Digitalisation – Revolutionising the oil and gas sector

Published on November 9, 2023 by Gurpreet Singh

Overview

The entire oil and gas sector value chain is undergoing an overhaul because of digital transformation. Companies in the sector would need to adapt if they are to remain competitive.

Digital transformation refers to integrating digital technologies into business models, procedures and operations. It entails gathering and analysing large amounts of data to produce insightful information to optimise operations, reduce downtime and enhance safety.

Digital transformation aims to increase the sector’s responsiveness, agility and ability to respond to shifting market and regulatory requirements while minimising its environmental impact.

Digitalisation of the oil and gas supply chain

Upstream: The upstream section of the oil and gas supply chain includes exploration and production activity, such as onshore and offshore drilling, and tasks such as finding possible areas of discovery and conducting geological surveys. While technological advancements have already contributed to the efficiency of these procedures, adopting digital solutions such as remote sensor imaging would help operators identify potential areas of development more precisely.

The development of high-performance computers that can analyse the geoscience data of thousands of wells in a matter of seconds, investment in cutting-edge algorithms and standardisation of geological data and formats contribute to the analytical ability.

Breaking down data silos is essential in the oil and gas business. Data silos emerge when company departments or systems collect, store and manage data independently, making it difficult to access and analyse crucial data.

Drilling accounts for up to 30% of production costs. Advanced analytics and other technological developments could boost drilling productivity by accelerating the drilling process.

Robotic Drilling Systems developed a totally electric and robotic drill floor – to accelerate the drilling process and minimise human interaction and, therefore, the likelihood of error. It found that by using the complete methodology, each rig could save up to 40 rig days annually. A fully automated system would, therefore, boost output, cut costs, enhance worker safety and reduce human involvement. In offshore drilling, unreachable locations are inspected automatically by using drones and submersible robots. Bots can also reduce errors and improve worker safety when installing new components and repairing old ones in risky locations.

Companies could combine data from a number of sources and make it available to all stakeholders by employing digital technologies. They could expand their perspective on how they operate, enhance decision-making and discover fresh insights.

By merging automation protocols with cloud-based analytical platforms in a secured environment, prominent legacy field issues such as gas interference, equipment choking, damaged fluid pound due to over-pumping and ineffective recovery owing to under-pumping might be solved.

Midstream: The upstream and downstream sections are connected by operations in the midstream segment. This section focuses on using pipelines and collection systems to store and transfer the extracted resources from wells to refineries. The oil and gas sector has looked to digitalisation for better visibility, managing assets efficiently and conducting better preventative maintenance to optimise costs –from monitoring pipelines to gauging equipment health.

By enhancing safety and traceability in midstream activities, digitalisation can help boost capacity without sacrificing efficiency. For example, data can be retrieved remotely from a pipeline or transport terminal in real time to track supply, spot leaks or spills along the way and prevent possible mishaps. The midstream section tries increasingly to use operating data to reduce risk, improve safety for humans and the environment, and enhance productivity.

Monitoring pipelines, to track leaks or hydraulic problems, is crucial. The internet of things (IoT) has a function that enables real-time pipeline monitoring to detect network leaks during supply. To identify the precise location of the leak, IoT is combined with intelligent sensors and other intelligent devices and installed across the network of pipelines.

The Columbia Pipeline Group has developed intelligent pipeline technology for transporting natural gas. Human interference and natural disasters threaten pipeline infrastructure, and this technology enables rapid threat evaluation, reducing the number of unexpected incidents.

The use of emerging technology in digitalisation initiatives has increased in recent years. Analytics, robotics, the industrial internet of things (IIoT) and cloud computing will likely disrupt the oil and gas sector. Drive-train analytics and pump analytics, for instance, provide a peek into system performance and could offer advice on when to schedule a repair.

Downstream: The midstream section distributes raw materials to the downstream section after the upstream section has explored and produced them. In the downstream section, the finished goods are processed and sent to end consumers.

Implementation of a digital transformation framework for the downstream section would succeed only if business processes are improved. Improved maintenance and technical resource management would lead to higher workforce productivity. Basic digital support tools such as "digital twins" and AI-based simulations would reduce the need for maintenance, boost worker productivity and minimise downtime.

Application performance management and AI-based simulation are used in automation solutions for maintenance and turnaround planning tools; these are easy to integrate into an operational system already in place. Long-term operational efficiencies would result from upgrading sensor systems to enable better predictive and prescriptive maintenance.

To enhance operations, oil and gas companies are turning to technologies such as AI, IoT and big data. Shell's downstream commercial division, engaged in selling petrol and oil to customers, uses AI technology to forecast customer demand for petroleum goods, identify supply gaps and suggest oil blends for refinery operations.

Blockchain technology could be used to enhance transparency, increase supplier and buyer security, and enable businesses to demonstrate their commitment to the environment.

Key challenges facing the oil and gas sector

Corporate culture: This is the most challenging. About one-third of the respondents to a survey conducted by Oil and Gas IQ in partnership with OpenText stated that corporate culture hampered the adoption of new technology in their organisations considerably. This is because the sector has historically relied on physical infrastructure and manual operations.
Cost: Some oil and gas organisations could be reluctant to invest in new technology, as digital transformation is expensive.
Lack of skills and workforce: The sector may not have the manpower or expertise required to embrace digital transformation and use new technologies properly.
Cybersecurity: Hackers, criminal elements and governments are engaged in more frequent and powerful cyberattacks, threatening businesses and their assets.
Moving data: The difficulty lies in moving data more than in obtaining it. Moving large amounts of data to a central data centre to apply analytics is currently simply not viable, regardless of whether a rig is situated onshore or offshore. Since data utility is usually lost if the date is not used immediately, especially data relating to platform efficiency and safety, latency is also a concern. Although sensors have become more accessible and popular in recent years, many organisations find it difficult to handle the vast amount of data produced.

Conclusion

Digital technologies across sectors have the potential to enable a 20% reduction in global CO₂ emissions by 2030. This could be accomplished by reducing emissions from all points along the supply chain, including wasteful production and transport, as well as by preventing accidents such as petrol leaks and oil spills before they cause significant damage.

Decision making would be improved by the oil and gas sector's digital transformation, as it would use real-time data insights. Such insights would help streamline production by identifying and eliminating inefficient procedures and processes, resulting in additional cost savings. They would also reduce downtime and enhance safety, all of which promote profitability.

Sensors and IoT devices allow for continuous equipment and process monitoring and detecting problems before they become a safety hazard.

How Acuity Knowledge Partners can help

We have a large pool of oil and gas experts experienced in providing strategic support across the value chain. We have partnered with leading energy companies over the years and worked closely with their strategy, business development, market intelligence and M&A teams, providing the information and analysis necessary to achieve business objectives.

We also offer expertise in the power; renewables; metals and mining; environmental, social and governance (ESG); and sustainability space.

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About the Author

Gurpreet Singh

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Gurpreet Singh has a total of 8.5 years of experience, including 4 years in the manufacturing and operational sectors and 4 years in the research and development industry. He has worked extensively on executing projects in energy and lubricants domain such as fields, blocks, wells, pipelines, lng, refineries, petrochemicals, engine oil and grease. He has assisted clients with market trends, industry analysis, and other business needs through a variety of primary and secondary research projects. He has executed profiling of key global market player using annual and quarterly reports, financial reports, presentations, press release etc.

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