The sudden and sharp decline in oil prices has produced predictable responses from oil and gas firms. Every day there is news about declining oil rigs, layoffs of employees, cancellation of projects, mergers and even bankruptcies.
It is indeed a crisis because it is disrupting the industry. Oil and gas companies have to make critical decisions. Can they override the downturn by cutting costs or will they take up the challenge presented by the modern environment to apply digital technologies to drive modernization to boost business and operational efficiency of their existing investments?
Digital Transformation has Improved Production of Oil
For the past years there has been proof that improved drilling techniques and technologies have benefited the efficiency and production of oil shale in the United States. Oil production has increased even with the cutbacks of some of the oil rigs. Fewer rigs were producing millions of barrels every day, more than several rigs in the past. Oil production would take nine months in that past. Today, many oil and gas firms could produce oil in 30 days or less. Improved technologies has cut the time required to drill a well. There is now more supply than demand so oil prices are cheaper, yet oil and gas companies can still earn profit.
The obvious choice of oil and gas companies is now clear. They must now accept the challenge of modern technology and new techniques to save them from bankruptcies or mergers. They must look at digital technology as an opportunity to drive them to competitive advantage now and in the days to come.
The Internet of Everything
Oil and gas companies have to implement and integrate digital transformation to reduce cost and improve efficiency of operation. Digital transformation means adopting the Internet of Everything. It is a network connecting people, data, process and many other things throughout the organization. They have to focus of the four areas of Internet of Everything in order to maximize business and operational benefits and put them in a position for growth. The four areas are:
- Data – oil and gas firms are flooded with all kinds of data coming from different sections of the organization which has to be processed, analysed and stored.
- People – These are employees who have knowledge and experience in Internet Technology and Operational Technology
- Things or devices
- Process – Integration of Internet Technology and Operational Technology processes.