The increasing nationwide lockdown measures due to the coronavirus pandemic and subsequent need for remote operations have unmasked the dire state of technologic sophistication in the oil and gas industry, according to a recent report by Quorum Software.
“The report shows that the oil and gas industry—by a large measure—wasn’t ready for a crisis of this magnitude,” Olivier Thierry, chief marketing officer of Quorum Software told Hart Energy, adding that the sector has been lagging behind its counterparts in adopting new technologies.
Data from the software provider revealed 95% of oil and gas decision makers agree companies that fail to embrace technological advances will not succeed in the current market conditions.
“Companies that had started their path to digital transformation for improving efficiency in operations will survive the crises well and emerge as leaders,” Thierry said.
Quorum Software’s report polled over 400 leaders across various industries, alongside oil and gas decision makers, to shed light on how energy companies can use lessons learned from other sectors to create their own technological roadmap.
The key takeaways from the research indicate that oil and gas companies, on average, suffer from a notable lack of technological sophistication in their everyday operations.
More than a third of oil and gas decision makers agreed that their industry lags behind others in technology. More concerning, however, is that while more than 90% believe investment in technology will lead to success, nearly three in five oil and gas leaders worry they don’t have the resources to make proper tech investments.
“The climate within our industry has changed as plunging crude prices have forced companies to scramble to generate profit from existing assets,” Gene Austin, CEO of Quorum Software, said in a press release.
Addressing the decision makers of oil and gas companies, Austin said: “The days of relying on ever-increasing supplies and consistently high revenues are over, or at least on hold. To survive today and thrive tomorrow, you don’t need to disrupt your business, but you do need to modernize it to be agile and sustain revenue production.”
So, how can oil and gas businesses update their processes during these unprecedented times?
It won’t be a quick fix, according to Thierry. Rather, he said it’s a roadmap to digital transformation that companies need to undertake.
“It has to begin at the senior level…with a willingness to breakdown the cultural silos,” he said.
The findings of the report show that almost all the oil and gas executives agree that technology should not be treated merely as an expense but rather a way to save in the future through efficiency. The good news is that a total of 97% polled executives believe they should commit funds to technological advances that will be successful in the long run.
Based on the survey findings, four key areas emerged as key priorities—cloud, mobile, Internet of Things (IoT) and analytics.
In today’s volatile environment, the need for cost-saving efficiencies and immediate access to information and insight has never been greater. Quorum suggests that cloud computing can enable companies to achieve workplace efficiencies and avoid interruption via faster deployment and easier ongoing support. Land records, for instance, can be accessed in the field and be used for faster decision-making. Additionally, IoT can help companies lower maintenance costs, field data in real-time and optimize assets by lowering maintenance costs and remote monitoring.
For many years, the oil and gas industry got away with being rewarded just for producing barrels of oil, which Thierry explained has largely changed due to the market crisis. Now, he said companies will be rewarded for being efficient producers, which can be achieved by modernizing and injecting digital tools in their business models.
The report concludes that digital transformation doesn’t mean replacing and upending everything. Rather, it’s about using the right data management tools.
Quorum Software suggests the first step should be taking control of the data. The ability to visualize and manage data at all stages of the well lifecycle and across all platforms is difficult yet critical. Higher quality of data will ensure stronger analytics and workflow automation.
The next step is the integration of the newly mastered data into software created by industry experts. Few oil and gas companies have successfully mitigated risk by investing in purpose-built oil and gas software capable of integrating with the rest of its business operations.
Once the data is integrated into the new software, the company can reap benefits of digital transformation such as lower risk, faster decision-making and ability to analyze massive volumes of data to identify new opportunities for investment or to drive efficiency.
For example, establishing this system has been essential to Concho Resources Inc.’s digital transformation, according to Kang Chen, CIO of the Permian shale producer.
“We started by information gathering—it was critical to educate our executive team and the board to get buy-in and support,” he said, in a statement to Quorum Software. “[Concho] only leveraged 10 to 20% of the data we owned or acquired; this research opened our eyes to the inherent value of our own data which was not being effectively applied.”
Going forward, Chen said Concho’s focus will be largely driven by our company-wide objectives and the maturity of available technology solutions.
“Given the dynamic market conditions in oil and gas, we will continue to invest in technology and work with our supply chain and partners to help mature those solutions,” he said.
The acquisition of Mid-Con Energy by Contango Oil & Gas is “simply the next step, and certainly not our last, in our stated goal of consolidating a sector that is in dire need of it,” Contango CEO Wilkie Colyer says.
ConocoPhillips CEO’s $13.3 billion deal for Permian Basin pure-play Concho Resources will create the world’s biggest independent oil and gas producer.
The combined company is expected to generate annual synergies of $1.2 billion and will operate as Cenovus Energy Inc with headquarters in Alberta.