New technological developments have consistently pushed oil and gas operators into new frontiers — deeper waters, more remote reservoirs and unconventional plays — that were once out of reach. While advances have spanned the value chain, horizontal drilling and hydraulic fracturing unlocking shale resources played a major role in creating the oversupply responsible for the market shift and resulting in low crude prices.
The shift to abundance from the “peak oil” concerns of the not-too-distant past and the slow demand growth has reset oil and gas prices to lower levels and created a mandate for oil and gas companies to focus aggressively on both capital and operational efficiency to reduce costs.
Digital solutions that support this new approach are how the oil and gas industry will transform to succeed both today and in the future.
Digital imperative — the convergence of supply and demand
Many oil and gas companies exist as islands of technical excellence. Technology advances and engineering brilliance exist in silos, rather than being fully disseminated and embraced by the enterprise as a whole. And one doesn’t have to look too hard in most companies to find business operations that still employ outdated means of data entry, simply because that is the way it has always been done and innovation is typically focused at the well site.
This traditional mind-set is costly and inefficient, particularly in today’s sustained low oil price environment. Many companies have already scaled back their workforce, slashed budgets and pushed their suppliers for price reductions. Adapting to this new normal in market fundamentals, companies are taking a hard look at their operating models and asking themselves how they can change to survive.
The fundamental driver is simple: leveraging the power of digital technology to transform business operations can deliver real, sustained value to the bottom line. Another reason that the time is right for digital in oil and gas is the robust nature of the latest technology. The consumer internet couldn’t handle the volume of data oil and gas needs for digital to be meaningful.
With the advent of the industrial internet, there is now the infrastructure to handle the vast amounts of data generated along with advanced analytics, cloud storage and increasingly reliable mobile communications. These recent technological advances enable digital technology to transform the oil and gas industry.