How Can Greater Digitalization Support the Future of the Oil and Gas Industry?

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During the Covid pandemic, when several industries were forced to halt operations and workers were required to stay at home due to restrictions, many companies began to embrace alternative ways of working to ensure they were able to adapt to the change. While many office workers had an easy shift to working remotely, oil and gas companies needed to be more innovative in their approach to a locked-down world. While the pandemic led to many bankruptcies and redundancies, several companies were able to modernize by introducing new technologies into their operations, allowing them to continue producing oil with fewer workers on-site and respond to supply chain disruptions. Having seen the success of this modernization, many energy firms are incorporating these practices into their standard setup, with greater digitalization set to follow. 

One major hurdle coming out of the pandemic was the long-term disruption of global supply chains, which are still affected today. Oil and gas companies found that greater digitalization could help alleviate reliance on supply chains by incorporating operational mechanisms that monitor and evaluate processes and help improve productivity. For example, several firms have introduced Internet of things (IoT) technologies, digital twins, data analytics, and blockchain technology into operations in recent years. Using these mechanisms to better analyze operations, gather and share real-time data, and respond to problems could save costs and ensure that issues are addressed before they become urgent. 

While some of these technologies are becoming common components of oil and gas operations, a few energy firms are exploring lesser-used machinery to see how greater digitalization could improve their efficiency and reduce costs. The introduction of 3D printers to the industry is expected to help with these aims. While these types of printers are best known for their use in the medical industry, oil and gas firms are exploring the use of 3D printers to build vital components on-site for immediate use in operations. This could massively reduce reliance on an inefficient supply chain. Typically, once the need for a part is identified on-site, it must be reported for the new part to be ordered and shipped, often from far-flung locations. Being able to produce parts quickly and efficiently on-site could ease this burden. 

One 2021 report showed that 83% of oil and gas companies surveyed were considering using 3D printing or on-demand manufacturing to support their operations. Meanwhile, an EY survey revealed that almost nine in ten respondents expected to increase their investment in digital tools over the next two years. And Global Data predicts that IoT revenue in the energy sector will achieve $59 billion by 2025, an increase from $34 billion in 2019. 

In addition to helping reduce inefficiencies and costs, greater digitalization could help mitigate health and safety concerns, protecting the lives of oil and gas workers worldwide. Since the pandemic, companies such as the U.S. firm Offshore Robotics have attracted more interest in their provision of robots to assist in oil operations. Companies worldwide are developing robots that can be used to carry out the dirtiest and most dangerous activities on oil platforms, so workers no longer have to do these tasks. 

Energy firms including major players like Exxon Mobil, Baker Hughes, and Chevron, Saudi Arabia’s Aramco, Norway’s Equinor, France’s Total Energies, and the U.K.’s Shell and BP have all increased their investments in robotics. And the industry is growing rapidly, valued at $45 billion in 2020, and is expected to grow at a CAGR of 28% from now to 2030.

Other approaches have included the development of ‘ghost rigs’, unmanned oil platforms that be operated remotely, thereby reducing the number of onboard workers. During the pandemic, many energy firms provided training for skilled engineers and other workers to operate the rigs from a desk, mitigating the risk of spreading Covid and allowing operations to continue during lockdowns. 

Modernizing operations through the incorporation of digital technologies could also help oil and gas companies achieve decarbonization aims faster as projects become more efficient and there is a reduced reliance on the transport of people and parts to and from sites. A recent Frost & Sullivan analysis stated that “Digital transformation is occurring on a massive scale due to the need for increased efficiency, safety and sustainability.” In addition, the oil and gas automation market is expected to achieve $24.63 billion in revenue by 2025, an increase from $17.17 billion in 2020, at a CAGR of 7.5%, according to the report. 

Initially driven by the restrictions of the pandemic, it seems that the digitalization of oil and gas is now in full swing and is expected to continue for many years to come. With energy firms quickly realizing the potential for greater efficiency, cost-cutting, and enhanced health and safety in operations, the need for rapid digitalization became clear and has led to greater investment in the research and development of new technologies and their incorporation into oil and gas operations. 

Felicity Bradstock is a freelance writer specializing in Energy and Industry. She has a Master’s in International Development from the University of Birmingham, UK, and is now based in Mexico City.

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