Oil and gas enterprises touch nearly every aspect of the global economy, as well as individual consumers’ pocketbooks. Clearly, the industry has huge external impact. The inner workings of the industry, however, carry complexities to match its external reach and influence.
Oil and gas’s upstream, midstream, and downstream sectors function independently, yet rely on the health of one another to thrive. The upstream sector handles the search for and extraction of crude oil or raw natural gas, while the midstream sector covers the transportation and storage of these products. Finally, the downstream sector refines the products for distribution to businesses and consumers.
This simplified breakdown of the industry doesn’t do justice to the operational complexities involved with each step along the way of discovering, extracting, and refining energy resources. In this article, we’ll dig deeper into three key challenges that span the oil and gas sectors, and how digitization can help alleviate major and minor industry pain points.
Read on to learn all about what’s changing in equipment inspections, field data collection, and material transportation. Spoiler: the digital transformation of oil and gas processes and operations will elevate the industry in 2020 and beyond.
Let’s start by exploring the many blockers in the way of technical advancement of oil and gas industry processes. Gartner Inc. surveyed oil and gas CIOs and other IT leaders in its 2019 Gartner CIO Survey. According to Gartner, “The purpose of the 2019 Gartner CIO Survey is to help CIOs and other IT leaders set and validate their management agendas for the coming year. To achieve this, Gartner gathered data from 3,102 CIO respondents in 89 countries and across major industries, representing $15 trillion in revenue and public-sector budgets and $284 billion in IT spending. Respondents come from a range of industries, including manufacturing, government, professional services, banking, energy/utilities, education, insurance, retail, healthcare, transportation, communications and media. This report focuses on the answers from 84 oil and gas industry CIO respondents and compares them with the total sample.”
According to Gartner Inc.’s 2019 CIO Agenda: Oil and Gas Industry Insights*, (report available to subscribers), the top four most significant barriers to CIOs achieving their objectives are: insufficient numbers of IT/business resources; weak management understanding of digital business; business culture blocking change; and insufficient depth/breadth of digital skills.
The good news? It is clear to us that these roadblocks hinge on matters of perception which can be confronted through education and information. Gartner recommends that oil and gas CIOs “educate stakeholders and help operationalize digital initiatives and — critically — address embedded cultural issues at all levels in their firms.”
We know that technology done right simplifies processes while reducing resource requirements and costs in the long-term. The following sections demystify the path towards digitization in order to help inspire a digital mindset in the oil and gas industry.
Despite these challenges of perception, we believe digitizing processes in the oil and gas industry has the potential to fulfill longstanding priorities the industry’s CIOs. According to the 2019 CIO Agenda: Oil and Gas Industry Insights Gartner Inc. report, the top two priorities for 2018 and 2019 for these leaders were revenue/business growth and operational excellence.
We believe that the digitization of processes aligns well to both goals. Investment in the right technology today will lay the bedrock for successful operations down the line. The term “operational excellence” doesn’t always inspire excitement and instead conjures up stymied images of paper, spreadsheets, whiteboards, and flimsy rules begging to be broken.
However, we know that operations work can be both creative and flexible, and that digital innovation isn’t a one-size-fits-all path. As Gartner Inc. points out, “there is no single correct model of digitalization in the [oil and gas] industry, and digital ambitions with different emphases — and levels of intensity — are developing across all types of industry enterprises.”
In other words, we believe that the beauty of digitization lies in customization. Oil and gas companies can customize their digital priorities and processes. So which challenges within the energy industry have the most potential to be faced by digitization? The following sections explore how digitization can improve oil and gas equipment inspections, field work, and materials transportation and tracking.
The energy industry relies on vast ecosystems of equipment which require upfront and ongoing capital investment. Oil and gas assets are expensive and highly regulated. It’s in the best financial interest of companies to keep this equipment in top shape. Also, the safety of workers and the security of products depend on well-managed equipment.
In the upstream sector, crude oil is stored in field tank batteries, bulk terminals, and refinery/ holding tanks. Natural gas lives in underground tanks until it’s ready to be transported to market. After field processing, intricate transportation pipelines deliver the gas.
These are just a handful of examples of oil and gas equipment that need to remain efficient and safe. On top of that, there’s a variety of inspection methods including visual, ultrasonic, and x-ray techniques. In short, each organization runs on a variety of equipment and corresponding operations to ensure compliance to industry standards.
Digital inspection platforms can facilitate seamless operational processes by tracking and providing guidance on the correct protective apparel, safety training, procedures, and equipment inspection techniques. Applications provide the universal means in which workers, wherever they’re based, can follow and log the same processes as other colleagues. This technology provides quick, easy, and error-free routes for oil and gas worker to do inspections right.
Copy and customize the AppSheet equipment inspections app to get started on digitizing your oil and gas equipment inspections:
The upstream and midstream sectors center around work done in the field. In the energy industry, “the field” can denote a wide array of spaces including shale plays, reservoirs, oil fields, drilling and fracking sites, wells, offshore drilling platforms, and refineries. Each of these places, as varied as they are, require operational gusto to run properly and profitably.
Take wells. The exploration and production of oil and natural gas requires coordinated efforts to locate natural resource wells and determine how deep the drills need to go. Further, wells need to be optimized in terms of design, construction, operations, and management.
Take onsite refinement. Field processing locations employ workers and equipment that measure production rates, remove impurities, and store crude resources prior to transport.
In addition to the complexity and seriousness of work done on these sites, energy field locations are scattered across the globe, often situated in remote places. The digitization of field operations promises to revolutionize the inner workings of oil and gas locations by facilitating data collection and project management, as well as the communication between workers separated by long distances.
Check out AppSheet’s sample project management and field survey apps, which can be customized for specific oil and gas sites:
The transportation of crude oil and natural gas represents an integral part of the industry’s supply chain. Each material requires unique specifications to assure safe transport. For instance, natural gas flows at a higher pressure than crude oil and therefore require large, regulated pipelines. Crude oil, on the other hand, can be transported through some existing pipelines but is often shipped via truck or rail.
Basically, energy resources are perpetually on the move by way of highly complex and specific modes. In the United States alone, hundreds of thousands of miles of natural gas, crude oil, and liquids pipelines stretch the land. Meanwhile, workers need foolproof methods to accurately and efficiently track the transportation of these materials. The literal and operational expanse of materials transportation boggles the mind.
It’s now safe to say that no modern oil and gas organization can get by without the help of tracking software. But which software and application features should companies consider when it deciding on the right solutions to manage material tracking and transportation? Look for GPS-powered tracking, barcode scanning, and smartphone-enabled incident reporting for when the unexpected happens.
Explore and customize AppSheet’s incident reporting app:
The digital transformation of the oil and gas industry has just begun. There are so many options for how to improve operations through technology — from buying out-of-the-box software to hiring developers to build custom applications.
AppSheet provides an alternative to these options. Instead of building or purchasing individual apps, the AppSheet platform lets you create an endless number of apps specific to your workplace and needs. Contact us today to learn more about how you can create an entire suite of energy industry operations applications all under one roof.
*Gartner, 2019 CIO Agenda: Oil and Gas Industry Insights, Simon Cushing and Rich McAvery, 15 October 2018