Digital transformation trends in oil and gas
By Alex Hawkes|2 October, 2023
The Oil and Gas sector, responsible in part for two industrial revolutions in the last 300 years, has been something of a laggard when it comes to adoption of new technologies.
Cloud and edge penetration in Oil and Gas is late compared to other industries, mainly due to long standing concerns around security and data privacy. But it’s also true that while other sectors saw digital transformation as a way of improving productivity, cutting costs, or monetising data, Oil and Gas leaders saw no advantage in changing a business model that was working very well.
In short, despite a market that deals with intense volatility - balancing supply and demand - profitability rates for Oil and Gas have been consistently high, and proven benefits to digitising the model were few and far between.
But times change, and with the world in the grip of a new industrial revolution, this time propelled by connectivity, Artificial Intelligence (AI), and renewable energy, Oil and Gas is catching up fast to the digital transformation trend.
Driving digital transformation in Oil and Gas
With oil reserves sitting at around 1.65 trillion barrels, it has been calculated that the world will exhaust its supply in 47 years. Oil discovery rates are at an all time low, and the industry is facing pressures on environmental and renewable fronts, as well as health and safety, forcing an exploration of transformative technologies to address these concerns.
To this end, the cloud and its associated technologies - 5G, AI, and IoT among others - are instrumental for long-term value generation, including connecting remote assets and workers, process automation, and momentum on the net zero carbon effort to meet the sustainability goals of people and planet.
Importantly, the cloud provides a scalable solution for storage and compute of large volumes of data, driving better analytics to result in higher yields concerning investments, reduced accidents, and less waste.
Like other well established sectors, such as insurance, the Oil and Gas industry has data generated from decades of use of physical equipment and assets, with little standardisation between manufacturers and data harvesters, meaning no easy way of accessing and computing this information. But cloud computing offers an attractive solution, reversing the lock-outs of proprietary technology and allowing for members of the ecosystem to collaborate effectively.
"Global events have profound effects on the oil and gas industry and the significant amount of global disruption had acute impact on the industry. Oil and gas leaders have increased the pace of digital adoption in industry, while vendors have developed technologies that have lowered barriers to adoption…the broader takeaway is that rapid change is on the horizon and industry leaders are looking to technology to navigate the change," according to Andrew Meyers, research director of IDC's Worldwide Oil and Gas IT Strategies programme.
Cloud-enabling the Oil and Gas value chain
The cloud proposes effectiveness in value chain interventions across:
- Upstream: Choosing the optimal location for oil wells based on geological data, seismic testing results, and conditional information, with the cloud supporting machine learning (ML) algorithms for AI-based operations, data processing power, and 3D modelling.
- Midstream: Improving leak detection and automation for the pipeline industry to remedy pipeline leaks and spills, using the cloud to enable predictive maintenance and smart monitoring to reduce downtime, monitoring and optimisation of pipelines, inventories, and workers, and creating dashboards to realign the supply chain operations.
- Downstream: Analysing data and providing recommendations for crude refining, raw gas processing, and marketing and distribution of refined goods for further processing, as well as better assessment of demand and supply dynamics keeping renewable goals in mind.
The rise of the digital twin
The maturing of the IoT ecosystem along with more recent breakthroughs in AI, are transforming the way the Oil and Gas sector works.
In the Oil and Gas industry, even minor accidents can negatively affect people, the environment, and the enterprise on a grand scale, while unforeseen environmental factors can significantly impact investments made in production and distribution.
For this type of business, the ability to model for all scenarios is very attractive and the concept of digital twins has been widely discussed as an industrial solution capable of monitoring objects in real-time, predicting their state, integrity, and safety conditions, and providing user feedback.
Along with connected sensors capable of replicating physical entities in the digital world, cloud and edge computing grant access to scalable storage and computational capabilities and decouple the necessity of relying on a robust local IT infrastructure.
IoT-based digital twin applications help reduce operating expenses by replicating a physical systems' state, behaviour, and architecture.
According to a research paper in Science Direct, digital twins are composed of at least five dimensions:
- Physical Entity: An object which, through IoT sensors, provides information on its behaviour, states, and characteristics.
- Virtual Model: For each physical object, there exists a digital replica that can model the object and its behaviour and is critical to provide deep insights into the physical entity via simulations.
- Data: These objects provide valuable information for modelling, simulation, optimisation, and predictions, with historical and real-time data used to generate decisions for the digital twin.
- Connections: Connectivity is critical to enable all elements in the digital twin because both the real and virtual counterparts interact with each other and other entities through both physical and digital spaces. Without connectivity, the digital twin cannot exist.
- Services: These encapsulate the functionalities provided by the digital twin, as users only provide inputs and results of the functions executed are generated by cloud applications, modelling and analysis.
Cloud computing is essential in implementing digital twins, ensuring the scalability of communications, storage, and computation, driven by more emerging technologies such as intelligent Deep Learning and AI.
In fact, so critical is the IoT part of the ecosystem that Oil and Gas corporates are investing and partnering with IoT technology companies to develop analytics platforms, improve energy efficiency, and identify major infrastructure risks.
From Total to Engie to Saudi Aramco, these major oil and gas companies are ramping up IoT investments, including M2M communications to wireless sensors to IoT analytics software, among others, with the top 12 oil and gas corporates participating in over 35 investment rounds totaling over $575m in disclosed funding to 27 companies since 2013.
Securing IoT deployments and digital twins with Edge SIM
Network-as-a-Service platforms like Console Connect can help meet the increasingly complex networking requirements of the Oil and Gas sector.
From providing connectivity to offices and commercial sites through to connecting IoT sensors and delivering secure access to the cloud, a NaaS platform offers businesses the ability to take greater control over their global network connections – improving cost, agility and efficiency.
To ensure IoT deployments and digital twins are able to perform, while addressing security concerns, businesses may want to consider Edge SIM by Console Connect.
The IoT connectivity solution ensures mobile traffic is not exposed to the public internet, as it dynamically and securely routes traffic directly between IoT devices and clouds globally over a private network.
The end-to-end connection ensures your data is fully protected and connected to any of the main cloud platforms, including AWS, Google Cloud, Microsoft Azure, Oracle Cloud, IBM Cloud, Alibaba Cloud and more.
Furthermore, by adding a Console Connect Access Port, businesses can dynamically link their enterprise locations and network environments, including data centres, Wide Area Networks (WAN) and last mile access using wireless connectivity.
A powerful combination of Edge SIM and the Console Connect NaaS platform enables businesses to create their own private virtual “mesh” network between devices, clouds, applications, office locations, data centres and other network endpoints.