OIL & GAS 4.0:
Wherever you look, change is happening: in society, business and in the way we live and work. In recent years, every industrial sector and economy around the world has been experiencing disruptive change at an unprecedented pace.
As technology and new ways of working have transformed other major industries, leaders in the Oil & Gas sector have embraced emerging technology in hopes that it will lead to a more productive future for the industry as a whole.
But with big change comes big questions, especially for the oil & gas professionals that are faced with staying relevant. As a transitioning workforce of specialists braces for an ever-changing landscape, the requirement of understanding technology and new ways of working is no longer nice to have but a necessity.
In this post we're going to answer how emerging technology solutions are currently being applied to the sector, what skills do you need to seize the opportunity and lastly how you can get started in learning these skills.
Famously coined the fourth industrial revolution, the global economy is faced with adapting to a new way of operating and technologies that are already disrupting how businesses do things. As our ability to harness Big Data grows and technology like artificial intelligence and automation improves, we're currently observing a seismic shift in major industries. More than anything else, new systems that merge the digital and physical planes and enhance the decision making process with data-driven insights are key for corporations in the Oil & Gas sector.
The Oil & Gas industry while experiencing a complete disruption, is no different to other global sectors that are taking advantage of the progress in business performance especially through the application of automation, digitization, big data analytics, and artificial intelligence.
Although the oil and gas industry has a cultural representation of traditional and “old way of thinking”, it is one of the market leaders in pioneering innovation and technology. This innovation has happened in many facets of the sector but especially in exploration, drilling, completion, and production all focused on the same goal; to produce hydrocarbons in the most effective and efficient way.
Among other things, Oil & Gas 4.0 has introduced linking technologies to communicate with each other and make decisions without human involvement. This concept has already transformed many other technology-driven industries and is now transforming the hydrocarbon sector. In fact, one of the foundational reasons corporations have embraced emerging technology is because it has opened up new opportunities of understanding and exploiting the industries most valuable asset, it's data. in addition to that, it has also created more accessibility and higher computing power.
While technology may be the key disrupting force leading the way, it is not the only one. The global workforce is currently undergoing a changing of the guard with more veterans retiring paired with one of the highest attrition rates ever experienced in the industry. In combination with this, the oil & gas sector has faced a serious shortage of talent primarily because the global sentiment of the oil & gas industry especially with the millennial generation is low.
Alongside this, the introduction of new technology and innovation has resulted in a change of business models and supply networks, forcing corporations to rethink how they go about doing things. Needless to say, the transition into a lower carbon future and globalization are also playing major roles in the evolution of the oil & gas landscape.
It's fair to say that the industry is undergoing a massive shift with its fair share of challenges, but for the oil & gas professionals who are seeing the opportunities that the change brings, there is much that can be done.
With technology, innovation, the transition to a less carbon reliant future and new business models, new technical skills are becoming a part of the necessary skill-set. The industry is in need of a flexible, multi-skilled and technology adept workforce.
According to the UKCS Skills Landscape report, we know that by 2025 that there are estimated to be over 4,500 new people employed in roles that currently don't exist in the UK alone. These new roles will require a new set of skills and competencies which means the industry will need to find new ways of re-skilling the current workforce and strategize how to compete with other industries for future talent. In the next six years, we will see an introduction of new jobs in areas such as data science, automation and new materials to name a few.
The majority of the current workforce will still be working in the industry for the next 10 years. This means there will also be a need to consider how to up-skill the existing talent to do the same job but more efficiently.
There will be a particular emphasis on training for data skills, enterprise skills, new ways of working and other specialized technology skills. Some of these specialized technical skills include artificial intelligence, robotics, material science, cybersecurity, remote ops, and blockchain development.
While many corporations will be investing in retraining capabilities for their core workforce, it will be up to the gig worker, consultant or contractor in the industry to take the lead in their own capabilities training.
In an increasingly evolving landscape, where reduced costs and improved returns are the names of the game, it's becoming evident that the use of technology is creating opportunities that offset the challenges the industry currently faces. However, companies should stay away from a "one size fits all approach" and look to customize solutions to get the most out of the solutions at hand.
In a recent report by Wood Mackenzie titled Digitalisation in Upstream: Show me the money, it highlighted that digital transformation could offset as much as $150bn in operations related cost within the energy and natural resources sector as a whole.
