, and enable on-demand parts replacement in remote locations.
Improved Product Safety And Traceability
After oil and gas products are extracted and before they reach the consumer, they must be stored, processed, and transported. These midstream activities play an important role in the industry, so bottlenecks in these parts of the supply chain can have a huge impact on demand and supply dynamics.
Digitization can improve product traceability and safety. With the right technology, companies can get useful insights into the status and productivity of each system. They can leverage blockchain to track the status of each product at each stage of the supply chain and intelligent automation to increase capacity without compromising efficiency.
Companies can also utilize real-time data from pipelines or transport terminals to monitor supply and close demand-supply gaps. They can use AI tools to detect leaks and act quickly to avoid delays or accidents. They can also employ sensors to predict and stabilize production variability, and prevent unnecessary losses.
Lower Emissions And A Greener Industry
Shell predicts that by 2030, the use of digital technologies could reduce global CO2 emissions by 20%. The right tools could reduce emissions from many areas including production and transport. With sensors and predictive analytics, operators can identify sites of damage before a gas leak or oil spill has occurred. They will thus be able to prevent accidents and avoid costly damages.
Other digital systems for automated production control, equipment condition monitoring, and predictive shutdown systems can also prevent and mitigate potentially catastrophic events that can have a huge environmental impact. Many companies will also adopt blockchain-based tools to achieve their environmental credentials and demonstrate their decarbonization efforts.
Conclusion
The oil and gas industry is ripe for digital transformation. Technologies like blockchain, intelligent automation, Artificial Intelligence, big data, and Industrial IoT all have great potential to significantly impact the oil/gas value chain. As the industry landscape continues to evolve, oil and gas companies will aim for greater digitization to realize even more benefits and unlock even more opportunities.
