I was recently asked if I thought that the oil and gas industry would bounce back once the world is rid of the coronavirus. It was a question prompted by the sharp decline in activity in several oil-and-gas-dependent sectors such as transportation. The coronavirus and its subsequent impact on the price of oil have injected a sense of uncertainty into the industry, prompting many to speculate as to what will happen once the pandemic abates.
Rather than asking if we’ll bounce back, I’d prefer we focus on how fast we can learn from the challenges and move forward. The oil and gas industry has come to a point at which there is no turning back. The pressure to transform was mounting long before COVID-19 entered our vocabulary. Recent events only highlight the urgency of it.
It is an urgency that stems from new regulation, increasing financial pressure, and growing societal expectations. From the Paris Agreement to the UN’s Sustainable Development Goals, the world has come to terms with the fact that our planet is not immune to human impact and that we need to take measures to mitigate our damage to it. For oil and gas, that means transformation, in both the short and long term, all the while remaining profitable and competitive.
In the shorter term, the world is not able to fill the void that going completely fossil-free would create. Oil and gas are still key components of the global energy system, driving both social and economic development in much of the world. That means that while our dependency remains, the extraction of this natural resource and its subsequent processing need to be done as safely, efficiently, and as carbon-friendly as possible. That’s where technology stands to play a pivotal role.
For oil and gas operations, achieving near-term, sustainable success will require three things.
Optimizing the use of data for increased transparency. There are savings to be had across oil and gas operations. In 2017, global management consultant McKinsey & Company reported that the industry’s performance gap was around $200 billion and that most offshore platforms are only running at 77% of their maximum potential. This means that there is significant ground to be gained. Today, we have the tools available to capture this value, to extract the data, and identify where there is waste and where there is opportunity. This kind of accountability is possible only if you are transparent with your data, which requires the right tools to uncover it, understand it, and share it.
Several oil and gas players today have already cracked the code to learn how to use data to ensure more sustainable operations. By gaining an understanding of the inherent power of data flowing through their operations and by embracing transparency around that data, they can harness it to their advantage. Norway-based oil and gas operator Aker BP is one such example. Working with Cognite, it recently implemented machine learning to improve water- contamination detection, saving $6 million per year and reducing the company’s environmental impact. The massive savings for both the companies and the environment was achieved with the smarter and more open use of data.