A growing body of evidence suggests the oil and gas industry’s digitalization drive is now going mainstream, with spending on digital solutions no longer subject to fluctuating prices. One notable facet of the rapid changes witnessed in oil markets in 2020-21 was the absence of a dramatic impact on the investment going into digitalization, which remained broadly constant, even while IOCs reduced capital expenditure.
Contracts activity relating to digitalization in the upstream remained resilient in the last two years, notes Ravindra Puranik, oil & gas analyst at GlobalData, a data and analytics firm, despite the pandemic-led industry downturn. Upstream hotspots in the North Sea, Norwegian Sea and Persian Gulf regions, as well as the US Lower 48 play, attracted bulk of these contracts, he said.
GlobalData reckons that COVID-19 has been a wake-up call to the upheaval that a sudden drop in energy demand and/or labor availability can cause, and digital oilfield technologies such as digital twins and other remote monitoring solutions will be gamechangers in upstream oil and gas operations.
As Charlotte Newton, analyst on the thematic research team at GlobalData, commented: “Technologies such as digital twins have the potential to be the backbone of digitalization in the sector. By creating 3D images and simulations of assets, systems, and processes, oil companies can imagine more sophisticated, and more reliable, machinery in oilfields both now and in the near future.”
The oil and gas industry saw major disruption during the first waves of the COVID-19 pandemic, and companies, said Puranik, were now looking to automate as many processes as possible to mitigate future operational risks.
Leading operators such as BP, Shell, and Equinor have garnered considerable experience in developing technologies to make digital oilfields a reality. “The major focus is on asset management to maximize investment returns. Companies are likely to use digital twins and other technologies to oversee every aspect of the asset lifecycle to ensure long-term sustainability,” said Puranik.
This mainstreaming is underscored by recent analysis from Ericsson released in January,
Artificial intelligence (AI) and machine learning (ML) are gaining acceptance quickly in the oil and gas industry, the company said. Between 2018 and 2020, the percentage of companies that had deployed these technologies more than doubled – from 13% to 32%.
Today, half of oil and gas executives say they have already begun using AI to help solve challenges at their organizations, and 92% are either currently investing in AI or plan to in the next two years.
While these technologies have mostly been operationalized for specific use cases or particular processes, said Ericsson, they are increasingly being incorporated into a whole host of systems and software to improve efficiency, productivity and profitability.