Digital transformation is the key to thriving in a volatile world, writes Fernanda Martins, Industry Director, Energy and Emerging Markets, AVEVA
The oil and gas (O&G) sector faces mounting challenges amid a changing world. Market uncertainty and pricing volatility are plaguing the industry, making it difficult for companies to plan and execute accordingly. Ongoing geopolitical events have fractured already-fragile supply chains, while the hangover of the global pandemic has reshaped worker dynamics and reduced the available workforce.
What’s more, amid an ever-stricter climate for environmental regulations, companies must stay ahead of mandates and public and industry pressures to meet new ESG targets.
Given the rocky economic climate market of the last few years, many O&G firms have been reluctant to invest in capital upgrades or digital infrastructure to increase efficiencies. But today’s wafer-thin margins and high stakes are now acting as a propellant for energy companies to seek out technological solutions for complex challenges.
Across the world, O&G firms are finding success through the digitalization of work. Fresh ways of working with technology, based on common data platforms, advanced analytics and global visibility, are helping companies become more profitable.
According to LNS Research’s recent “Industrial Transformation in 2021: Getting Real” report, half of industrial enterprises report they have embarked on a digital transformation journey, and these programs are yielding very real benefits. LNS found that leaders in digital transformation are 72% more likely to have increased revenues by more than 10% and 57% more likely to have reduced the Cost of Goods Sold (COGS) by more than 10%.
Through the adoption of digital tools, companies are able to leverage their own industrial data and turn that information into innovative insights. This value-added data then enables companies to:
- Speed time from concept to full-capacity production
- Empower the workforce
- Optimize the value chain to create more agile operations
- Enable reliable, efficient, and safe operations
- Meet sustainability and decarbonization objectives.
Optimized operations through digitization
To accelerate their transformation, forward-looking O&G companies are leveraging digital initiatives powered by the latest advances in cloud, artificial intelligence (AI), big data, digital twin, and industrial Internet of Things (IIoT). Built on open, agnostic industrial software design principles, O&G companies are using these technologies to overcome key challenges while improving sustainability and the profitability of their businesses.
By digitalizing work, O&G companies can drastically improve collaboration and efficiency, prioritize capital spending, and build more agile operations that can withstand market shifts. Because digital work allows workers to complete tasks from anywhere across different sites and locations, operators can accomplish more than just solving problems. Through digital workflows they can improve overall efficiency, use the remaining time to innovate, and help companies build resilience against workforce disruptions and attract a new generation of workers.
Not only do digital tools enhance enterprise-wide collaboration, but they can also seamlessly unify operations and supply chains, breaking down silos while opening new pathways for information flow. By centralizing operational insights and visualizations, operators can collaborate on the same information at the same time to identify weak spots in the business and work together to improve efficiency and profitability.
Shared data aligned with advanced analytics improves the transfer of institutional knowledge and empowers the workforce. Even when workers are away or retire, new workers can make informed decisions by accessing information in a central digital repository, with contextualized operational data and AI-based guidance.
Digitalization likewise improves sustainability initiatives and regulatory compliance.
Software applications can optimize operations, streamline environmental reporting, and maximize energy usage.
Becoming agile and resilient
With reliable operational data and accurate models, companies can optimize every part of the value chain. From process optimization, to inventory management and supply and demand balance, they can uncover new opportunities that lead to greater profitability.
Agile operations start with good quality data and integrations – and that requires a convergence of engineering, operations, and information technology. By creating one single source of truth for real-time operational data and contextualizing that information alongside engineering, performance, and financial data, teams can use AI-powered tools to run real-time comparisons and simulations to find new efficiencies.
BP: A digital success story
Global energy giant BP’s downstream business processes 1.7 million barrels per day in eight refineries around the world. Unfortunately, the company’s outdated technology wasn’t intuitive and made it difficult to share best practices across locations. Teams were also unable to quickly make decisions to reflect market changes, leading to lost opportunities and benefits. As part of its Digital Innovation Program, BP opted to review its global downstream supply chain management process to enable more agile operations.
BP deployed a series of digital cloud technologies to maximize margin capture, efficiency, and sustainability. One of the solutions was used to optimize the production planning of its downstream business, which allows teams to quickly run complex analyses and analytics using accurate, real-time data. By simplifying and standardizing its supply chain management, BP has fostered better collaboration and planning, which has increased overall agility, significantly cutting crude purchase time and improving the modeling of CO2 emissions.
Overall, BP has significantly improved margins, made better, faster decisions, increased planning and analysis accuracy, and decreased the time it takes to analyze information from hours to minutes.
Going green with ease
Sustainability and decarbonization are key drivers for the O&G industry. As companies look to reach net-zero targets by 2050, they must increase compliance with energy transition mandates and open up new value chains for carbon and hydrogen.
Reaching these goals and complying with new market demands requires companies to reshape business models, increase investment in ESG programs, and bolster decarbonization initiatives. To succeed, O&G companies need to modernize facilities and increase visibility across the value chain.
Access to reliable data, optimization models in the cloud and enhanced KPI visualization gives companies the operational intelligence they need to boost the value chain, reduce emissions, and innovate to reach energy targets.
Thriving in a new age
Through digital initiatives powered by the latest technology enablers, O&G companies can build industrial information infrastructure and upgrade engineering and operations applications to accelerate value creation.
They can then visualize and share industrial data within their teams and value chain partners. By undertaking these initiatives, O&G firms of the future can streamline engineering cycles, achieve operational excellence, and empower their workforces to drive the circular economy and ensure profitable, sustainable operations.