Speaking at the 2018 edition of the Abu Dhabi International Petroleum Exhibition & Conference (Adipec), the UAE Minister of State for Artificial Intelligence, Omar Sultan al-Olama, said: “Technology is going to change the impact of output and return in the energy scene globally. The factors are data, artificial intelligence (AI) and internet of things (IoT), to name a few, as well as blockchain and other emerging technologies.” The minister noted that AI’s contribution to the oil and gas sector could reach $2.85bn by 2020. The general sentiment of the industry is that the advantages that technology offers the industry is astounding and will allow for greater growth in the industry as it has in the past.
Staying true to the innovative culture of the sector, Oil companies have already developed new technologies of their own, like enhancing recovery from mature oil fields and deep offshore locations. For example, in the area of deepwater exploration, the limit of development in the Gulf of Mexico 10 years ago was about 3,000 feet. Today the limit is 8,000 feet. Another technological advance that created greater opportunity for the industry as a whole was the ease of ability to extract and refine tar sands. Through these examples and more below, we can see that the industry has a track record of innovation and there is little to disapprove that this will continue.
Drone technology is ready for lift off in the oil & gas sector. UAS technology is impacting the energy industry as a whole in a multitude of ways like efficient maintenance, safer inspections but more than anything else, it is the data that the technology provides which is transforming the industry. Through a reduction in costs, time efficiency and data collecting abilities, drones are replacing the standard operating practices in the oil & gas industry.
While the human eye may be prone to error, a drone visual is not. One way where drone capabilities will unlock cost savings is in the oil rigs. Through detailed data gathering and visuals from sensors on drones, operators are able to analyze information in offshore and onshore sites and detect potential issues the human eye cannot. For instance, energy giants are already implementing drones to search for corrosion prone areas on rigs to help plan safe and productive drilling operations.
One particular project that has implemented drone technology is Petronas’ refinery and petrochemical integrated development (Rapid), the largest refinery and petrochemical development in Southeast Asia. The $27bn project has an area of over 2,000 hectares and will produce 9 million tonnes of petroleum products and 4.5 million tonnes of petrochemicals a year. Aerodyne, a global drone solutions provider is involved in aerial monitoring and reporting of the entire complex.
Another facet of the industry that is adopting UAV is threat monitoring, specifically with oil wells. Traditionally, engineers monitor wells manually and usually rely on manned aircraft or road vehicles to detect any damage or leaks.
Both methods are expensive and less effective than a drone solution. This is a growing concern for the industry as they are estimates that the market spends $37 billion a year in monitoring potential threats.
One more noteworthy example of the impact of drone technology is in exploration. A traditionally complex aspect of searching for hydrocarbon can be dealing with geological formations such as high outcrops that make a site unreachable. Through the use of unmanned aerial vehicles, Saudi Aramco has been able to overcome the hazards of these outcrops and capture a treasure trove of information through remote sensing technology (more on this below).
With multiple immediate opportunities offered by UAV systems, it is very likely their use will be common practice across the industry. In addition to that, various drone technologies developed specifically for the sector have popped up, enabling a faster pace of innovation within our sector.
The oil and gas industry is notoriously complex, with multiple operating systems responsible for different parts of the value chain. Each system has its own structure, stakeholders and role in the journey of exploration and extraction to export or domestic use. Often times large organizations control the entire value chain creating multiple organizations with multiple systems. It's not an understatement to say it can get complex.
One such organization is the Abu Dhabi National Oil Company (Adnoc). In a landmark project with IBM, both entities realized there was a potential to remove inefficiencies from the hydrocarbon value chain and allow for greater revenue potential across their various companies. Blockchain, as a decentralized technology with specific technical features, was able to make this happen.
By creating a blockchain across their entities, Adnoc receives a birds-eye view of the flow of their hydrocarbon and the associated financial transactions, creating further efficiencies in their accounting.
Furthermore, the individual operating companies, as well as investors and stakeholders, can base decisions on an immutable record that is as credible as it gets.
With incredible volumes of transactions passing through outdated trading platforms and far from secure documentation, the costs alone of labor to manage invoices and remittances is a major opportunity that blockchain has been able to reinvent.
Blockchain is a distributed database technology that allows the secure transmission of information without control by a central authority. This allows companies to significantly reduce discrepancies in the process by enhancing transparency and improving accuracy in transactions and networks such as freight rates, shipment routing and invoice generation. This, in turn, would remove the possibility of costly reconciliations, audits, third parties, and payment service providers, as well as reduce the risk of overpayments.
