The Technological Evolution of the Oil and Gas Industry
Technology is once again on the forefront of advancing the oil and gas (“O&G”) industry. Throughout the supply chain, O&G companies are experiencing pressure to increase operational efficiencies as a result of a “New Normal” in depressed commodity prices. This environment has created a substantial opportunity for companies focused on delivering technological solutions tailored to solve age-old problems in the O&G industry.
Much of the new innovation is centered on leveraging big data through cloud-based internet of things (“IoT”) technology. The utilization of big data can be used to derive information that can lead to smarter business decisions and improved operations. A single well can produce terabytes of data in a single day; however, most of this data is currently unutilized. With these uprising trends, digitalization in the O&G sector can potentially unlock billions worth of value to the industry over the next decade. Furthermore, these technologies combined with data-driven insights have the ability to boost operations and decision-making abilities, substantially cutting down capital expenditures.
Automation and cloud technology is also being combined to discover cost savings and improve the efficiency of operations. O&G companies have the power to connect on digital platforms and engage in information sharing. Devices, from drones to sensors, will allow for automation to take over the industry. Firms will use these devices to increase their reservoir limits and focus more on analyzing information. Big data combined with machine learning will allow for these digital applications to deliver insights which humans can easily overlook. In addition, advanced analytics will promote predictive maintenance, decreasing operating costs.
Technological innovation has already started to make its way to the industry today. In recent news, several players have started showing interest in the digital transformation, setting an example for their competitors to follow. For example, BP recently invested $20 million into an augmented reality start-up known as Beyond Limits, which was created in conjunction with NASA. With augmented reality, BP will use cognitive computing to fill in areas not possible through human operation. This technology has the capability to improve the way BP locates reservoirs, produces oil, and markets their products.
As for software-focused businesses, companies like DrillingInfo, which has received over $200 million in funding, focus on providing operators with the correct analytical tools to maximize operations. RigUp, which has received $18 million in funding, has created an online marketplace for O&G professionals to come together and scale operations. These are the platforms and initiatives that are necessary for the profitable future of the O&G industry.