It is clear that in today’s world, information is the new precious commodity. In the era known as the ‘Fourth Industrial Revolution’, companies are looking to take advantage of robotics, artificial intelligence, big data and the Internet of Things, all of which are set to reshape the global economy in ways previously unimagined.
Taking particular advantage of this new trend are the world’s energy companies. They are among those doing the most to bridge the gap between a century-old industry and today’s cutting-edge technology. At the Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC) this week, the UAE’s minister of state for Artificial Intelligence, Omar bin Sultan Al Olama, went so far as to declare that “Data is the new oil.”
Indeed, according to Pulitzer Prize-winning author, economic historian and one of the world’s leading experts on the oil & gas sector; Daniel Yergin, there is now a “symbiosis” between energy producers and the new knowledge economy. The production of oil & gas and the generation of data are now, Yergin argues, “wholly inter-dependent”.
One such company seeking to unlock the benefits of the Fourth Industrial Revolution is Abu Dhabi’s National Oil Company (ADNOC). “We are going to see ADNOC emerge as one of the leaders in the global industry, and it has made this trend a high priority,” says Yergin.
Opening this week’s ADIPEC summit, Dr Sultan Ahmed Al Jaber, ADNOC’s Chief Executive, launched this concept when he identified the emerging nexus of technology and energy as “Oil & Gas 4.0” – and made it a focus for his business.
What does Oil & Gas 4.0 look like in practice?
Aided by the technologies of Industry 4.0, energy companies are already undergoing an important evolution – making greater use of new data-driven technologies in order to re-design processes across all aspects of the industry, from drilling and production to refining, as well as bringing in new skills.
Yergin notes that the greater use of automation and collection of data has allowed an upsurge in the “de-manning” of oil & gas facilities – an “example of a trend that was not possible a decade ago”. He compares the trend to the development curve of autonomous vehicles – which, until this decade, were fundamentally not possible due to the absence of adequate data analytics. “You don’t need a lot people on an oil platform – but very powerful digital tools can manage it from onshore,” he explains.
Another great leap forward for the sector in the 4.0 era is predictive maintenance. Thanks to a significant increase in the number of sensors being deployed across operations, companies can monitor what is happening in real time, which markedly improves safety levels. “Being able to see problems before they become problems and bringing that together with data and information is extraordinary. It enables the industry to operate upscale, efficiently and productively,” says Yergin.
New technology is also empowering oil companies in ways previously impossible. North America’s shale boom, for instance, has been down to digitisation’s ability to bring down costs – particularly for the smaller, independent producers that spearheaded the trend and have helped US production to reach 11.4 million barrels per day last month. “This is a very clear example of what the application of ‘technology’means,” says Yergin. “At the end of the day, this is about costs and capabilities.”
Survive, adapt, and prosper
What has triggered the Oil & gas 4.0 era? In large part, the drive towards boosting efficiencies in order to lower costs and expand production capabilities has necessitated the incorporation of digital tools. Long accustomed to the volatility of commodity prices, oil companies have learned more than most the need to embrace innovation in order to adapt to external conditions.
Consider the three-year price slump that began in 2014. During this period – when oil prices collapsed from highs of more than $110 per barrel to below $30 by the start of 2016 – the “push to digitisation became very pronounced,” according to Yergin. By 2018, some 55 per cent of partnerships announced by firms in the oil & gas industry had a digital emphasis, up from 22 per cent in 2013. Chevron and Shell, for instance, each count on a strategic alliance with Microsoft.
Technology companies, for their own part, have begun to realise that partnerships with the oil & gas industry represent a significant source of data that can help define and shape new efficiencies. Yergin says that, for Silicon Valley, this is “a new frontier of technology and a frontier the oil & gas industry is very much moving into.”
All this is “part of a survival and prosper strategy”, notes Yergin. After all, in the competitive environment of the Fourth Industrial Revolution, no business can afford to be left behind by not investing in new technologies – so strategic discussions are important. “At this scale and at this intensity, this is new terrain.” But he remains optimistic. “The oil & gas industry has been at the forefront. And it is undergoing another step change to ensure it is at the forefront again.” In the age of Oil & Gas 4.0, this surely rings true.