Just as 3D printing is increasingly adopted in the healthcare and transportation industries, so too is it gaining traction in the global energy sector. A SmarTech report estimates that oil and gas revenue will reach $450 million by 2021 through additive manufacturing. Furthermore, analysts predict that this revenue in oil and gas will triple over the next few years, surging to $1.5 billion by 2015
One of the key benefits of 3D printing is the acceleration of product development. With 3D printings capacity for rapid prototyping, companies are able to develop, design and validate their prototypes faster, which in turn accelerates the manufacturing process and from a grander scale allows organizations to implement unique solutions in various market opportunities.
A quick development cycle is of great value in the oil and gas industry. Through the investment in agile 3D printing stations, companies can reduce the time it takes to mass production and tests multiple design concepts before doing so
Oil and gas operators face significant logistical challenges, one of them being the wide geographical distribution of operations across continents and oceans. The high cost of downtime that can occur when delivery delays high-quality accentuate the parts supply challenge.
Because of the efficient delivery of parts and maintenance is important, most companies minimize the costly downtime that can occur by stockpiling large inventories of critical spare parts. From a fiscal point of view, it is more cost effective to overstock parts than to deal with long downtimes.
Additive manufacturing optimizes asset maintenance in multiple ways. Through quick turnarounds, suppliers and maintenance providers all achieve faster repairs and improved design quality. AM also reduces the need to maintain a large inventory of spare parts through on-demand printing.
In addition to these examples, Additive manufacturing has been implemented across multiple organizations to allow for greater transparency, development, and visibility in projects with stakeholders. With a diverse array of design solutions piloted in the last 3 years, it's fair to say that the 3D printing solution will likely expand across the value chain.
The Internet of Things (IoT) in the oil & gas industry is the network of physical objects connected to the Internet. Things like Wearable devices, drones, equipment, buildings, and just about anything can be embedded with electronics, software, sensors, and network connectivity. The ability to transfer data without any human interaction enables previously unprecedented amounts of data to be collected and exchanged with other devices, or through a centralized platform. Increasingly, oil & gas organizations are focusing their IoT initiatives on underlying sensors, and devices while also developing bold approaches for managing data, building an IoT infrastructure, and subsequently developing new business models. According to McKinsey, IoT has a potential economic impact of $930B from oil & gas companies within the next ten years, it’s no surprise that the O&G industry is interested in leveraging IoT. Here are a few ways that IoT is playing a major role in the sector.
The majority of Oil & Gas facilities need to be monitored on a regular basis. With tank levels pressure and flow rates monitored regularly along with various other things, these machines are subject to wear and tear which often make them need regular maintenance.
Predictive maintenance is performed based on the current condition of a piece of equipment. For example, if a coil is getting too hot, its failure is immediate and will require a technician to diagnose and repair the cause. Predictive maintenance allows oil & gas companies to use remote monitoring for equipment through sensors and make important decisions based on that,
such as whether something needs to be fixed, replaced or shut down. The sensors that collect the data send the company an alert when a machine needs to be maintained. This technology prevents costly equipment failure from happening.
Although predictive maintenance is the immediate payout, by utilizing IoT and creating a predictive maintenance process, operators can now track deterioration and corrosion of assets and equipment with the ability to diagnose a problem remotely. The way this works is the collection of data from the sensors is fed to the cloud, giving management access to real-time data from the field.
With the industry under constant pressure to improve operations and produce greater returns, asset tracking, and equipment monitoring have become the most widely adopted wireless sensor network application in the sector. Due to the dramatic price volatility oil can face, companies need to spend more efforts on analyzing their operations and assets to see where reductions can take place while still maximizing the utility of assets.
Asset management is one of the core priorities in the industry that can significantly impact operational performance.
Productivity can be improved through optimizing production by making production more predictable through asset tracking and management. With asset tracking, all assets are integrated into one platform to allow the monitoring of multiple wells or sites.
Through IoT sensors, companies can also monitor key pipeline equipment more accurately and cost-effectively. It can allow teams to survey potential drilling sites and find a specific location for a pump. Additionally, the use of wireless sensors will give oil companies the ability to monitor their inventory and shipments in real time.
