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Oil industry can save $100 bln on digitalisation –Rystad Energy

Oct 09, 2019
3 min read
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As much as $100 billion can be eliminated from E&P upstream budgets through automation and digitalisation initiatives in the 2020s, Rystad Energy estimates in a new study.

Service companies are reinventing themselves to help operators unlock these savings.

In 2018, $1 trillion was spent on operational expenditures, wells, facilities and subsea capital expenditures across more than 3,000 companies in the upstream space. There are varying degrees of potential savings within offshore, shale and conventional onshore activity budgets, but in total, around 10 per cent of this spend can be erased through more efficient and productive operations thanks to automation and digitalisation, Rystad said.

“Many key industry players are setting optimistic goals, but the realisation of these initiatives largely depends on how freely data is shared amongst companies and how commercial strategies are deployed to drive this development. Because of this, it could be years before we see full adoption. However, based on our analysis of 2018 capital spend and operational budgets, we believe savings could easily reach $100 billion,” said Audun Martinsen, head of oilfield services research.

The amount of savings has the potential to be significant and several operators expect automation and digitalisation to reduce drilling costs by 10 per cent to 20 per cent, and facility and subsea costs by 10 per cent to 30 per cent.

However, not all field developments or drilling operations have the same capacity to reduce costs. Adoption across the entire value chain of suppliers from national oil companies (NOCs) to majors to smaller E&Ps will vary, so the realistic efficiencies and synergies will be closer to 10 per cent by the end of the next decade.

“In addition to cost savings, digitalisation initiatives can also increase productivity by increasing uptime, optimising reservoir depletion strategies, improving the health, safety, and environment of workers and minimising greenhouse emissions – all of which have significant value creation,” Martinsen added.

The painful oil market downturn has given upstream operators and service providers a strong incentive to adapt and become more efficient or be forced to close down shop.

A race among suppliers is currently underway as companies roll-out new digital products; the last three months alone have seen major releases by Schlumberger, Baker Hughes and TechnipFMC. One of the largest digitalisation initiatives to date was recently launched on 17 September 2019, the result of a collaboration by Schlumberger, Chevron and Microsoft. This ambitious project aims to visualise, interpret and ultimately obtain meaningful insights from multiple data sources across exploration, development, and production and midstream sectors.

 Another driver of digitalisation is that data storage and processing have become significantly cheaper, and the increased connectivity through the so-called “Internet of Things” has allowed more data to be efficiently digested. Nonetheless, the digital systems of an offshore platform can have around 5,000 to 15,000 sensors, and connecting this myriad of data points is not a straight forward process. Given the complexity of digitalisation efforts, it is likely that investments will be primarily aimed at new greenfield projects, while aging producing assets will not be a priority.

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