November 07, 2017

E&E News: Even in a Downturn, Oil Industry's Future is Digital

Authored by Nathanial Gronewold

Houston -- Technology companies are continuing to push the "digital oil field" concept to an increasingly receptive oil and gas industry.

At a recent marketing event here at the posh regional headquarters of Microsoft Corp., technical experts with software company Quorum unveiled their latest market offering: myQuorum Design Studio.

The software suite essentially invites companies to customize their digital connections to the office and field, permitting real-time exchanges between workers on both sides, whether it means live office monitoring and updates of field inspections or dispatches from the office to the oil patch. It also features interoperability between basic data inputting and geographic information systems software.

Tyson Greer, head of software at Quorum, says digital offerings such as the new one his company unveiled are increasingly in demand as industry clients seek new ways to streamline and become more efficient.

"This is a new way of working for oil and gas," he said.

The digitalization of energy will be a key topic of conversation for top regulators gathered today in Paris for an annual ministerial meeting hosted by the International Energy Agency. Industry and its consultants will follow on that gathering with their own discussions next week at a digital oil field event in Houston, sponsored by the American Energy Society.

IEA estimates that fuller adoption of "digitalization" by the oil and gas sector could boost the world's supply of technically recoverable hydrocarbon reserves by 5 percent. They see the greatest promise in enhancing production from unconventional reserves, in particular shale gas.

Laura Cozzi, IEA's head of energy demand forecasting, told reporters in a call that a new IEA study concludes that expanded digitalization of the oil field could lower production costs by 10 to 20 percent. "Digital wells have been in operation for a few years now, and we still see some additional potential being there for the spreading of these succession technologies," she said.

Though oil prices are gradually recovering, there are no signs yet that the industry is leaning back toward more analog ways of doing things. Companies that survived the downturn in part thanks to new digital technologies appear intent on continuing to pursue and adopt new digital innovations that reduce overhead costs and permit them to be more profitable at lower oil and natural gas prices.

Two-thirds of upstream oil and gas company professionals polled in a new survey by Accenture PLC and Microsoft said they are prioritizing digitalization and digital applications in their work. Many of these respondents were unsure of how much value digitalization adds to corporate bottom lines, but at least one-third of them estimated the value at $50 million to $100 million or more.

Companies said they are now planning to leverage digital technologies in initiatives reaching beyond their existing workforces. The oil and gas industry is concerned about its ability to attract top talent in the future, and poll takers said companies told them that they "are also now adding digital workforce challenges to their ongoing talent concerns."

Quorum builds software for oil and gas companies' office operations, including for tracking and managing land acquisitions, energy marketing initiatives, and accounting. The packed crowd at the unveiling of its Design Studio product suggests the industry is still keen on knowing what the digital offerings are and how they may further improve companies' performance.

In a report launched yesterday, IEA said the world's energy infrastructure in general — oil and gas, electric generation, vehicle technology, and more — is rapidly advancing its uptake and deployment of digital technologies. While energy providers have been adopting software and digital solutions for some time, the trend has accelerated in recent years, the report's authors argue, and digitalization is increasingly found on the demand and consumption side, and not only with generation or production.

"We estimate that over the next two decades or so, digitalization will enable 1 billion, 1 billion consumers and 11 billion smart appliances to work actively in energy systems," said IEA Director Fatih Birol. "Smart demand response has the potential, according to our study, to provide about 180 gigawatts of system flexibility."

Challenges Include Cybersecurity

But with greater digital connectivity come enhanced cybersecurity threats, along with other challenges.

The IEA report puts forth 10 "no regrets" recommendations to governments grappling with the advancing digitalization of energy.

Among the recommendations, IEA will tell energy ministers this week that they should ensure their own regulatory workers are up to speed on digital technologies and their inherent risks and rewards. They also urge flexible regulations that could encourage the adoption of new technologies.

Governments should seek partnership with the private sector to conduct real-world experiments that could inform how new digital energy technologies should be addressed, IEA says.

"Governments may also consider setting up equivalent digital 'sandboxes' along the lines of fintech test zones developed in Australia, Indonesia and Singapore," says the report. "Such sandboxes, for example, could be set up to enable testing of peer-to-peer transactive energy markets or autonomous vehicle experimental zones."

Reprinted from Energywire with permission from E&E News. Copyright 2017. E&E provides essential news for energy and environment professionals at For the original story click here