HOW TO UNLOCK

THE POTENTIAL
OF DIGITAL
TRANSFORMATION
IN OIL & GAS
Practical strategies to address the
employee skills gap, mitigate equipment
failure and optimise production
 Digital transformation is a key enabler for oil and gas companies
to reduce costs, increase productivity and make better strategic
decisions.
The oil and gas industry is no stranger to digital technology. Beginning as early as
the 1980s, oil and gas companies invested in digital technology to better
understand their reservoir’s resource and production potential and improve
“We need to be health and safety. Yet, a recent report by Accenture indicates that while most
companies in the industry are capable of using digital technology to create

excited about the efficiencies, few have fully exploited this to substantially improve performance
in the long run.

unknown… we need to Technology has the potential to reshape the operating landscape for the oil and
gas industry, but the transition to become fully digital should be embraced as a

think big, even if we transformative journey, not a piecemeal process.

It is crucial to have a strategic framework in mind that can address your

start with small steps.” near-term business objectives while also creating a pathway for the
transformation of core operations.
Michael Borrell, SVP While other industries can adopt the rapid prototyping approach of ‘fail early, fail
E&P North Sea, Total fast, learn faster’, the capital-intensive oil and gas industry must be far smarter
about where to invest attention and resources.
Source: Forbes
There are three areas which hold the potential to unlock long-lasting efficiency
gains for the industry through digital transformation:

• Addressing the skills gap

• Mitigating equipment failure

• Optimising production

A changing workforce Maintenance and monitoring Maximising production Operational efficiency Unlocking your potential
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THE CHANGING WORKFORCE OF
OIL AND GAS COMPANIES
Skilled workers are quickly becoming a scarce
commodity in the oil and gas industry. 71 per cent of
the current energy workforce are 50 years or older,
with 50 per cent of skilled energy workers and
managers forecast to retire by 2022. A generation of
experienced employees will soon exit the workforce,
leaving many oil and gas companies pushing to
attract and train a new influx of workers.

It is predicted that in the next six years, the industry

will need to hire an additional 25,000 workers to
meet the workload demand. This has left many
companies worried about an impending talent crisis.
More than 40 per cent of respondents in a recent
survey by Energy Jobline and AirSwift revealed that
they are already witnessing a skills crisis unfold in
their geographical area.

To attract new talent to the industry, upskill them

over a shorter time period and reduce the need for
staff during certain tasks, there is one clear answer:
embrace digital transformation. In a survey of 33,000 oil and
gas workers, 90 per cent said
that skills shortages were
damaging their productivity.
Source: NES Global Talent

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DIGITAL TRANSFORMATION CAN UPSKILL
AND ATTRACT A NEW WORKFORCE
The oil and gas industry has struggled to attract young talent in a competitive
landscape, but digital capabilities are a key driver of interest. Digital
transformation curates a more modern image for the industry and
represents an opportunity for new entrants to develop valuable transferable
skills and handle cutting-edge technology.

Digital technology will also help to bridge the skills gap between the exiting
experienced employees and the entering inexperienced recruits. Using digital
technology, masses of data can be collated to help guide the decision making
of newer employees. There are also a growing number of digital training
methods, such as simulations and augmented reality. These are valuable tools
to increase employee knowledge in a short space of time.

Digital technology is crucial in the retention of talent. A recent Skills

Landscape report by the Offshore Petroleum Industry Training Organisation
(OPITO) found that 28 per cent of energy workers’ time is spent on repetitive,
transactional activities. If these tasks were to be automated, it could reduce
the admin burden on employees and free up their time for more enjoyable “HR executives in oil and gas
value-adding activities. There is also the additional benefit of limiting the risk
of human error for data processing and handling.
need to begin systematically
planning what the workforce of
the future needs to be and
shape their strategies to create
that workforce.”
Source: Robert Bolton, KPMG

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 The growing need to manage and maintain legacy equipment
The oil and gas industry can realise significant gains by improving the
optimisation of their equipment maintenance. With a vast amount of legacy
equipment in operation, there is an increased risk of failure from wear-and-tear.
To limit potential downtime, it is important that any issues can be managed and
mitigated to maintain the longevity of critical equipment.

Companies are losing As many production assets are also situated in harsh operational environments,
maintaining equipment can be an ongoing challenge. By monitoring crucial
between three to five parts of machinery and leveraging an alerts system, the focus can be placed on
fixing an issue before it is beyond repair.
per cent of their Having increased oversight of the historic performance of assets can also help

production to operators to spot patterns and start to address issues early on.

