The energy industry seems to be on a roller coaster ride lately, with uncertainty as the defining theme. The cyclicity and long-term nature of the investments in this industry often impel companies to rethink long-term capital investments. While demand for energy is growing, competition for natural resources has driven companies to explore and produce in harsh, remote and hostile locations, where even the simplest of logistical tasks can be difficult and costly. In addition, there are significant operational and technology challenges that need to be met. Another big constraint is a shortage of skilled technical talent due to people electing to pursue IT careers over ones in the oil and gas sector. At the same time, new discoveries and technologies such as shale oil fracking could revolutionize the world’s energy markets over the next couple of decades, although environmental concerns and regulation could require a reassessment in the near future.
So, how can this sector cope with the myriad challenges it is facing today? I think technology could help in several ways.
Take new technologies for instance. Gas-to-liquid (GTL) technologies can convert natural gas to liquefied natural gas or liquefied petroleum, and can potentially turn countries like the US from energy importers to exporters. Energy companies can improve the management of their investment programs using data analytics and related IT expertise. For example, instead of spending several years drilling oil wells and exploiting them over the next 20 years, a company might accelerate that by digging 500 gas wells at once. Oil and gas companies are looking to perform the same task repeatedly in a much shorter period; condensing the two years analyzing seismic data as you might do with oil fields, into two months. This creates the new challenge of how to manage, analyze, transport and store all that data, which could be six to ten times bigger than it was previously.
Standardized processes, templates, IT capabilities, and data management and analytical capabilities can help companies find solutions to reducing operational costs and improving efficiencies. With cloud technology and analytics, oil and gas companies could tap into their process skills across different locations worldwide, and have centralized storage, management and analytics of most data.
In addition, after oil spill disasters, governments around the world have upped their regulatory requirements, leading to increased scrutiny from all stakeholders. And as oil and gas companies move to newer territories in search of new energy sources, they have to navigate regulatory and policy paths in these new geographies. Technology can provide better safety management as well as regulatory compliance tools, including integrated applications for health, safety and environment, incident management and maintenance management.
The combination of challenges and opportunities that the industry now faces requires epic rather than incremental responses. Technology can help the industry respond quickly to both external and internal challenges and to adapt to new situations as they develop, leading to long term growth and profitability.