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Considerations in Digitizing Oil and Gas Operations

Considerations in Digitizing Oil and Gas Operations

The oil and gas industry is famously risk-averse—and for good reason. In the field, any departure from approved standards could result in leaks, sub-optimal production, environmental damage, injury, or even death. Consequently, oil and gas companies take the time to thoroughly vet any changes to the equipment, processes, or technologies that they use. However, this means that the industry as a whole can move slowly when it comes to revising established practices, causing it to lag behind other industries in its modernization efforts. This gap grows especially pronounced when it comes to digitalization, where technologies can evolve quickly

New fuel sources entering the energy mix means that the energy industry is growing more complex, and as margins continue to grow tighter, it will benefit oil and gas companies to operate more efficiently. Digital tools will help operators to overcome these challenges and optimize energy production and use. Namely, advances in cloud-based software applications, artificial intelligence (AI) and predictive analytics, Internet of Things (IoT), blockchain, and digital twins can lead to substantial improvements in how oil and gas companies function.

Investing in cloud-based applications to establish a baseline

Most oil and gas companies have a wealth of data but struggle to use it as effectively as it can be used. Legacy data systems, time-intensive manual data entry, and large volumes of siloed data make realizing additional value from digitalization much more challenging. However, switching to cloud-based enterprise resource planning (ERP) software can correct many of these issues. Cloud-based ERP software streamlines workflows, making it easier to flag issues and subsequently address them and improve performance. Real-time data transfer enables distributed teams to stay connected and work together more effectively across time and distance. In addition, choosing the right ERP software synthesizes all data together in one platform, so oil and gas companies can perform more effective data analysis and realize increased efficiencies.

AI and predictive analytics to refine operations

Armed with data that has been gathered into one platform that all business users can access, oil and gas companies can turn their attentions to predictive data analytics and AI. By collecting and analyzing data on a given asset or field, companies can gain greater insight into what drives optimal production and achieve long-term improved decision making. And as the system collects data on equipment failures or issues, the algorithm can more accurately predict when future problems could occur, flagging potentially unsafe circumstances days, weeks, or even months before an error occurs. This allows companies to take corrective action and repair or replace parts—or otherwise adjust operations—and keep production flowing.

Using Internet of Things to streamline processes

The myriad sensors, software, or other electronics available to us can connect physical objects together through IoT. By outfitting disparate parts of a given well or asset with devices capable of transferring large volumes of data, the industry can gain even greater insight into operations. And because the data transfer occurs automatically, without the need for human intervention, operators can collect and access much more data with greater speed than previously possible. This data is collected and can be analyzed by a software application, or the data can then be transmitted on to yet another device. This is especially beneficial for remote or difficult-to-access locations, where an entire wellsite can be equipped with sensors and other equipment to be monitored by an off-site team. 

Blockchain for greater accountability and traceability

While the cited benefits of blockchain often revolve around its ability to make transactions faster, more accurate, and more secure, it can also greatly improve accountability and compliance with regulations. As a shared ledger, blockchain affords energy companies greater transparency into transactions throughout the energy value chain, a benefit that may grow more valuable should operators need to quantify Scope 3 emissions in the future. With guaranteed accuracy and full visibility into all transactions, oil and gas companies are able to use blockchain to trace carbon dioxide, methane, sulfur dioxide, and other emissions all the way back to the wellhead for reporting. Whereas complying with reporting requirements would have required a long, manual due diligence process, compliance can now be verified simply by referring to the ledger.

Digital twins for greater confidence

The creation of a digital twin provides oil and gas companies with a virtual replica of a given asset, and it houses all of the relevant information such as equipment used, troubleshooting procedures, and maintenance records in the cloud for easy access and updating. Beyond serving as a single source for all asset information, digital twins can also help operators to improve production and efficiency. Operators can test out changes to equipment or devices, see how adjusting parameters may affect the rest of the asset, and gain insight into potential faults, errors, or events that could put the asset at risk of unscheduled downtime. 


Achieving widespread digitization in the energy sector will be challenging, but oil and gas companies must take steps now to modernize their processes if they want to outperform competitors. To most effectively begin this process, it benefits companies to start first with cloud-based software. With a fully integrated cloud solution, oil and gas companies can not only immediately improve efficiencies but also build the foundation necessary for future efforts.  

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