Big data and big oil

Big data and big oil

Few industries need and produce richer, greater volumes of data than oil and gas: terabytes of the stuff from the geological exploration and appraisal process; the complex modelling and measurement applied to daily onshore and offshore active operations;  the electronic brains behind the delivery of cargoes, coordinating the thousands of tankers and pipelines taking the raw product from field to refinery; and then, of course, the digital monitoring and sensors needed to support the refining and processing of the crude and gas into petroleum and LNG.

Digitalisation has well and truly arrived in the industry, and it looks likely to disrupt the relationship between operators and their service providers. Traditionally, this has been defined by the operators looking to the service providers for the innovation to enhance efficiency. A walk around any installation will reveal sensors and tech owned by service providers being used throughout upstream, drilling and refining operations. These tools provide rapid, often real-time data to support performance analysis and safety-critical decisions. The providers who owned these systems have always had the whip hand, as controllers of the data.

Now, the growth of cloud-based platforms which can simplify numerous data streams is reducing reliance on proprietary systems, and with this, more operators are stepping up to the challenge of wrangling their own digital information. We can expect to see an acceleration of data being used to predict and automate maintenance processes onshore and offshore, not only in newbuild platforms, but also retrofitted to mature assets. This makes sense not only in terms of dollars and cents, but also in terms of human safety – something that all oil and gas companies are sharply focused upon. Why fly teams of people offshore to a hazardous environment when you can troubleshoot from the safety of an onshore virtual control room?

The opportunity for the major suppliers to the industry, such as manufacturers of compressors, pumps and valves, is to look at their existing business models differently. To borrow an example from the aviation industry, engine manufacturers have long since offered airlines ‘power by the hour’ – a fixed cost contract per flying hour which aligned the interests of the engine manufacturer and operator, by ensuring engines performed as efficiently as possible. The model could be translated into life of field equivalence in the oil and gas industry, minimising downtime and mitigating the need for expensive redundancy systems.

Digitalisation is also bringing significant new competition into the sector. Automation, cloud services and analytics are being applied to the whole industry. It is the household names leading the charge with IBM, Google and Amazon all offering options to the vast datasets of the industry. Established oilfield service providers focus should be on intelligent, value adding niche solutions, combining data with the existing knowledge of the industry’s value streams.

Overall, the impact of digitalisation can have a profound impact on an industry that has hitherto taken a conservative attitude to innovation. According to Woodmac, a 30% efficiency improvement through automation and digital transformation in the deepwater drilling sector could reduce rig demand by more than 20 rigs. Total’s new Culzean field in the UK North Sea is saving at least USD 10m annually through a digitally enhanced platform enabling real time maintenance and enhanced diagnostic capability – preventing issues rather than managing them. Many operators also now use drone technology to conduct inspection programmes at facilities, instead of traditional human rope-access teams. A safer practice with data driven results.
These, and other new areas of practice will reshape oil and gas. Machines will increasingly take on tasks humans have performed, with more people focused on interpreting the data to maintain and improve daily operations or seismic interpretation. Perhaps the incremental efficiency gains from the application of data can successfully support the economics of old and new fields, prolonging production of existing resources as the industry and society alike monitor the pace of transition to carbon-free energy sources.
Taken together, the business models relating to the operations of the oil and gas industry look set to be transformed, moving from traditional fixed price contracts with payment upfront, to performance-based rewards over longer timescales – a partnership of aligned interests. There can be no doubt that the era of big data will fundamentally change the business of big oil.
For advice on digitalisation in your business and operations, please contact David Tomasi, Global Energy Lead for Moore at