Even though the oil and gas industry has been historically slower in leveraging and adopting new technologies in its operations, the current challenging market conditions may provide the right nudge for companies in the sector to explore new digital solutions, according to partners at Boston Consulting Group (BCG).

“What we see today is that several oil and gas players are leveraging the current conditions to accelerate the implementation of new ways of working,” Bjorn Ewers, partner and managing director at BCG, told Hart Energy. 

For example, Ewers said some oil and gas companies are reinforcing several parameters of remote operations by transitioning brownfield manned operations to fully remote operations using automation and digital twin technologies. In addition, these digital solutions could generate short-term impacts such as a reduction in energy costs by 10% to 15% on multiple assets while also lowering HSE exposure.

“The current environment is an opportunity for oil and gas companies to transform, which is supported by a clear case for change,” Ewers said.

Incorporating new technologies into operations not only will generate short-term value but will also lead to a more fundamental transformation of their operating model, he added.

Creating value in the ‘new normal’

Jean-Christophe Bernardini, partner and associate director at BCG, emphasized the fundamental need for oil and gas companies to adopt digital solutions to create value in the ‘new normal,’ amidst a bleak outlook of the industry.

“With the ongoing market challenges faced by the oil and gas industry, the definition of digital technologies varies quite drastically. It is vital for companies to determine the right technology or a mix of technologies to deploy for purposes of capturing and creating value,” Bernardini told Hart Energy.

Data from BCG’s research shows that significant value can be unlocked by using digital solutions in upstream activities:

  • 50 to 60% reduction in data interpretation time and cost;
  • Up to 70% reduction in engineering hours plus higher-value field concepts;
  • 20 to 30% faster well-delivery and more productive wells; and
  • 20 to 40% reduced maintenance cost by improving uptime using predictive maintenance and digital twins.

Bernardini said digital solutions like artificial intelligence can help streamline the iterative operations of oil and gas companies while producing actionable insights through data captured to support decision-makers. Additionally, solutions such as digital twin technology could optimize E&P’s operating processes by capitalizing on investments in a virtual world, Ewers added.

“This, in essence, allows E&P companies to create and capture more value by enhancing the effectiveness of value-creating factors such as capital expenditure reduction, time-to-first-oil acceleration, recovery rate increase, production acceleration, operating expense reduction, and HSE improvement,” he said.

Ewers cited an example of an oil and gas company that recently adopted digital twin technology, leading to a significant reduction in man-hours. Longer-term projections show a 30% reduction in maintenance work, a 70% reduction in shutdowns, and a 40% increase in pump availability.

Offshore sector’s recovery

Digital technology could speed up the offshore sector’s recovery, which has been severely hit by the pandemic, according to Philip Whittaker, partner and director of oil and gas at BCG.

Speaking at a recent energy dialogue webinar, he said that coronavirus has prompted offshore oil and gas businesses to ask how they can extract greater margins and use technological differentiation to create more stable, less cyclical businesses from their exposure to E&P.

“A great example is one of our clients, working in North Sea operations, which has had to demobilize about 40% of its traditional crew from their platforms but due to the application of wearable technology, digitized remote viewing and remote work planning, they are still able to liquidate 90% of the plant maintenance and integrity activity they have planned,” Whittaker explained.

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