The sky-high potential of cloud
Among respondents, 20% predicted the cloud would have the greatest impact on their business over the next five years. Cloud also figures most strongly among all technology types that companies are currently implementing, with 98% citing it as a tool they already use.
Cloud applications have attracted considerable interest, with tech giants such as Google and Microsoft partnering with oil companies over the past year to deliver cloud solutions to the oil and gas industry. For instance, Norwegian oil company Equinor, formerly known as Statoil, announced a tie-up with Microsoft in June 2018 with the aim of accelerating the development of “fit for purpose” IT services.4
Above all, companies should be thinking about technologies holistically, according to EY’s Strier. “Value is attained by stitching tools together to solve specific business problems,” he said. “Inevitably, the right answer is not going to be a robot or an algorithm, it's going to be a combination of the two. You're going to have a few bots, some machine learning algorithms, some data models, some machines, and they're all going to be working together.”
“The narrative is beyond the tool,” Strier continued. “It's really about the integration of the full spectrum of technology.”
EY's Canada’s National Oil & Gas Strategy Services Leader, Lance Mortlock agrees: "The question is less about which technology to use and more about how technology enables the business process and the people capabilities”
Upgrading key links in the value chain
For a majority (55%) of our survey respondents, the key priority for investment in the value chain is operations. It should come as little surprise that operations are the main focus for companies in the industry – they represent the biggest cost center, and therefore a prime target for seeking efficiencies. Indeed, the key attraction of digital technology for many oil and gas firms is the opportunity to scale back their reliance on costly and time-consuming manual operations.
Take the unconventional oil sector. In traditional land-based operations in the US, operators spend an enormous number of man-hours at the well site. The time and expense associated with this manual activity has led some operators to use remote operation centers (ROCs), which utilize sensors to provide data about the operation of wells. Operational risk is also substantially reduced by ROCs, which can continuously monitor all of the locations to ensure that wells and facilities are operating smoothly without production problems or leaks.
Norwegian producer Equinor has launched a number of ROCs in recent years, and in November 2017 it opened its first control room for complete remote operation of an offshore rig, the Valemon platform in the North Sea. “In new field developments, oil and gas production will, to an increasing extent, be carried out from unmanned, robotized, standardized and remote-controlled installations,” said Equinor COO Jannicke Nilsson in announcing the opening of an integrated operations support center in Bergen in March 2018.5
Ultimately, a strategic approach is usually best when considering investment strategy in the value chain, since efforts at change often impact multiple areas of the business. For instance, those same ROCs can afford opportunities for oil and gas companies to improve their human resource development, given the reduced use of on-site labor. Fewer crews manning rigs equates to a better use of human resources to focus on value-added optimization activities.
Moving beyond operations
Secondary priorities in the value chain are maintenance and reliability (25%) and logistics and supply chain (19%) – but 96% of respondents are planning to invest in these two areas as well. Less attention is being paid to finance and human resources, though a majority said they would devote at least some capital to these areas.