Intelligent Enterprise For Oil And Gas: The Next Frontier In Operational Excellence

Anoop Srivastava

After the oil price shock in 2014 and the loss of significant jobs worldwide, a distressed oil and gas industry saw back-to-back years of negative spending, especially in the upstream sector, for the first time this century. After three years of cost optimization and structural streamlining, the oil and gas industry has begun to embrace the potential for innovative intelligent technologies to enhance performance and profitability to secure its future. They now realize data is the new oil, and there is plenty of this “new oil” lingering in siloed islands in the oil and gas enterprise. There is a huge potential to monetize this data and achieve a step change in efficiency across the value chain.

Oil and gas companies were pioneers of the first digital age in the 1980s and 1990s. Long before phrases such as Big Data, advanced analytics, and the Internet of Things became popular, oil and gas executives were using 3-D, seismic, linear program modeling of refineries and advanced process control for operations. However, advancements in the technology will help the oil and gas industry leapfrog to the next level of efficiency.

As the upstream oil and gas industry has been generating millions of petabytes of data from oil fields, it makes perfect sense to leverage intelligent technologies to make sense of the vast amount of data they possess for managing profitability at the wellhead level and achieving significant, tangible benefits from improved performance efficiencies and better compliance.

Similarly, downstream companies have a huge amount of data emanating from refinery plant systems, sensors, SCADA systems, etc. Imagine a scenario where an oil and gas company can reduce unplanned shutdowns by proactively monitoring its assets or improve “days in inventory” by enabling real-time visibility of the inventory across the supply chain, resulting in enhanced cash flow.

With the help of intelligent technologies, oil and gas companies can achieve the “Digital Energy Network” with connected assets, connected workers, connected logistics, and connected oilfields. According to research, the most significant impacts of intelligent enterprise (IE) technologies on oil and gas will be cost optimization, high-level process automation, new business models, and enhanced productivity.

Does this mean IE technology will lead to the next level of operational excellence? The answer is a definitive yes, based on the experience of early adopters. Per McKinsey research, the effective use of digital (intelligent) technologies in the oil and gas sector could reduce capital expenditures by up to 20%; it could cut upstream operating costs by three to five percent and by about half that in the downstream.

In early June 2017, BP purchased Beyond Limits, an AI and cognitive computing startup that is adapting NASA technology designed for deep-space exploration to meet the needs of the upstream sector. The oil giant’s corporate and technology investment arm was evidently keen to see if the startup’s expertise can aid its own push towards smarter digital operations. BP’s chief digital innovation officer, Morag Watson, commented: “Our strategic co-operation with Beyond Limits is a perfect fit with BP’s vision of using digital technology to help transform our organization. We believe artificial intelligence will be one of the most critical digital technologies to drive new levels of performance across the industry.”

Similarly, other major energy companies, including Exxon and Chevron, have been using cognitive technologies to analyze seismic data and detect anomalies. Shell built an IE model to transform end-to-end business to meet the growing demand for energy.

As energy needs keep growing, energy companies will leverage the IE to meet this ever-increasing demand at the most optimized cost and the highest efficiency in a sustainable way to reach the next frontier of operational excellence. These operational excellence gains will provide other oil and gas companies with a value case to start their journey right now.

Learn more about how IoT and Machine Learning Are “Refueling” The Oil And Gas Industry.

Anoop Srivastava

About Anoop Srivastava

Anoop Srivastava is Senior Director of the Energy and Natural Resources Industries at SAP Value Engineering in Middle East and North Africa. He advises clients on their digital transformation strategies and helps them align their business strategy with IT strategy leveraging digital technology innovations such as the Internet of Things, Big Data, Advanced Analytics, Cloud etc. He has 21+ years of work experience spanning across Oil& Gas Industry, Business Consulting, Industry Value Advisory and Digital Transformation.