How digital transformation has been impacting the Oil and Gas sector

Digital transformation has been spreading rapidly across various industrial sectors; Health, Finance, entertainment, Automotive, and others. Just like the 18th-century industrial revolution, which engulfed Europe, producing the steam engine and electrification. However, a combination of new technologies such as Cloud, Artificial Intelligence (AI), Sensors, and Analytics is rapidly transforming the way things are done across the globe with exponential gains.

“Digital transformation provides industries with unparalleled opportunities for value creation from expanding industry profit pools, creating new revenue models, and enabling unprecedented access to global markets. It used to take Fortune 500 companies an average of 20 years to reach a billion-dollar valuation; but today’s digital startups are getting there in four years.”-World Economic Forum

In this article, we’ll be discussing on what Digital transformation is all about and how it impacts the oil and gas sector.

What is digital transformation?

Every day, almost every industry is going digital, and it might all be fuzzy what this whole thing is about for confident business leaders. Here’s a brief break down for you.  Digital transformation entails the integration of various digital technologies birthing the reinvention of business processes and also, service delivery to customers. This could mean a departure from the traditional methods of business operations in which certain companies are known for, while embracing new practices that are continually tested and technology driven

Wiki says, “Digital transformation is the changes associated with the application of digital technology in all aspects of human society.”

Impact of DX on the Oil & Gas industry

Following the upturn in the Oil & Gas Sector, which greeted the industry back in the second half of 2014. “The cost of oil plummeted from an apex of $115 per barrel in June 2014 to near $35 toward the end of February 2016. Brent exchanged for above $100 a barrel for quite a while until 2014, dropping to nearly $26 in 2016”, Statista Reports.  

Following the change in market sentiment and subsequently, the crude rising above $60-a-barrel back then in December 2017, many extraction projects became economically viable, and the oil industry was revived. This prompted a rethinking of the future. Before now, the Oil and Gas industries were not so keen on adopting digital solutions in their business processes. They were more interested in organizational restructuring and cost-cutting.

These strategies are now mundane practices as O&G companies are increasingly launching initiatives to improve technology and revise their IT/OT strategies to make greater use of digital solutions. That singular event changed the course of history as many O&G companies are now creating full-time offices occupied by Chief Digital Officers or DX executive board members vetted with the responsibility of proffering digital solutions. In recent surveys, addresses, speeches, in board meetings, as well as investor meetings, the Speeches, and projects, have mostly been centered on the digital innovation road map.

So far, digital technologies have been an integral part of making the O&G industry successful in terms of critical exploration and production (E&P). They go on to include every piece of industry core business activity — seismic data acquisition, seismic processing, data interpretation reservoir characterization, and modeling. These distinct parts have all been reaping the benefit of several software solutions.

On the same vein, digital tech firms have been working tirelessly and innovatively in developing and customizing their products and services for new use cases in the O&G industry. Some of which are spectacular, while many are the result of intelligent incremental innovations. In conclusion, IT and digital solutions companies are continually developing the higher capacity to offer large-scale industrial digitalization solutions customized exclusively for O&G firms. In similitude, O&G companies are increasingly growing dependent on these digital solutions.