Embracing the fourth industrial revolution through digital technologies will help the oil and gas industry reduce operating costs, but could be money misspent on “shiny new toys” if not combined with other changes, delegates at Tuesday’s SPE Offshore Europe business breakfast were told.
In the past few years, oil and gas companies have been focusing their technology spending on mobile devices, EY partner Mark Hutchinson told attendees at the Aberdeen & Grampian Chamber of Commerce (AGCC) business breakfast yesterday morning. Robotics, artificial intelligence, drones, augmented reality and virtual reality, blockchain, 3D printing, autonomous vehicles, and the Internet of Things are other technologies that will significantly impact industry in the next few years, he says.
However, technology alone will not guarantee success. Instead, an integrated approach combining technology, business model, and customer needs will be critical. “It can be hard to know how much to invest, particularly with cost challenges,” said Hutchinson. “There are lots of shiny new toys to waste money on.”
Industry also will have to overcome its risk averse nature in terms of technology and testing needs to be done to determine what technologies will fail and what will have the biggest impact. This means companies need to learn to fail in a safe environment while balancing investment, Hutchinson said.
Graham Gillies, VP subsea production systems for Baker Hughes, a GE Company, echoed the sentiment of the need for a new approach to implementing new technology. He says the company is seeking to create a sustainable footprint for technology by adopting these technologies into its factories. Through this transformation, BHGE has focused on advanced manufacturing such as material innovation, and the industrial internet to connect machines and data and analytics. The company is now validating products with virtual reality tools, eliminating problems and optimizing manufacturing.
Gillies said his company seeing more openness in the industry due to the downturn. But that openness is forced, with the same buy-sell, customer-vendor relationships still existing. Collaboration needs to become more than a buzzword, with collaboration not only in technology, but in finance and project management and between producers and regulators. The industry still has a long way to go to embrace collaboration, says Gillies.
“It’s not about surviving the downturn anymore,” said Gillies. “This is the new normal,” and it is one that goes beyond the North Sea.
While oil and gas’ share in the global energy demand will decline from 53% today to 44% in 2050, fossil fuels will remain a player in meeting global energy needs. But future oil and gas investment will need to focus on cost containment, leveraging existing infrastructure of new production, and diversification across the energy mix, DNV GL CEO Remi Eriksen told the breakfast. Some oil and gas companies have already started increasing the amount of gas in their portfolios to meet future energy demand alongside renewables, he says. Standardization, digitalization, and autonomous technology will be key to helping oil and gas companies keep costs low as renewable energy, electric cars and greater energy efficiency will reduce oil and gas demand, he added. This new way of thinking will need to include facility design and contract business models.
Still, Erickson remains confident that the industry can take the extraordinary steps needed to adopt to the new energy outlook.
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