Disruption in the oil and gas sector: where is IT heading?

Jul 02, 2019
6 min read
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By: Paul Carthy, Managing Director, Accenture Energy Industry Group, Middle East and Turkey

Our world is increasingly being impacted by the rapid advancement of technology. Across all sectors, digital transformation has become synonymous with innovation and the oil and gas sector is no exception. According to our 2019 Technology Vision report, 94 per cent of oil and gas executives report that the pace of innovation in their organisations has accelerated over the past three years due to emerging technologies. This rings particularly true in the Middle East, with oil and gas having traditionally been a strategic pillar of the local economy.

In recent years, this industry has been facing widespread change. One contributing factor has been significant price volatility, as shifting geopolitical dynamics have seen the supply-and-demand equations diverge in various geographies with, for example, OPEC members agreeing in late 2018 to slash oil production in a bid to prevent plummeting prices. Another factor has been the need to comply with increasing environmental regulations designed to support de-carbonisation, pushing the industry’s growth imperative towards expanding the natural gas and renewable energy businesses. 

As they navigate through this fast-evolving environment, oil and gas companies are continuing their digital transformation journeys with a view to drive growth, productivity, efficiency and safety across their operations, while also maintaining their efforts to explore and forge new business structures.

Overall, the industry has also become receptive to deploying technologies to decrease costs and increase operational efficiency. For instance, some companies have transformed their business models to streamline operations, adopt mobile platforms, and shift from offline traditional warehouses to smart warehouses to have a better overview of operations.

Accenture’s 2019 Technology Vision report lists ‘DARQ’ technologies as being key to the next wave of innovation. This includes distributed ledger technology (DLT, or blockchain), artificial intelligence, extended reality and quantum computing. The research found that 85 per cent of oil and gas companies are already experimenting with one or more of these technologies. 

In the wake of these recent technological developments, companies in the sector have become more conscious to optimise operations. Below are four key technology trends that are playing a big role in shaping companies’ strategies for delivering growth amid today’s pervasive change.

To the Cloud

Many upstream oil and gas companies globally have adopted cloud-based platforms where they can host their business applications related to areas like sub-surface, land and production systems. Any new workload and innovation projects are mostly being taken up in the cloud, where IT is enabling infrastructure management, data interfacing with on-premise legacy systems and security management. As major cloud vendors are investing to enter the Middle East market, oil and gas companies will gain greater control and self-service of applications using analytics and artificial intelligence (AI), with a trend towards 100-per cent cloud-based applications within a couple of years. 

Operationalising Digital Representations of Physical Assets

Asset performance management (APM) and “digital twin” initiatives are set to converge, driving the development of innovative new solutions for managing critical assets across upstream and downstream operations. As companies’ approach to asset management comes to focus increasingly on risk and reliability, long-term programs and initiatives are being launched to source, ingest, manage and interpret asset operational data and performance KPIs in real time. These initiatives span areas from sub-surface visualisation to well-drilling, from production field assets to mid-stream pipeline corrosion and static refinery assets, and more. Augmented/virtual reality technologies are playing a significant role alongside APM tools and applications. And real-time asset and worker tracking solutions are becoming mainstream, as companies take worker safety and productivity ever more seriously.

Higher Adoption of Internet of Things (IoT) Devices and Edge Computing

Oil fields and downstream plants will continue to increase their adoption of sophisticated sensors, with a large proportion of the resulting data being collected from edge computing devices and managed by “data historians” as the core data system. New interoperability and data interface protocols will be created to enable the data from the legacy instrumentation to be shared and synergised on the IoT platforms. IT will play a growing role in managing the device connectivity, data processing and application workloads both on the edge IoT platforms and the cloud, as well as their inevitable two-way interactions with other Enterprise IT and OT systems.

Renewed and Holistic Focus on Data and Data Technologies

Today, business analytics and AI systems are scaling rapidly, with the increasing availability of historical data for model training and testing. Within a few years, assets will be deployed with self-diagnosing and healing capabilities. Asset maintenance decisions will be made by AI bots/operators with minimal to no human intervention. All these developments and trends are leading to a multiplicity of challenges for companies as they seek to manage an increasingly complex data landscape. Issues such as data veracity concerns, bias in models, data security threats and a lack of metadata management may significantly challenge a successful digital transformation. IT can play a major role in bringing new innovations around data discipline, and in administering the data foundation holistically for all business intelligence, analytics and AI applications in close collaboration with business. Applications using blockchain technology are gaining momentum in oil and gas companies, especially in areas like supply chain, logistics, trading, joint ventures and production accounting. We’ve seen oil and gas companies piloting blockchain-based applications that integrate oil and gas production across the full value chain. Similarly, Saudi Arabia is currently testing blockchain to track quality in the oil and gas industry. This demonstrates that the Middle East is steamrolling ahead with digital transformation and integrating technology in this sector.

As the technology trends described above play out for oil and gas companies, they will help to influence innovations in many areas of the business—with the relative timing and costs of these innovations varying widely.

However, as the industry’s adoption of these technologies continues to advance and the resulting benefits flow to the business, oil and gas companies will feel increasingly confident about investing in their long-term growth and innovation agendas. Put simply: Business growth and technology innovation will complement each other and will go hand-in-hand.