One of the best ways to achieve efficiency gains is digitalisation of assets. Digitalisation is no longer a trend, but has become a necessity for all industries including oil and gas in the face of growing competition and a dynamic macro environment. That said, there is still immense scope for digitalisation in Indian oil and gas companies. Among all the major industries, the hydrocarbon sector has the maximum potential for digitalisation, but the average digital maturity in the sector is only 1.3 (on a scale of 5), much lower than industries such as telecom that stand at 3.2.
As the oil and gas business is becoming more complex, due to drilling activity in greater depths, geological difficulties, internationalisation, geopolitics, climate change concerns, etc., the competition has become even more intense. Petroleum companies are heavily investing in cost-saving measures, particularly with regard to asset management. Digitalisation has proved to be an effective strategy in this regard.
Digitalisation has made it much easier to monitor assets such as rigs, pipelines and reservoirs, resulting in effective management of the value chain. The usage of equipment can be monitored in real time, thereby enabling quick decision-making. The large amount of data that is generated during the process lends the management better visibility of future production scenarios. Further, both risks and costs are reduced.
Advantages of digitalisation of assets in the oil and gas industry
However, digitalisation alone will not be sufficient to bring in efficiency. The oil and gas industry, not only in India, but across the world, is currently undergoing a transition, presenting its own set of challenges. The main components of the transition are reduction in energy import dependence, adoption of new oil recovery techniques, falling extraction rates and the move towards a gas-based economy. Adapting to these changes requires efforts that go beyond digitalisation. Apart from generic digitalisation and automation measures, there is a need to develop a digital DNA of every organisation going forward.
Case Study: Tieto’s experience in the digitalisation of hydrocarbon assets
Norway-based Tieto has handled most of the digitalisation at the Big Oil companies. Tieto is yet to come to India, but it holds significant expertise in digitalisation and can be a learning case for Indian companies.
- Tieto’s digitalising upstream solutions (addressing challenges such as ageing fields, complex reservoirs and unreliable data) has enhanced production by 10 per cent for one of its clients. For a Norwegian client, its solutions have resulted in significant cost savings.
- In midstream, Tieto’s solutions address issues pertaining to unexpected demand, shift from long-term contracts and larger/complex distribution networks. The company offers products that enable scenario-based visualisations.
- Oilfield chemistry management is Tieto’s is part of forward-looking solution, which helps reduce the carbon footprint associated with hydrocarbon production.
Risks and concerns remain
Oil and gas firms are increasingly moving towards digitalisation to improve their operational efficiency, optimise cost and generate new revenue streams. However, there is a persistent threat of cyberattacks in this process. Therefore, companies need to identify and deploy an effective evaluation strategy, and put in place authentication protocols. In India, there is a lot of scope for such improvements. Cyber incidence response is also required, under which cloud storage solutions should be adopted. These solutions will secure the transfer of data from remote regions. In addition, there is a risk of technology disruption, and this calls for proper implementation of policies and regulations.
Digitalisation has become a way of conducting business in the oil and gas industry. All companies, big and small, are making investments in digital solutions and technologies to protect their long-term margins and benefit from efficiency gains. However, digitalisation cannot work in isolation. It can strengthen the sector and spur growth only if it is combined with information technology and operational technology, internet of things, artificial intelligence, etc. Integration of all these modules and mitigation of risks associated with digitalisation can provide the much needed boost to the industry.