IBM believes that digital transformation can help manage and mitigate
unplanned downtime. maintenance issues by:

Source: ARC survey • Connecting sensors, devices and equipment to offer real-time insights
on performance
• Predicting and preventing issues and failures by looking for non-obvious
patterns and trends to spot issues days or weeks in advance

• Gathering useful insights from documents, manuals and internal notes

• Delivering real-time updates and timely warnings

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HOW THE INDUSTRY IS USING DIGITAL TECHNOLOGY
TO IMPROVE MAINTENANCE AND MONITORING
• Shell are using artificial intelligence to predict when maintenance is needed on
compressors, valves and other equipment. It has leveraged real-time data to help
geologists chart a more accurate course for the well to boost productivity and
reduce drill wear-and-tear.
• BP have collaborated with Silicon Microgravity to manufacture and deploy special
sensors to help reservoir engineers mitigate the potentially damaging results of
water reaching a production well. This then improves oilfield reservoir
surveillance.
• In remote or inhospitable operating environments, oil and gas companies are
looking to increase their use of automation. This can mitigate risks and prevent
HSE incidents, by reducing the number of people needed to carry out the more
dangerous aspects of fieldwork. The World Economic Forum believes that the
combination of drones and autonomous robots will lead to a 25 per cent reduction
in inspection and maintenance costs and a 20 per cent lower employee count.
• Apache Corporation are using predictive analytics to anticipate the failure of
critical pumping equipment, such as electronic submersible pumps (ESPs). ESP
failure was causing losses of 10,000 barrels per day for Apache. To identify
actionable variables to improve the ESPs, they tracked the location and operating
conditions of more than 100,000 pumps. Following this, they were able to increase
equipment uptime and reduce production losses.
• Companies are beginning to leverage remote operation centres (ROCs) to control
operations and make decisions in real time. By collating information from multiple
assets companies can make more effective decisions and limit the number of field
personnel required.

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WHY THE INDUSTRY NEEDS TO
MAXIMISE THE PRODUCTION
VALUE OF CURRENT ASSETS
With oil prices flat and margins tight, the oil and
gas industry has faced growing pressure to
improve operational efficiency. Given the large
production volumes, marginal improvements can
have a significant impact.

At present, the production segment of oil and

gas consists mainly of brownfield wells,
platforms, instruments and control systems. The
prevailing strategy for many companies used to
revolve around chasing growth in greenfield
projects. However, according to PwC, the drop in
capital expenditures for exploration signals that
the new focus is on maximising the production
and throughput of existing assets.
40 per cent of global crude oil and
Considering the complexity of the infrastructure
across the industry, this is a task beyond the natural gas production comes
ability of humans. To secure efficiency benefits,
oil and gas companies need to shift their from fields that have been in
attention to digital technology which can
simplify, automate and optimise their
operation for over 25 years. 175
operations. fields have been producing for
more than 100 years.

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THE INSIGHT AND INTELLIGENCE DIGITAL TECHNOLOGY
CAN HAVE ON OPERATIONAL EFFICIENCY
Oil and gas companies produce a wealth of • Saudi Aramco have employed digital
data about their operations, but it takes surface and subsurface technologies to
digital technologies to transform this data optimise field development and
into actionable intelligence. operations. They are also using a
Reservoir Engineering Integrated
If companies can take a birds’ eye view of
Environment tool to help their
their operations, they can more efficiently
engineers improve the planning,
respond to production failures, optimise
management and development of fields
the parameters of low-rate wells, and resources.
streamline oil distribution and identify
profitable opportunities. • ENI have employed predictive analytics
systems to increase production rates
Having this enhanced insight will then and reduce asset downtime.
allow companies to oversee, predict, plan,
• Deloitte shared an example of an
act and learn how to improve their current
operator in Kazakhstan facing poor
“Visualisation and modelling
operations.
pump pressure and production will take away a lot of the
deferment in several mature gas wells.
The operator used real-time analytics uncertainty and bring more
to make proactive adjustments to
electrical submersible pumps (ESPs) reliability… as a
and motor amp modifications to suit the consequence, companies
changing reservoir conditions. This
additional layer of intelligence led to a will be able to deploy capex
27 per cent reduction in downtime,
beyond the benefit of the ESPs. more efficiently.”
Source: Archana Deskus, Vice-President and
Chief Information Officer, Baker Hughes

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ARE YOU READY TO UNLOCK THE
POTENTIAL OF DIGITAL
TRANSFORMATION?
According to Deloitte’s digital maturity index, the oil and gas "Digitalisation has the potential to create around $1 trillion
industry is lagging behind other sectors. With many digital of value for oil and gas companies"
transformation efforts focused on tactical solutions for Source: World Economic Forum
incremental gains, the industry can stand to vastly improve
There are some critical success factors to keep in mind for
success rates by taking an overarching approach to
your digital transformation
transformation.

IBM notes that to thrive in both current and future market 1. Make digital a priority – create and follow through
conditions, it will not be enough to simply enhance the way oil and with an overarching digital strategy; be prepared to
gas companies currently operate. Instead, there needs to be an adapt processes where necessary
effort to combine technologies in innovative ways to magnify their 2. Carry momentum from one project to the next –
capabilities exponentially. Rather than limit their effectiveness begin a digital focus with key achievable KPIs and
through separate, fractured deployments. use the success of this project to bring forth the
In this eBook, we’ve showcased three areas where success can be next
found through digital transformation. By making strategic 3. Encourage cross-functional collaboration – bring
improvements across each of these areas, oil and gas companies together different functions of the business to
could achieve substantial efficiency gains. share ideas and collaborate on new tools and
implementations
4. Democratise your data – accessible and contextual
“The industry could benefit from pursuing a revolutionary
data is key and in the hands of your employees it
agenda with digital as a backbone.”
can transform the calibre of their decision making
Source: World Economic Forum

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