What is the most valuable resource in the world? If this question were in 2011, you would have no doubt and answer that it was oil, since three of the five most valuable companies in the world were from the energy area.
Since 2016, the five companies are from technology!
What changed for this to happen? According to The Economist magazine, in the article “The world’s most valuable resource is no longer oil, but data”, the power and influence that data holds for technology companies today has the same value as the dominance of large oil companies in the early twentieth century.
Data Transmission and Artificial Intelligence are not something new. People started talking about it in 1948. The current great boom of these terms is mainly due to the 3 fundamental laws governing digital technologies: Moore’s law, which says that processing capacity doubles every 18 months, Butter’s law, in which it states that communication speed doubles every 9 months, and Kryder’s law, in which increased storage capacity doubles every 13 months. All this means that there is a constant improvement in performance and cost reduction of these technologies.
In the industrial environment, this transformation has triggered the so-called 4th Industrial Revolution. According to the documentary Big Data and the Power of Information, by Philos TV, it is precisely data the key to making this integration between the physical world and the others, transforming it into numbers and trying to find mathematical patterns in the middle of complexity, an area also studied by Network Science.
Big Data, Cloud Computing, Internet of Things (IoT), Artificial Intelligence (AI), Cognitive Computing and Blockchain are the digital technologies with the most potential for business impact. All of them have their associated impacts and risks, but in general, we will see both organizational (people and management) and operational impacts. To overcome these challenges, Mckinsey Consulting, in its article “The oil and gas organization of the future”, brings 5 ideas of how organizations can adapt themselves:
Organizational Agility – organizations must be able to adapt more quickly to changing conditions, need to be agile;
Digital Organization – significant changes in productivity and safety rates; new classes of work and skills will emerge; new ways of managing people and performance.
An organization administered by millennials – this generation is no longer just a bunch of college kids. Many of them are already in key positions and even taking executive positions, which will bring new ideas, new ways of collaborating, such as using technology, generating more flexible work structures, new work and cultural environments and greater social responsibility, since this generation does not only want their personal career growth, but rather have a positive impact on society.
A decentralized enterprise – with the collapse of oil prices, it became very expensive to support the entire cost structure of large corporate structures. Hence, it is necessary to balance this framework between lower risk assets, with leaner structures with higher risk assets, in which centralization is important for risk management.
A redefinition of what is essential – companies have come back and are rethinking what activities are needed to have control and production internally or whether it would be better to make partnerships and trade agreements externally. Market pressures and cost reduction have generated several movements in the market in search of this response.
In the same vein, in article “The Next Frontier for Digital Technologies in Oil and Gas”, they state that the main benefit of using these new technologies will be increased operational efficiency, which is extremely important for the major players in the market today. In research done with more than 100 cases, they identified 3 categories for application of these technologies:
Operations of the Future – with the advent and increase of data collection and analysis capacity, the potential impact for cost reduction in maintenance, for example, reaches 13%, as well as the reduction of cost by up to 27% by preventing vital production equipment from stopping, through increased reliability and productive time.
Reservoir Limits – with the integration of digital technologies, companies have been able to expand the analysis of reservoirs, and consequently their limits, reducing by up to 20% the capital invested in upstream and downstream and improving the recovery rate to 40%, which can generate an increase in upstream revenue by up to 5%.
Marketing and distribution powered by the digital medium – other industries have frequently used these new technologies to better know the habits of their customers, and oil companies are also beginning to benefit, through mapping their journey, which allows better decision making in the optimization of distribution and logistics, location planning and etc, generating cost reduction by up to 10% and revenue increases by up to 3%.
Although the benefits and impacts are many, it is necessary for organizations to be aware of the pitfalls and risks that may arise in this way, such as the lack of cyber security, especially with the development of the Internet of Things, as we have already talked about in our blog, and also the lack of a clear and defined strategy of how to “digitize”, generating huge expenses without any value return to the organization.
Contact InfraOPS; we have more than 10 years in the Oil and Gas field, and with that, enough know-how so we can help you in this important transition that we are already living in.
References:
Documentary Big Data and the Power of Information Philos TV
https://philos.tv/video/big-data-e-o-poder-da-informacao/381882/
edX: Industry 4.0: How to Revolutionize your Business, The Hong Kong Polytechnic University
https://www.edx.org/course/industry-4-0-how-revolutionize-business-hkpolyux-i4-0x
Digital Transformation in the Oil and Gas Industry
Transformação Digital na Indústria de Óleo e Gás – Parte 1: Impactos, Riscos e como estar preparado
Coursera: Digital Transformation, BCG and University of Virginia
https://www.coursera.org/learn/bcg-uva-darden-digital-transformation
The Fourth Industrial Revolution: what it means, how to respond
https://www.weforum.org/agenda/2016/01/the-fourth-industrial-revolution-what-it-means-and-how-to-respond/
Indústria 4.0: A Quarta Revolução Industrial
Indústria 4.0: A Quarta Revolução Industrial (Recomendado)
