Oil and gas companies are facing the twin blows of demand disruption caused by the COVID-19 pandemic and oversupply in the market. Access to capital will be severely restricted and producers will likely only be able to invest the cash that they generate. Consequently, drastic cost-cutting measures encompassing workforce reductions, furloughs, salary cuts, dividend cuts, withdrawal of share buybacks and facility consolidation have also been announced.
The industry is not new to volatility, and what the current situation again underscores is the constant pressure for oil and gas companies to reduce costs, increase efficiencies and adapt their business models to remain competitive. These pressures are gaining greater prominence as the energy transition builds momentum and competition from alternative energy sources intensifies.
The current situation will accelerate strategic and operational reviews of companies, with digitalization at the heart of this process. The convergence of digital, cloud computing and the new normal in oil prices has positioned the oil and gas industry for a massive transformation. Given the scale of oil and gas operations, incremental improvements can have a tremendous impact. This has been demonstrated by oil and gas companies leveraging advances in digital technology across the value chain, and there is potential for a greater impact in the following areas.
Big data, analytical platforms and artificial intelligence (AI) are converging to analyze data in ways that had not been possible until now. These more sophisticated data insights can help oil and gas businesses to increase operational efficiency by innovating the maintenance of assets, identifying better areas to drill, decreasing unplanned downtime and optimizing production.
Industrial Internet of Things (IIoT)
Intelligent asset management allows companies to benefit from automated monitoring and diagnostics by connecting field assets and equipment to the IIoT platform with smart sensors. Companies can build real-time insights, operations and processes, such as helping to optimize equipment utilization and maintenance planning.
Businesses have been using intelligent automation and robotic process automation (RPA) to automate human processing. By adding the power of AI to RPA, they can employ critical thinking, analytical models and quality improvements to automate various functions across the organization.
Blockchain solutions can help to improve accuracy and reduce governance efforts in complex processes, such as commodity trading, materials movement and the tracking of assets. Blockchain can also be used in conjunction with the IIoT platform to track the history of devices and enhance security.