The inevitable transformation: digitalisation, AI, and IoT
Remaining competitive in the digital marketplace
Maintaing the digital edge
Digitalisation is an inevitable move for any oil and gas companies who are aiming to remain competitive in a changing landscape, and is an inherent part of the challenges faced throughout the market structure, as well as when dealing with the human factor.
The primary motivation for investment in digital transformation is to improve the working efficiency of an enterprise. According to Gartner, the smart oil deposit concept (smart drilling, involving machine learning and AI) and its development could help oil companies to cut costs by five per cent and enhance production volume by two per cent.
Achieving a truly smart oil and gas deposit can lead to a reduction in production costs of between one and six per cent. Smart technology can also reduce oil-well downtime by up to four per cent, and lower labor intensity up to 25. All of these numbers refer to the implementation of current generation technology; next-gen tech could change these numbers yet further. However, there is a real need to weigh the social responsibilities of implementing tech that could radically alter staffing and cybersecurity status with the perceived economic benefits of smart tech.
According to the EY report, robotic process automation (RPA) and advanced analytics are expected to have the most significant impact on the industry over the next five years.
While 70 per cent of company executives say they plan to adopt a full IIoT strategy in the next 18 months, 20 per cent of Gartner's respondents believe the move carries the most risk of all digitalisation strategies in light of the associated cybersecurity threat. BDO Australia forecasts hackers will initiate at least five global cyberattacks with constant damage to production facilities by the end of the year. The more digitally complex and interconnected modern systems become the more vulnerable they get.
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The third issue is more of a trend than a dilemma. On average, respondents allocate nearly half (48 per cent) of their digital technology investment to outsourcing, while just 17 per cent of their digital technology investment is sidelined for the building of in-house capabilities. While outsourcing can be beneficial at the outset, ultimately, the winners are believed to be those who build integrated, in-house capabilities that embrace the transformative potential of new technologies. Of cource, only majors can afford this, and it seems that a winner with the in-house solution will turn it into an integrated platform that will absorb younger independent developers.
Stay tuned to Oil & Gas IQ for our exclusive AI report, due later this month.