“We are in the beginnings of the most exciting phase of the energy industry since the 1970s, and it’s going to get really exciting over the course of the next decade.”
So said founder and CEO of Proteus, James McCallum, in the opening of the online discussion entitled Green is the new Black | Digitalisation, big data and technology innovation.
McCallum set the scene by asking if green really is the new black. With finance institutions admitting to funding fossil fuel projects over the last quarter and oil hitting $100 a barrel, has anything really changed since COP26 in Glasgow, and is the sector really making any noteworthy changes?
Exclusive insights from James McCallum
Do oil and gas businesses have a future?
MacCallum believes the sector is indeed changing, however, it’s vitally important to ensure oil and gas businesses perform better than in the past by embracing the digital tools that are currently available.
A new dawn for oil and gas
He explained how the oil & gas sector is in a new growth phase that comes off the back of a near-decade of recession for the upstream sector. “We are still coming to the end of a tumultuous decade, without major CAPEX investments.”
Changes are afoot according to McCallum, and not only the fact that nearly half of the licenses in the recent Scotwind awards were awarded to upstream oil and gas companies.
Other changes on the cards include shifting landscapes of knowledge and human capital management, as well as changes to how oil & gas businesses are run. “Knowledge is no longer a proprietary asset, remote working is more popular… the knowledge transition is a big part of the [energy] transition.”
Added McCallum, “It’s going to be about how you manage your business and your margins and how you tap into the talent pool. It’s also going to be about how you access capital. Access to capital is becoming increasingly constrained and will become more so as companies move towards the Task Force on Climate-Related Financial Disclosures or ESG reporting.”
“To get a ticket to that capital party, it’s about demonstrating how you run your business, who is in your business, how you run your supply chain and how you manage your four assets: hardware, software, capital and carbon.”
The panel, which included Michele Lauriola from Baker Hughes, Mika Tienhaara from ROCSOLE and Chandran Jayabalan from Aggreko, agreed that in order for companies to get and stay ahead, they will need effective process management to ensure their businesses are managed efficiently.
Predictive maintenance for improved efficiency
Michele Lauriola, Technical Leader – Digital Services, Turbomachinery and Process Solutions at Baker Hughes suggested that predictive maintenance will play a key role in enhancing performance of the sector.
Said Lauriola: “Clients are emphasising continuous, preemptive, actionable intelligence, early warning capabilities provided by data resulting in maintenance recommendation. Analytics plays a critical role.”
Mika Tienhaara, Chief Executive Officer at ROCSOLE, added: “Predictive maintenance is the way to go but there is still a lot of work to do.”
According to Tienhaara, 75% of maintenance on the US Gulf Coast for example is unplanned, often caused by run to failure, lack of data, and siloed management. Furthermore, legacy instrumentation that doesn’t work dents operational efficiency.
“Inefficiencies are huge in the industry and this leads to greater emissions,” said Tienhaara.
“Having actionable data available under harsh conditions will achieve greater efficiencies. Without data providing higher efficiency OPEX will be higher.
“If you improve the performance of one single mid-sized oil field by 10%, you could improve the financial performance by $30 million per year,” concluded Tienhaara.
Chandran Jayabalan, Head of Oil and Gas Sector (Asia) at Aggreko, also emphasised the importance of successfully navigating remote monitoring. “The ‘COVID-world’ has taught us to do many different things, from remote monitoring to managing the movement of manpower, trying to keep the brains in one location while serving globally.
“In terms of remote monitoring, customers are demanding it now that they realise how much time and cost it can save.”
The panel made it clear that the oil and gas sector is facing evident and exciting disruption. Digitalisation is impacting business models and people and must be embraced and capitalised on if the sector is to remain relevant and financially sound in decades to come.
The entire session is available on demand.