In recent years, technology has helped oil and gas (O&G) companies explore deeper waters, remote reservoirs and extract from shale resources. The success of this technological advancement has created an oversupply which is responsible for lower crude prices, and now O&G companies are aggressively pursuing capital and operational efficiency to reduce costs.
Most of the innovation in the O&G sector is focused at the well site – but digital technology can also help transform business operations and deliver sustained value to the bottom line, for example by connecting disparate operations across organizations, harnessing data via the industrial internet of things (IoT), and sharing that data to improve decision-making.
In the short term, digital technology has significant potential for compressing across siloed operational supply chain processes, bringing together producers and consumers (whether internal or external) of common sources of information to create greater operational efficiency. The broader these networks, the greater the potential.
Process compression combines three foundational digital capabilities: smart assets, paperless processes and data analytics — all in a secure environment. When applied across the O&G supply chain, digital technology can simplify and synchronize processes, and speed up integrated decision-making.
Opportunities for process compression
- Topside production optimization: Topside production can be improved at lower cost with better connectivity between data sources and physical locations to drive more informed, fact-based decisions.
- Predictive maintenance and repair: Reactive decisions on production assets can lead to overspend in maintenance, duplication of inventory and inefficient allocation of resources. Today, tracking devices on inventory and asset management applications can help synchronize tool delivery and management with preventive maintenance schedules.
- Logistics and warehousing: Tracking the equipment and resources that serve critical assets across all sites, and checking their connection to business processes, is critical to improving production.
- Integrated planning and execution: Digital toolsets such as process collaboration and analytics can enable cross-functional understanding and collaborative decision-making.
- Digital finance transformation: Digital solutions can combine mobile, cloud and finance systems to automate invoicing in the field. Real-time views of back-office activities and spend can also increase accuracy and timeliness in billing.
These compressed processes can not only drive down operational costs, but also position early-adopter organizations for the future in their ability to attract and retain the next generation of digital-native talent. On a wider note, change initiatives and technologies also offer another layer of benefit: improved safety for workers.
CIOs are increasingly involved in business decisions, and for innovative CIOs in the O&G industry there is a great opportunity. Technology is often the key, and sometimes the only, competitive differentiator in this industry, and CIOs can step up to claim greater responsibility – shifting from running IT to driving innovation, and encouraging the relentless pursuit of optimization.
Legal disclaimer: The views expressed are those of the author only and do not represent the views of any of the member firms of Ernst & Young Global Limited.