By Shukri Eid, Director, Cisco Consulting Services, EMEAR
The Oil & Gas (O&G) industry has seen a sharp decline with oil prices down by more than 50 percent since June 2014, which has prompted some companies both globally and in the Middle East region to resort to traditional cost-cutting measures such as layoffs and capital expense reductions. However, some forward-looking O&G firms, believe today's turbulent market landscape provides an opportunity to gain a competitive advantage by harnessing new technologies. These companies are already reaping sizable benefits.
It is time for O&G companies in the Middle East to make a critical decision: Will they attempt to ride out the downturn by simply cutting costs? Or will they use today's challenging environment as the impetus for applying digital technologies to drive innovation while boosting business and operational efficiency of existing investments?
Digitization – A Step Towards IoE
As an industry, Oil & Gas has been "digitized" for a while now. Cisco Consulting Services conducted a survey that uncovers the urgency for the oil and gas industry to adopt digital technologies powered by the Internet of Everything (IoE), which is the networked connection of people, process, data, and things throughout the O&G value chain, including both the IT and OT elements of the business, to stay competitive. The survey identified intelligence from data as the key area needed to improve operational efficiency, and data analytics as the No. 1 IoE driver for faster, better decision-making.
The IoE offers a way for O&G companies to connect all parts of their operations across the globe. By connecting more physical objects to the Internet, companies can benefit from the knowledge and efficiency gains of a digitized and automated world.
IoE applications can remotely sense, monitor, and automate dangerous tasks, such as high pressure testing, to alleviate resource shortfalls. In an industry characterized by far-flung operations in often-harsh environments, the IoE can "send" experts virtually to any location and accelerate production by minimizing downtime.
As operations become increasingly digitized, improved collaboration between O&G companies and the broad supply chain can help ensure efficient management of scarce resources. Companies like Cisco can provide a connectivity platform designed to manage the transition to a state-of-the-art IoE infrastructure, with an overall lower cost of ownership. This can help operators link remote fields, rigs, drills, and reservoirs to a standards-based network, as well as IT systems and other data. With this technology, operators and suppliers can improve planning and modeling cycle times, support more expedient deployment of devices and services, improve safety, and decrease downtime.
O&G companies are deluged with data generated by a multitude of sensors and machines spread throughout their far-flung value chain. Despite significant investments in operational technology, however, many O&G companies especially struggle to use real-time operating data to improve functional and business capabilities.
To capitalize on the wide range of data IoE generates, O&G firms must overcome three key challenges:
- Automating the collection of data
- Integrating data from multiple sources
- Analyzing data to effectively identify actionable insights
Data analytics-driven insights will drive the opportunity for process change and optimization. In many cases, these insights will foster transformative rather than incremental changes in business and operational processes.
Value At Stake
According to analysis by Cisco Consulting Services, IoE will generate $600 billion in Value at Stake for the O&G industry. This value comes from improvements to Asset Utilization, Process / Supply-Chain Efficiency, Employee Productivity, CapEx Savings and Marketing Innovations.
To claim their share of IoE's Value at Stake, oil and gas firms must maximize their ability to turn data into actionable insights. As we have seen, the solution lies in aligning "people, data, process, and things," along with the IT and OT elements of the business.