Digital at the Center of Upstream Company Strategies

The 2016 Accenture-Microsoft Report on Digital Trends in Upstream Oil and Gas

Digital at the Center of Upstream Company Strategies

It is no secret that technology is the key in the new era of oil and gas, which began with the shale revolution. The time of countries with massive oil reserves and obsolete technology staying ahead of the game are long gone.

Today, and I have been saying this for several years now, whoever controls the technology, has the potential to control the market. Shale showed us what technology can do, and how reserves can be dramatically expanded by it, but digital technology still has a lot more to offer the industry.

As if further evidence of the importance of technology were needed, the 2016 Upstream Oil and Gas Digital Trends Survey from Accenture and Microsoft leaves little doubt about just how important key industry players believe all things digital to be in 2016.

When compared to the 2015 report, one can identify a definite shift. In 2015, the industry seemed to have a general idea about how it might benefit from digital technology. In 2016, we have finally begun to understand which aspects of digital are the most relevant to our sector, and we have learned which areas we need to focus on to improve productivity.

In a way, the dire circumstances of having low oil prices have encouraged companies to become more efficient, more often than not, by optimizing the use of technology.

Accenture’s 2016 report focuses on five key trends:

  • Digital is creating value and could create even more. It is perceived as vital for reducing costs, facilitating faster and better decisions and increasing workforce productivity.
  • In spite of the low oil price environment, most oil and gas companies will continue to invest the same or more in digital technologies over the course of the next 3-5 years.
  • Investments are focused and targeting value. The main areas of focus are mobility and the Internet of Things (IoT); analytics and IoT are predicted to lead the way over the next 3-5 years.
  • Increase in analytics capability. To realize the benefits that digital can create over the long term, oil and gas companies need to quickly improve their capabilities, including maturity in analytics. 
  • Increased leveraging of the cloud to unlock the value of digital. Use of cloud technology has become mainstream for oil and gas companies. They need to rapidly adopt full hybrid cloud solutions to accelerate delivery of the value of digital.

Digital seems to be gaining unprecedented momentum among the survey’s 250 respondents, comprised of “oil and gas industry professionals including engineers, mid-level and executive management, business unit heads and staff, project managers, and geoscientists from a cross-segment of the industry.”

A staggering 80% of upstream oil and gas companies plan to either continue to spend the same or significantly increase their expense on digital technologies over the next 3-5 years. According to the survey’s respondents, digital is playing a key role in making organizations leaner and driving costs down -and value up- in a low oil price environment.  

While the 2015 report identified a vague intention of focusing on digital “to improve operational efficiency,” 2016 finds upstream industry players having much more specific goals for their investments in digital technologies.

Over 50% of respondents believe that digital is helping them reduce costs, and 56% feel it is helping them make faster and better decisions. While the most frequent investments are seen on mobile (57% of respondents), big data and analytics were seen as the main focus for the next 3-5 years, followed by IoT and mobile.

According to Intira Laomeepol, managing director for resources at Accenture (Thailand), respondents see digital technologies not only as enabling them to make quicker and more informed decisions, but also as improving employee productivity, increasing employee engagement (particularly in the case of young people) and significantly improving on-the-job training.

Accenture’s Rich Holsman has offered a global view of the report. “In the short term we expect these companies will continue to invest in areas that help lower operations costs through technologies like increased worker productivity with mobility, lower infrastructure costs through the cloud and drive better asset management through analytics,” he commented.

I constantly emphasize the importance of connectivity and nanotechnology for the future of our industry, and I was pleased to hear that about 60% of Accenture’s survey respondents are planning to have field workers and assets digitally connected using both smart devices and Internet of Things technology.

The cloud’s new and central role in our industry is also excellent news, as respondents explained that they are no longer using the cloud merely to improve infrastructure, but also to enable a variety of mobile tools. And it is the synergy between this more efficient use of the cloud and other digital technologies that can really make all the difference in the coming years. 

If the Accenture report on digital technology has made one thing clear, it is that the time of digitally efficient refineries, connected wells, and smart pipelines is here, and any company that is not keeping up with these trends will have a hard time thriving in the 21st century oil and gas landscape.

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Attorney Jimmy Vallee is an energy Mergers & Acquisitions lawyer, oil and gas industry commentator, and frequent resource for media outlets including USA Today, U.S. News & World Report, Oil & Gas Monitor and others. His new book, Giant Shifts: Energy Trends Reshaping America’s Future, released in May, 2017 hit #1 in two Amazon categories the week of its launch. Connect with Jimmy at [hidden email]  “Noted Energy Futurist” – Mensa AG 2016


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