The energy industry is in the midst of a deep and wide-ranging digital transformation. While Covid-19 and lower oil and gas prices have disrupted many investment programmes, the direction of travel is clear – the industry needs to continue to invest in innovation and the development and deployment of new processes and technologies. Not to do so risks being left behind.
Technology innovation and adoption is being driven by multiple factors. We need to transform and improve field development, production performance, consistency and cost effectiveness; facilitate energy transition, improve health and safety performance and reduce our carbon footprint and environmental impact. Digital solutions also offer the advantages of improved audit trails and accountability.
In terms of day-to-day corporate infrastructure, even relatively mundane solutions can be highly effective – such as deploying robotic process automation and chatbots to automate labour intensive tasks. In a world impacted by Covid-19, the rapid roll out of remote working communication and collaboration tools has proven invaluable to business continuity and effectiveness. We are also seeing an acceleration in the adoption of cloud-based business process tools and on-demand solutions such as e-signing platforms to enable remote execution of transactions. On the trading and accounting side blockchain technology is being investigated for use in supply chain provenance and in trading platforms, where it has the potential to revolutionise record keeping, access and reconciliation.
From an operational perspective the potential is enormous. Digital twins, processes and services can be used to analyse data and monitor systems to identify and isolate problems before they arise, thereby minimising downtime. They are becoming increasingly important in modelling asset lifecycles and the operating parameters of devices and systems.
Communications systems facilitate remote monitoring and operation of equipment. The use of autonomous vehicles and drones in high risk and difficult to access areas presents clear health and safety advantages by removing the need for human presence.
Analysis of the richer, more accurate data these technologies and satellite and Earth-based Internet of Things (IoT) monitoring devices can provide is also transforming the identification and modelling of potential sites, and the ways in which technology can be further deployed to automate and increase the efficiency of operations while simultaneously reducing their impact on the environment.
We are also starting to see some exciting developments around the use of wi-fi enabled construction and operational sites. The deployment of IoT connected wearables and equipment black boxes can not only help prevent accidents occurring, but analysis of the data they collect is being used to inform improved health and safety practices and identify areas where further automation can reduce risk.
Industry policy makers and regulators have a part to play in this. The Oil and Gas Authority recognises it needs to support an environment that will foster innovation. Technology solutions are critical to extending the life of mature fields, improving the economics of smaller and technically challenging fields and reducing decommissioning costs. Ofgem is also taking steps to encourage and facilitate technological innovation, introducing a regulatory sandbox to allow innovators to trial new products, services and business models. It recognises that while the rule book needs to set high standards, the rules may need to change to ensure they remain capable of delivering desired outcomes.
The major cloud service providers now host marketplaces and sandboxes for blockchain, AI and data analytics solutions and partner collaborations, making trialling and optimising new technologies easier than ever before. There’s now no need to bear the cost of building and maintaining your own IT environment to do so – you can leverage it on demand as a service. These tools are already being used by companies in other sectors to experiment in areas the energy industry could also benefit from.
New technology is, by its very nature, relatively untested. With that comes risk. While data analytics and new technologies provide game-changing transformational opportunities, at the same time they pose unique risks for companies, governments and society as a whole. These opportunities and legal risks present a wide range of ethical, legal and regulatory challenges. In the context of an industry where security, health and safety, and environmental protection are paramount, those risks should never be underestimated. Aside from cyber security concerns, the risks range from inappropriate use of personal data and data or algorithm bias leading to discrimination or other undesirable outcomes. As a consequence AI, blockchain and data analytics are gaining an increasing amount of scrutiny.
As an industry we have a responsibility to ensure we leverage the opportunities data analytics and new technologies present, but also that we do so in the right way. To do this we need to adapt and evolve our governance models and supply chain management. Problems rarely arise from the technology itself. It is the human factor that remains the greater risk – the data we input and how we choose to design, evaluate, deploy, train, test, secure, monitor and manage the systems and solutions we incorporate the technology into. It is not enough to seek to contract for risk transfer to the supplier or service provider. Ensuring continued successful outcomes from the deployment of machine learning and other emerging technologies is dependent on factors beyond appropriate supplier and solution due diligence and selection. Operationally, continued in-life training and monitoring are key to ensuring the solution continues to perform within its operating parameters, and that those operating parameters remain appropriate and are delivering the desired outcomes. Strong internal governance, policies, oversight and accountability are critical to any material business change, and particularly to a successful digital transformation.