Another advancement in the oil and gas industry has been technologies like seismic imaging and the latest measurement while drilling that increase the productivity of oil drilling. Until quite recently the drilling industry was operating in the blind. Using unreliable geological surveys (compared to today's technology), drilling companies were going into formations somewhat blind. Without exact geological characteristics that 3D seismic imaging offers now, drilling companies were often in a financially risky or rather dangerous endeavor with no real idea of what hydrocarbon payout they would get if they even found a reservoir. Now that 3D seismic technology has been a great success in the industry, a drilling team that is well versed in the newest technology will always prove to be an asset to the industry.
Although the oil and gas industry is one of the largest industrial sectors in the world, the competitive environment for skills is likely to grow in the next 10 years. Because the skills needed to close the gap in the industry are not energy specific, the sector will have to compete for access to these critical skills. It is also likely that new companies will enter the market, providing services that plug the skills gap.
Due to rapidly changing business models, new ways of working and new opportunities, there is a requirement of new skills and competencies. At the same time, many traditional skill sets are now declining, requiring people to change jobs or re-skill. There is a combination of skills needed to succeed in the sector and prepare for these changes. Some of these are technical while others are more intrinsic. As a professional, it will benefit you to have a thought about how your specialization and area of focus intersects with the technologies adopted in the industry and what skills should you train for.
While re-skilling is a necessity, there will be new job titles in the industry like data scientists, software engineers, cybersecurity specialists, cloud architecture analysts, blockchain developers, robotics engineers, artificial intelligence engineers, and dev-ops engineers to name a few.
The application of new technology will also enable far more adaptable and agile work environments, in contrast to the traditional, matrix-type organizations. Teams will need to be more flexible and nimble compared to what we see today. In addition, the combination of real-time data analytics, artificial intelligence, and cognitive reasoning will likely shift insight and decision-making deeper into organizations. The impact of new technology and changing business models will change the expectations on people in leadership positions and a degree of upskilling is envisaged for supervisory, management and leadership positions to prepare them for these new business dynamics. Topical leadership training on managing change, implementing new technology and establishing new ways of working will be required. This will provide an opportunity for training and education providers to more closely align their curricula, training offer, and delivery methods.
As technology will replace traditional machinery and systems, it is crucial for oil & gas professionals to have a deep competency in it. As a freelancer or within the workforce, you will most likely face software, network systems or machinery that requires a fundamental understanding of programming.
While becoming a "coder" may not be necessary, understanding the logic behind it is. Artificial Intelligence and Blockchain are two such solutions that require a deep understanding of technical programming languages. But possibly the biggest skill in demand is Data Science. Professionals with competency in Data Science and Analytics will be in hot demand as companies build robust technology solutions that bring in a wealth of data.
So how can a consultant, gig worker or freelancer develop these skills efficiently and effectively.
The combination of new technology such as machine learning, automation, and data analytics paired with new training methods (MOOCs, virtual and augmented reality, boot camps) has the potential to transform how people are going to learn and gain new skills. It also has the potential to significantly shorten the time required for professionals to acquire the skills and competencies needed to succeed. Here are two of the most common methods of training for you to kickstart your learning.
A hackathon is an event where people come together to try and solve problems, usually in small teams. Hackathons can include looking at industry-specific problems using coding. They are a great learning experience due to the problem-solving facet that comes with actually learning to code and are usually open for complete beginners and advanced learners. While hackathons are great for building connections and learning with peers, they are only as good as the people in them. An industry example of it, the UK Oil & Gas Authority has been organizing hackathons where participants tackle subsurface problems using machine learning.
Probably the most accessible way to learn a new skill, MOOCs or massive open online courses are platforms that give you access to hundreds or thousands of online courses on specific skill sets. They are often times the least expensive way to acquire a new skill and can be done at your own pace. Platforms such as Udemy and Coursera not only have courses that can take you from absolute beginner to industry proficient, but they also offer certifications which you can use for further credibility in the industry. While MOOCs are probably the best way to get started, they have a huge drop off rate due to the lack of mentorship or community to keep you going while facing a steep learning curve.
Now that you know why and how you need to acquire these skills, it's time to get going. It's not over after you start learning and it may take some time for results to show, but with the technology revolution far from maturity now is the time to build competency in these skills and be a part of Oil & Gas 4.0.
Proteus is a software built for the oil & gas industry by oil & gas professionals. Built with the workers of the future in mind, it gives you access to specialised opportunities in the industry, real time project management, accessing a global network and turning a specialty into a service you can get paid for in our service marketplace. Sign up below to get early access to the Proteus app.