The oil and gas industry is facing many challenges that are expected to redefine the sector’s traditional fundamentals. With new technologies enabling industry leaders to maximise resources, empower employees and even predict breakdowns before they happen, the future of the sector is expected to undergo dramatic changes in coming years.
The Fourth Industrial Revolution (Industry 4.0) is already creating incredible opportunities for manufacturers, employees and their customers in refining and petrochemicals. With connected technology, advanced analytics and mixed reality simulation, oil and gas plants will change dramatically in the near future, with 40 per cent of operational processes expected to become self-healing and self-learning by 2022. But what is required for the industry to make that happen?
According to research released by Deloitte last year, executives in oil and gas are aware of the opportunities Industry 4.0 creates—and they prize digital transformation as a way to harness that growth. At the same time, however, disconnects in different areas suggest that executives aren’t quite sure how to get there—even though they plan more significant investments in the future.
To uphold the success of the Australian oil and gas industry and take it to the next level, Accenture says companies need to move beyond proofs of concepts and pilots to implement and scale quickly. Although the industry is still being bombarded by references to Industry 4.0, Accenture suggests the sector should look towards the next revolution; the Industry X.0. Industry X.0 can be defined by businesses that have grasped that it’s not enough to digitise one part of their organisation and expect positive results across the enterprise.
Instead, Christophe Bourdeau, Industry X.O Lead for Resources at Accenture AAPAC says, they embrace change and apply the right combinations of digital technologies continuously in all areas.
“This is the point where industrial businesses are not just digitally run, but completely reinvented through smart, connected, learning and living technologies. The future oil and gas industry in Australia will be no different and has the opportunity to be a global pioneer,” Mr Bourdeau says.
Accenture’s recent study into the digital opportunities in the oil and gas sector shows that one in two energy executives admit they’re struggling to combine rapidly evolving technologies effectively. This is because many lack a comprehensive vision for newly adopted technologies and a plan for how business models and organisations will adapt around the technology.
They also point to the lack of culture of experimentation in their organisations, and insufficient data security and trust. The result is that they are not getting the most from their digital investments and adoptions. Another major finding is that while 83 per cent of executives believe their digital investments are designed to achieve strategic priorities, only 5 per cent feel their ecosystem is actually ready to help drive value with digital.
In the study, Accenture identifies five value-triggers that can drive the successful take-up of new technologies, namely:
- Talent readiness – The available technology talent pool and its existing size and quality.
- Capital adequacy – The extent of capital investments made outside company boundaries to mature on-boarded technologies.
- Ecosystem maturity – The technology maturity of the ecosystem, including partners, vendors, suppliers, academia and start-ups.
- Adoption intensity – Evidence of successful technology integration within the same or in related industries.
- Value potential – Estimates of the plausible returns on digital technology investments.
THE TECHNOLOGIES OF THE FUTURE
Accenture has also identified five technologies that can change the game for oil and gas companies seeking to harness the power of Industry X.0:
Augmented and Virtual Reality
The buyer-value perception and incremental top line gain of AR/VR technologies is high within the oil industry due to its potential in training new workforce and enhancing workforce safety. However, the industry ecosystem is yet to mature and there is limited investment and spending on the technology. The value potential is yet to be clearly established, in part because the use cases are not highly visible, and collaboration opportunities are limited.
Big data analytics
As a data heavy industry, the oil sector shows a mature ecosystem and talent readiness for Big Data analytics technology. Additionally, adoption of Big Data technology is highly driven by large number of commercial deployments and use cases. Despite this, the value potential (particularly around cost savings) is till yet to be fully realised.
Artificial Intelligence (AI)
The oil industry is showing strong adoption and deployment of AI technologies but surprisingly industry demand for AI talent and skills remains low. This may signify that the industry is leveraging its ecosystem and collaborating with external technology partners to develop and implement AI technologies.
Blockchain
There are many uses for Blockchain in the oil sector. It can improve supply chain efficiency; secure and simplify energy trading, billing and payments; improve capital project management; and increase transparency in regulatory filing within the energy industry. Blockchain technology is still at the nascent stage with talent readiness, capital adequacy, adoption intensity and value potential all low compared to other industries. The oil industry has just started setting up its ecosystem with various industry participants and financial institutions creating consortiums to run pilot projects.
Robotics
The buyer-value perception for robotics technology is very positive in the industry, reflected in the rapid maturing of ecosystem with strong focus on consortiums working to enhance interoperability and standards and high demand for automation. However, lack of talent and skills and low level of capital investments will hamper the growth of robotics technology for energy, as will competition with other industries.
Sources: The Industry 4.0 paradox: Overcoming disconnects on the path to digital transformation, Deloitte; Delivering digital dividends, Accenture; Downstream oil and gas enters Industry 4.0, Asian Downstream Summit
