Digital transformation has disrupted almost every industry on the planet. Oil and gas 4.0 brings with it a new wave of technologies to support the “the digitization of the oilfield” drawing on IoT, automation, big data, artificial intelligence (AI) and machine learning technologies to achieve a digital oilfield.
While oil and gas companies realize the potential for digital transformation – including increased revenues, reduced operating costs and lower emissions – the industry has fallen behind. More than 70% of oil and gas companies see themselves in the early stages of digital maturity. Why has the digital transformation of oil and gas not yet fully materialized?
What’s holding companies back from a digital oilfield?
According to PwC’s 2020 Digital Operations Study for Energy Report, most oil and gas companies are still approaching digital technologies conservatively. Few have considered large-scale deployments of digital technologies that could transform their business and operating models.
Here are some common challenges identified by the industry and onlookers:
- A large portfolio of producing assets that are digitally behind. It’s estimated 85% of all oil and gas plant and equipment, from well heads to gasoline stations, predate the internet era, let alone digital. This archaic infrastructure can complicate and delay the modernization of assets.
- Not going beyond data-driven insights. For oil and gas companies who’ve digitized some assets, they typically have stopped their digital transformation at the data-driven insights stage. Transformation needs to progress from integrating diverse data such as using cloud-servers, to analyzing and visualizing data and augmented decision-making.
- Digitization has not been seen as a tool that addresses business priorities. Digital transformation must go beyond the simple adoption of new technologies. It must be seen as a cultural change to promote collaboration, knowledge-sharing and the adoption of new ways of working.
- Lack of clear, quantifiable benefits. Benefits of digitization efforts are not always easy to quantify as they are often embedded within large improvement initiatives. This can make it difficult to direct correlation to bottom line operational metrics such as operating costs or production volumes.
Both technical and organizational challenges are often to blame for lack of digital evolution. But if other industries have faced these same challenges and evolved, why not oil and gas?
How can the digital oilfield help oil and gas companies to operate lean?
An often untapped opportunity for high-impact cost savings is in digitization of field operations. Tech solutions that help operators work smarter rather than harder are proven to yield sustained cost savings. Case studies document how digital oilfield software for field management can reduce OPEX by 15% for mid-sized producers.
Oil and gas producers have always relied on well run, cost effective operations for performance. However, many oil and gas producers are struggling with sprawling operations data and the speed and effectiveness of their operations decisions at the frontline.
We know oil and gas fields are incredibly complicated industrial operations. But status quo communications methods remain in place at the operations frontlines of many oil and gas producers, including decade old methods such as emails, spreadsheets and phone calls.
Then add in the patchwork of data that comes from specialized solutions for single tasks such as pump off controllers for oil wells, digital chart reading solutions and leak detection for high risk pipeline segments. This results in multiple, disparate solutions that all require their own logins and in many cases, duplicates the data entry work.
Field operators are hard working individuals who genuinely want to do a good job every day. Unfortunately, current systems result in extremely reactive work – operators end up driving around to each well every day looking for problems and fixing these problems as they go. There is a lot of wasted time with this amount of travel, and operators generally cannot synthesize all the information coming at them to properly prioritize their activities.
EZ Ops digital oilfield software results in real cost savings, full ESG transparency and enhanced operator safety.
With software for field operations management like EZ Ops, operators can see the top priorities that will yield the highest value production and safeguard compliance, using data analysis to take into account all the information sources that naturally overwhelm a foreman or field superintendent.
By reducing the amount of time it takes to identify and perform high priority tasks, and eliminating duplicate data entry, EZ Ops saves field operators two hours per day on average. All the activities required at a location are clear to reduce return trips and drive time, keeping operations teams safe and equipping them to be higher contributors, and gain a greater sense of fulfillment in their work.
For oil and gas companies, the cost savings they realize make them more profitable and more attractive for investment, increasing the value of their existing assets and reducing the breakeven commodity prices that are required to invest in their assets.
Why now? What will propel the shift to digital operations?
Even with the industry experiencing its third price collapse in 12 years, the mounting pressure (and now legislation) towards decarbonization and increasing competition from renewables – there’s never been a better time to shift to digital operations.
- Companies leading in efficiency will create pressure for others to better their performance. There’s a growing group of oil and gas producers that are operating by exception, demonstrating the industry’s leanest costs. It’s not just the super majors, mid-sized operators who are raising the bar on efficient energy production and others will need to adopt technology to compete. Expectations from shareholders, investors and regulators will level up.
- The option to hire more staff or settle for less operations efficiency, is no longer viable for producers in the low commodity price market. Operating costs are the biggest controllable cost for the industry – in many cases, OPEX can be higher than all of G&A, interest expense, royalties and transportation costs combined.
- Success from early adoption of technologies in well management, production accounting and other areas will build confidence in digital-supported efficiency. Even skeptics believe what we see. As oil and gas companies can quantify the value of digitization at the well or in optimizing production, they will grow more open to considering technologies for other areas of the business including field operations.
Assess the ROI of digital oilfield software with EZ Ops
Only by reducing the inefficiencies of status quo fragmented systems and communication on the operations frontline can producers best optimize production, streamline compliance management and reduce OPEX.
EZ Ops’ digital oilfield software provides everything you need to operate by exception behind one login.
About Brandon Ambrose, Founder & CEO of EZ Ops
Brandon has been in oil field operations for over 15 years and is a serial entrepreneur. He is dedicated to finding efficiency in complex oil and gas operations, which translates into tens of millions of dollars in savings for clients, and certainty of hitting ESG goals.