The oil and gas industry is currently struggling to manage a new world order based on lower oil prices. Average oil prices have dropped to about half of what they were in 2010. During the extended period of time when oil prices were high, many oil & gas companies recognized that their project costs and timelines had gotten out of control. ROIs were high and the industry was making so much money that some of the inefficiencies in the process systems were overlooked. Industry stakeholders knew the good times would come to an end, but they did not know under what circumstances. Now, many experts believe that the low oil prices are here to stay.
This current price crisis comes during a “perfect storm” of converging marketplace changes. Renewable energies and new methods for accessing, delivering and consuming energy, for example, are offering energy consumers with many more energy options. Generational attitudes are shifting as much of the traditional work force moves on to retirement. In addition to this marketplace variability, the unprecedented acceleration of technology development has emerged as a disruptive force across the oil and gas business.
As core business operations have grown inefficient over the last decades, it’s essential that oil and gas companies refine their competitive edge. In this new world order, those who learn to master the nuances of the new relationship between data, analysis, cost savings and profitability will be the winners. Success in this data-driven environment will require a new level of understanding both of how the market behaves and of which skill sets are necessary to thrive. In fact, marketplace real-time data will now need to be directly linked to internal oil and gas process dynamics in order to achieve profit-driven optimization of operations.
In essence, all of these market dynamics have helped to bring the industry together. Forward thinking executives see the current situation as an exciting time. Decisions made today will impact the way oil and gas companies will conduct their business over the next 30+ years
The digitization factor is a heavy influencer
Key processes within oil and gas operations can now be digitized. The profitability benefits of reinventing core oil and gas plant operational processes through digital transformation are significant. Market information can be leveraged to drive process optimization. Concepts such as digital twin, where a virtual model of an operating process, a machine or a plant is built (prior to building the real thing) to help make highly accurate predictions for how that process, machine, or plant will actually behave once in operation, are driving real cost reductions.
The Industrial Internet of Things (IIoT) and the related digitization initiatives are driving changes in the way oil and gas stakeholders think about how their systems work together to get product to market faster. Many rely on vendors who have grown along with the industry and who possess the expertise on leveraging technology to solve business inefficiency problems. Companies like Schneider Electric have invested millions in R&D in order to develop digitized solutions that focus on how systems at the plant or asset level help to make people more efficient. The goal is to roll-out real-time applications that now allow operators to make faster and safer decisions with an instant impact on profitability.
Empowering today’s industrial workforce with real-time operational profitability data, along with process control and real-time reliability risk information, will convert today’s equipment operators into operations and business performance managers. Operators will be able to adjust set points and see the impact their adjustments are having, not only on the process, but also on the profitability and reliability of the assets. They can then apply this feedback to make operating and business decisions that maximize operational profitability and safety without significantly increasing reliability risk.
For more information on how digitized solutions can drive oil and gas industry profits, click here