Making oil and gas 4.0 real with core change

Dec 22, 2019
5 min read
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By: Paul Carthy, Managing Director and Energy Industry Group Lead, Accenture Middle East


From deep-sea hydrocarbon explorers to avatars that respond to questions on lubricants in natural language, oil and gas majors have, to varying degrees, integrated intelligent technologies into their operations. However, few have leveraged these technologies in a way that puts them on the path to Oil & Gas 4.0.

Many focus on point solutions rather than embrace the kind of digital transformation that will allow benefits to flow to all parts of the company. A global survey by Accenture found that the right mix of technologies, in the right combinations, will allow companies to not just create smart products and connected services, but reinvent their operating models, production and value chains, leading to new levels of efficiency, new sources of growth, and new customer and worker experiences.

Accenture’s Combine and Conquer study also found that different combinations of technologies worked for different industries, which also benefited from the combinations to different degrees. The good news is that the oil and gas industry stands to gain more than most – some US$16 billion in market capitalisation and 43.9 per cent in incremental savings in cost per employee.

Data from 65 global oil and gas companies show that significant top-line value can be unlocked by combining digital twin (8%), autonomous robots (8%), AI (12%), big data (27%), and augmented reality (28%). 

The question is how to best benefit from digital investments? For the industry, it will mean focusing on three priorities:

Transforming the core

For digital technology to live up to its promise, it must be applied to core processes – and then scaled. Upstream exploration and production (E&P) companies, can gain important efficiencies from digitising and integrating their engineering, production and support systems. At the core of this initiative are digital twin technologies, which provide a 360-degree digital replica of physical assets, and connected workers equipped with wearable technologies. With data and real-time monitoring providing unprecedented real-time insights into operations, production companies can develop a predictive maintenance model and reduce unplanned downtime, optimise efficiency virtually without risking physical assets, and train workers without putting them in harm’s way. Meanwhile, wearable technology connects workers to “live” support from experts and transmits immediate warnings in potentially hazardous situations. When man, machine and intelligence are combined effectively, the result is end-to-end optimisation across the value chain. The benefits of integrated planning and faster decision-making at a fully digitised downstream facility are substantial: A potential 15 cents to 20 cents increase in gross margins per barrel. Real-time visibility and mobility in the field, meanwhile, could increase operational efficiency by up to 50 per cent, while reducing incident response time by up to 60 per cent.

Sourcing and enabling the next generation of talent

 It is critical to ensure that the skills and mind-set for an environment where man and machine work alongside each other are developed in current and future workforces. Already, some oil majors are working both internally and externally with universities and governments towards this goal. National oil companies, for example, are collaborating with universities to train the next generation of workers for emerging roles in the industry.

However, given the industry’s rapidly aging workforce, and the fierce competition for similarly-skilled talent from more ‘popular’ sectors, more needs to be done – and more quickly. To push training further and faster and create the necessary scale will require collaboration between all stakeholders, from industry leaders and policy-makers to educational institutions. The industry also needs to address the negative perceptions that the new generation of talent has of working in oil and gas and communicate the progressive, agile and technology-enabled work environments that these young people are drawn to. Reskilling of existing workforces for digital roles in the sector must be simultaneously addressed, in collaboration with governments.

Re-architecting the new ecosystem

As digital technology advances exponentially, companies must bring together the right partners to drive innovation and new capabilities. Sharing knowledge will allow them to access the full range of benefits this offers, from reduced costs to accelerated innovation.

Accenture’s research has shown that 75 per cent of C-level executives believe their competitive advantages will not be determined by their organisation, but by the strength of the partners and ecosystems they choose. In the digital age, ecosystem orchestration, open and co-innovation, and technology incubation are key.

While digital is a vital enabler, piecemeal investments limit the benefits they deliver. With the right mix of technologies, the gains are spread throughout the organisation, allowing companies to reap efficiencies in cost, productivity, and safety while moving closer to the Ghost Realm.

For the oil and gas industry, the time is ripe for digital investment. But to maximise the value it delivers, we need a revolutionary agenda, with digital as the backbone rather than selectively adopting technologies.