The International Energy Agency said global oil demand will reach a record 101.9 million mb/d in 2023. At the same time, global oil consumption is expected to reach 104.1 million mb/d by 2026. The ever-increasing demand for oil requires the development of hard-to-recover reserves and the improvement and optimization of existing technologies, which is impossible without digital technologies.
Consulting firm Accenture researched digital transformation in oil and gas in 2022. More than 200 oil and gas executives participated in the global survey. 70% of industry leaders and 50% of laggards consider enterprise-wide transformation to be the most important component of maintaining competitiveness.
According to McKinsey, comprehensive digital transformation in chemical companies can improve average earnings before interest, taxes, depreciation, and amortization (EBITDA) by 8.5%-16%. Earlier, Siemens research (from 2017) showed a similar efficiency estimate of at least 20% from digitalization implementation.
BrilaSoft report names the following benefits of digital transformation in the oil and gas sector:
- 12-20% reduction in operating costs
- Reduction of unplanned shutdowns by 15-25%
- Improved refinery efficiency by 8-12%
- Improved health, safety, security, and environment in the workplace
- Improved labor force efficiency
That said, an earlier 2016 study by the World Economic Forum argues that digital transformation in the oil and gas industry could generate approximately $1.6-2.5 trillion in value for the industry, its customers, and society as a whole by 2025. We also want you to show impressive McKinsey statistics: open data in the oil and gas industry could generate between $240 billion and $520 billion annually.
Key points
Global Digitalization of the Oil & Gas Industry
Currently, all leading oil and gas companies worldwide are basing their development strategy on a digital transformation roadmap. The industry is implementing technological processes, as digital transformation is a significant competitive advantage. It contributes to the profitability of oil and gas companies and increases their stability in the market.
According to MIT Sloan Management Review and Deloitte, the oil and gas industry currently ranks 14th out of 18 sectors in terms of digital maturity, far behind sectors such as telecommunications, media, or retail. This lag makes this area attractive for development.
The growth prospects of the digital transformation market in the oil and gas industry are projected to grow at an average annual rate of 16.56% from 2022 to 2027, according to Technavio. The market size is projected to increase to $58.66 billion in 2027.
Since the introduction of digitalization, the industry has expanded its digital portfolio and is making bigger leaps yearly. The use of artificial intelligence, machine learning, data analytics, cloud computing, and robotic automation has paved the way for the digital transformation of the oil and gas industry.
The main trends in the application of digital technologies in the oil and gas industry are summarized in the table below. It is based on several researches:
So, here are the directions for the application of digitalization in the oil and gas industry.
| Digitalization area in the oil and gas industry | Description |
| Remote Maintenance | Artificial intelligence, machine learning, data analytics, cloud computing, and the Internet of Things (IoT) reduce the need for maintenance. |
| Seismic visualization | AI-assisted 3D image processing speeds up the process by 10-100 times. |
| Precision drilling | Using machine learning and AI to control your drilling equipment. |
| Reducing corrosion in refineries | Real-time monitoring of the entire refinery with sensors using the Internet of Things (IoT). |
| Optimizing supply and demand | Blockchain for secure transactions and cloud computing to centralize data lead to business growth. |
| Fleet management | Real-time monitoring of equipment improves productivity across the entire production chain. |
| Logistics route optimization | AI and the Internet of Things can reduce delivery vehicle services by 20% and material costs by 2%. |
| Robotic drilling | Advanced analytics can improve drilling productivity (up to 20% cost reduction). |
| Field safety | Augmented and virtual reality rapidly delivers relevant information in real time, thereby improving safety. |
| Optimize field productivity | Digital twins reduce information retrieval time by 30%, data exchange by 70%, and improve document reconciliation efficiency by 25%. Internet of Things (IoT) reduces consumption and emissions throughout the process. |
| Diagnostic Maintenance | Preventive maintenance technology is used for unplanned downtime. It can reduce downtime by 20%. |
| Digital prototyping | It is possible to optimize design technology using a reduced 3D model. |
| Pipeline monitoring | Leak monitoring using the Internet of Things (IoT). |
| Connected Workers | Equipping employees with personal digital devices to assist in their work. This can bring a 15% increase in productivity. |
| Emissions modeling | The Internet of Things (IoT) can help detect leaks. AI/ML can be used to model emissions. |
Examples of Digital Transformation in the Oil & Gas Sector
Many IT companies emerged that specialize in developing digital transformation platforms for the oil and gas industry only. They can be divided into 2 main groups:
- Large cluster corporations in the oil and gas sector that do not specifically specialize in IT projects, but develop and implement them to serve their companies. Such oilfield service giants include Schlumberger, Halliburton, CGGVeritas, and Emerson Electric.
- Large companies that specialize in developing and implementing IT products for the oil and gas sector include KappaEngineering, RFD, TGToil, SoloWay Tech, and others. For example, we at SoloWay Tech provide digital transformation consulting services.
In general, today the application of innovative technologies by major IT companies in the oil and gas sector has a wide range in the production sphere:
- Shell and Total emphasize the use of robots in oil production
- Chevron and Shell widely use drones for oil production
- Statoil uses 3D visualization tools to monitor production activities
- Chevron uses video analytics tools to prevent pipeline leaks
- BP is actively developing IT projects based on the Industrial Internet of Things and testing them on offshore oil platforms
At present, global oil and gas corporations already have experience in the development and effective implementation of IT products in production activities. For example:
- Within the research center in the French city of Pau, Total specialists are engaged in developing software capable of ensuring high accuracy in decoding seismic images of subsalt complexes. Such software can also design variable models of gOfrac fractured reservoirs. In addition, the concern is actively cooperating with Chevron to test the Intersect simulator, supplied by Schlumberger. This IT product makes it possible to model the processes of hard-to-recover reserves production and effectively plan field development.
- Like Total, Shell is developing and testing the MoRES simulator at its own R&D center. This simulator models the complete production system from reservoir development to surface development.
- BP-Amoco Corporation developed the Falcon simulator. This IT product is currently known as Nexus, and Halliburton now owns it.
The existing digitalization programs of oil-producing companies, first of all, today are aimed at the introduction of such IT products as cloud technologies, Big Data, digital twins, AI, and remote production monitoring. IT technologies prioritized for implementation in the next 10 years have also been identified. In particular, during the following 20-25 years, the main focus in the digitalization of the oil & gas industry will be on mobile platforms, 3D (4D) printing, robotization, blockchain, and VR/AR technologies.
Conclusion
Comprehensive implementation and use of digital technologies are an integral part of the fourth industrial revolution. In the competitive and volatile oil market, where every percent of savings counts, technologies such as Big Data, ML, and AI can significantly improve the efficiency of a company’s business processes—from production and refining to selling produced products to the end consumer.
Key market players have recognized the need for digital technologies. Most leading oil and gas companies have developed digitalization strategies and are beginning to implement them. If you need a reliable oil and gas digitalization partner, feel free to contact our SoloWay Tech team!
