The future of oil and gas: Eight bold industry predictions
As oil prices tentatively recover from the 2014 crash and investments in alternative renewable energy sources gain momentum, oil and gas companies need to innovate to stay competitive and keep the fuel flowing. Offshore Technology asks industry experts for their insight into how technological advancements will shape the future of oil and gas.
The future of oil and gas: ‘Smart drilling’
Nowadays, it seems like more and more companies want to become the Carl Lewis or Usain Bolt of drilling. Get out the blocks fast, hit every stride sweetly and cross the finish line to first oil in record time.
As any elite runner will tell you, the equipment alone doesn’t win you the race. Equally, if not more important, is developing a race plan, road-testing that plan, and developing the intelligence to know exactly when, where and how to hit the gas.
So when it comes to the future of the oil and gas industry, ‘smart drilling’ will be key and require a combination of technology and thinking that reimagines how firms manage and execute a more harmonised approach to early well life.
"As drilling projects grow in ambition, smarter equals faster."
The key is ensuring that design, analysis, equipment selection and implementation are all aligned and buttressed by operational expertise. Where companies lack the expertise or resource, initiation specialists will fill the void.
As drilling projects grow in ambition, smarter equals faster. By combining integration and intelligence through specialist providers in the initiation phase with best-in-class technology, ‘smart drilling’ promises to give projects the solid footing needed to keep the industry running for decades to come.
- James Larnder, managing director, Aquaterra Energy
The future of oil and gas: Incorporating blockchain
One technology set to transform the oil and gas sector is blockchain. In fact, the blockchain revolution is starting here and now. The real task for the oil and gas sector is how quickly it can move to take advantage of the many opportunities that blockchain will bring.
For oil and gas businesses, data has gone from an asset to a burden. Companies are drowning in data and urgently need a way to control and authenticate information. Blockchain has enormous potential to reduce the risk of fraud, error, and invalid transactions in energy trading, make financial transactions more efficient, facilitate regulatory reporting requirements, and enable interoperability.
Blockchain will have huge benefits both upstream and downstream. From scheduling equipment maintenance to managing exploration acreage records, blockchain offers a single, unalterable record of transactions and documentation between numerous parties. Distributed ledgers also create more efficient and transparent downstream activities, such as exchanging products, secondary distribution delivery documentation, demurrage, and claims management. Mid-stream, it will revolutionise joint ventures, risk management, contracting, and regulatory compliance.
The possibilities of blockchain in oil and gas have few limits – and we’re yet to see more than a glimpse of its full capabilities.
- Simon Tucker, Head of Energy and Commodities, Infosys Consulting
The energy sector is seen as the next frontier for blockchain development outside the financial sector, where the distributed ledger technology has had its biggest impact to date. Blockchain is critical to unlocking the efficiency potential of distributed energy generation and disintermediating the public and private utility companies. So too does blockchain open up efficient fundraising through initial coin offerings (ICO's).
More than 1,500 ICOs have taken place in the energy space over the last two or three years. Admittedly, a disproportionate number of these token offerings have been electricity or renewables-focused, but the number of token offerings in the traditionally technologically phobic oil and gas sector is now rising.
"Blockchain is critical to unlocking the efficiency potential of distributed energy generation."
We have already seen strong interest in our own ICO for an onshore hydrocarbon concession and another standout example of an ICO in the sector is WePower, a Lithuanian-based green energy trading platform, which raised €32m ($40m) in February 2018 – the largest ICO in the energy sector to date.
Distributed ledger technology could also see the advent of peer-to-peer energy trading, as demonstrated by Power Ledger, which allows consumers to buy and sell clean solar energy, disrupting the established norms of energy provision.”
- Robert Pyke, CEO, Aziza
The future of oil and gas: Blurring the lines between fossil and renewable
Liquid fuels are still difficult to replace and while their reliance will be reduced as they get supplemented by biofuel and electrical energy sources, it will be a number of decades before they are phased out completely.
The prices of oil and gas will be perpetually lower for the foreseeable future as fracking will gradually open up more sources of cheap production, while demand slowly falls with the adoption of more renewables.
Better renewable energy technology and sources will eventually replace the use of oil as a combustible fuel but this will free it and other sources such as coal to be used to produce more sophisticated carbon products, hydrocarbons and polymers making it a feedstock rather than a fuel.
Finally, the ability to chemically synthesise oil and gas from more types of natural materials will blur the line between renewable and fossil fuels to the extent where it becomes a forgotten issue. The ability to synthesise these products will mean that even fossil fuels can be readily replaced so the market will drive the source again.
