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How Are Oil and Gas Firms Approaching Digital Investment?


How Are Oil and Gas Firms Approaching Digital Investment?

Digital technologies have become an integral part of capital budgets for oil and gas operators. This fact is driven home by a recent survey in which 9 in 10 executives from the industry in the US and abroad said they plan to increase spending on digital tools over the next 2 years. A quarter of respondents said they expect a significant increase.

What is apparent from the inquiry of 100 executives from upstream, integrated, and downstream firms by Ernst and Young (EY), however, is that, while plenty of incremental advancements can be made through digitization, integrating these new tools remains complicated. As a result, many oil and gas companies continue to take a conservative approach to adoption as they work out their digital strategies.

Thus far, in its early phase, digitization’s primary function to many companies, or 42% of respondents, is improving efficiencies in existing work—no surprise given the industry’s persisting shell shock from the steep commodity price downturn that began in 2014. Far fewer respondents, 23%, intend to use the technology to make more ambitious leaps in their capabilities.

A little more than half of executives, 55%, are first prioritizing investment in operations, compared with 25% in maintenance and reliability and 10% in logistics and the supply chain. An example cited by EY of firms investing in operational efficiencies is the use of remote operation centers.

Equinor recently opened onshore support centers in Bergen, Norway, that will eventually be linked to all 40 of the firm’s installations on the Norwegian Continental Shelf. Platforms such as those serving the Aasta Hansteen and Norne fields are being monitored through digital twins, which use real-time sensor data to track machine and equipment performance, allowing workers to address operating issues quickly and cut downtime. The firm’s separate onshore Geo-Operations Center remotely manages offshore drilling.

The inauguration of those centers followed Equinor’s December 2017 opening of its Austin, Texas-based remote operation center overseeing more than 1,100 US onshore wells in shale basins including the Bakken, Eagle Ford, and Marcellus.

But exploration and production firms surveyed said they are spending the biggest share of their digital budgets, 38%, on exploration and appraisal work, with 26% going toward sustaining production. This may have to do with operators’ desire to find new oil and gas deposits to replace production following years of underinvestment.

ExxonMobil announced in 2017 a collaboration with the National Center for Supercomputing Applications (NCSA) at the University of Illinois, EY noted, to slash the amount of time needed to study oil and gas reservoirs.

Scientists from the US major and NCSA benchmarked a series of multimillion-to-billion cell models on NCSA’s Blue Waters Super Computer, using 716,800 processors to speed up data output by thousands of times. ExxonMobil said the advancement results in better decision making when it comes to well placement, facility design, and environmental and financial risk management.