Should Oil Companies Go Digital?

The COVID-19 pandemic has forced a myriad of industries to adapt to a ‘new normal’ and the oil and gas sector is no exception. While digitisation has been on the agenda for years, coronavirus has accelerated the transition and seen innovations such as cloud computing, data analytics and remote monitoring given top priority. A recent Ernst & Young report titled “Oil & Gas Digital Transformation and the Workforce Survey 2020” revealed just how important digitisation is, with most executives citing investment in digital technologies as critical.

“The COVID-19 pandemic has accelerated the timeline for some digital technology adoption from five years to three months,” says Andy Brogan, Global Oil & Gas Leader at Ernst & Young. “The cost savings digital can deliver is critical for survival in today’s low-price environment, as oil and gas companies look to gain greater operational efficiencies and drive productivity across the value chain.”

COVID-19 accelerates digital shift

While the transition to digitisation was always coming, the COVID-19 pandemic accelerated the shift. Global lockdowns forced many companies to embrace remote operations, with a large portion of drilling activity conducted offsite during the second quarter of 2020. Not only do the digital technologies that support remote drilling allow for physical distancing, but they also reduce operational costs. As a result, many oil and gas companies will not be transitioning back.  

The report also revealed the extent to which data analytics is being used across the industry, with around 85% of companies currently leveraging advanced analytics. According to 43% of respondents, insight gained from data analytics was one of the most useful digital trends available to the oil and gas industry.

Precautions needed to save a “generation of workers”

While digital technologies are extremely useful, they’re far from a perfect solution. “The more we use the data the more potential issues we’re seeing with the data in either the way data is collected or the way data is used. It’s really driving the need for better data, more data, and then also people using it correctly and then interpreting the results,” warns an oil and gas expert in the Ernst & Young report. There are also concerns technology will shift the focus away from human labour and as a result lead to a skills shortage.

“It’s not enough for companies to simply spend more on technology,” says Tim Haskell, US Oil & Gas People Advisory Services Leader at Ernst & Young. “Investment in the workforce is needed to scale and integrate technologies and ultimately capture the intended value. Companies must find an investment balance while addressing market pressures. Otherwise, the industry will lose crucial years and potentially a generation of workers.”

To find out more about how new technologies are reinventing the oil and gas industry don’t miss ‘Digitalisation Transforms Refinery Emissions Monitoring and Combustion Control Gas Analysis.’