- Michael Martella, CEO, Anergy
The future of oil and gas: A ‘gig economy’?
Despite the market’s challenging period, there won’t be a Kodak moment. Oil and gas isn’t going anywhere and the reality is that the transition to 100% renewable energy use in the UK won’t happen in our lifetimes. Globally, emerging countries will also want to capitalise on their oil reserves – providing, literally and figuratively, a pipeline of growth for the future.
The industry will also become more collaborative. The billions of pounds spent on exploration and building platforms in new oil fields will be shared amongst multiple industry backers. As a whole, the oil and gas industry will become significantly more risk-averse, with companies working on joint ventures in order to avoid another big downturn.
"Expect the ‘gig economy’ to come to the oil and gas industry."
The aversion to risk will filter into the organisational culture, with companies looking at how they can run leaner and meaner operations. Having project teams sitting around waiting in the wings for a new assignment will no longer exist. The industry will rely more and more on flexible workers to be brought in for specific projects. Expect the ‘gig economy’ to come to the oil and gas industry.
Technology will be a facilitator in the transformation of organisations. The future of oil and gas is unmanned platforms, with workers transitioning from offshore to onshore office-based roles. Generalist manager roles will die out as the demand for short-term, niche skill sets to implement IT systems and bring oil fields ‘online’ grow.
- Terry Noble, lead consultant for the Energy and Utilities Practice, Odgers Interim
The future of oil and gas: ‘Smart oilfield’ technology
All oil and gas operators, wherever they are located, would like to focus more of their budgets and efforts on improving productivity whilst at the same time monitoring their local and remote assets dynamically. This is only possible via the deployment of a truly ‘smart oilfield’ technology, able to provide all critical data in real-time without any downtime.
From a technology standpoint, the ideal solution would need to seamlessly connect all systems and hardware platforms across the various fields of operation, integrating exploration, drilling and production facilities, and ultimately delivering useful data and video streams to a central location, allowing the operators to make better and quicker decisions.
One of the challenges faced by the oil and gas industry is related to the fact that contractors and assets generally move from one location to another on a daily or weekly basis. Additional challenges are directly linked to environmental conditions such as extreme temperatures and frequent sandstorms. Providing uninterrupted service without the involvement of on-site technicians after the move of a rig or drilling platform, for example, is only achievable through the adoption of high capacity wireless platforms, such as InfiNet’s, which are able to auto-align and mitigate these challenges.
The main factors that will drive the further adoption of wireless technologies in this industry sector will be the increasing demand for smarter sensors/devices in the field, as well as the desire for managers to stay continuously connected with their valuable assets.
- Kamal Mokrani, global vice-president, InfiNet Wireless.
The future of oil and gas: The challenge of rig decommissioning
One of the biggest challenges facing oil and gas companies is the cost of decommissioning ageing rigs around the world, a toll which will reach $13bn a year by 2040, with some set to be even more expensive than that. More than 600 rigs need to be decommissioned by 2021 and the most straightforward option – simply sinking the rigs – is not feasible. Oil companies need to come up with environmentally friendly ways of decommissioning rigs or face a potentially huge backlash from increasingly environmentally-conscious consumers.
"The problem is that predicting and addressing the environmental impacts of various decommissioning methods is complex."
The problem is that predicting and addressing the environmental impacts of various decommissioning methods is complex. There are always competing interests and trade-offs to be considered with circumstances varying from project to project. For example, the most carbon-neutral option in one instance might be unacceptable from a health and safety (HSE) perspective in another.
Tackling the problem demands that geoscientists and engineers make confident, data-driven decisions, using the most relevant and accurate research available. Therefore, in order to manage the huge challenge of decommissioning, companies have to ensure they are providing their engineers with accurate and trusted information platforms, allowing them to be as efficient as possible in their work and make confident decisions.
- Phoebe McMellon, director of Oil and Gas Strategy, Elsevier’s R&D Solutions
The future of oil and gas: Digital transformation offshore
The oil and gas industry is ‘always-on’ and has long been defined by the legacy systems that help it to function. However, as digitalisation continues to transform this sector, organisations are looking for common technologies that can help them balance requirements for uptime, security, and safety with the need to take advantage of digital innovation.
Digital transformation does not require a ‘rip and replace’ approach. Instead, organisations should view this as an opportunity to improve the functional capabilities of their facility and move to a new software environment, which extends the life of the traditional legacy systems.
No one can deny that digital technologies are the future. Looking ahead, we can expect to see many companies turn to open standards to help them improve operational efficiency and grapple with digital complexity. Organisations within the oil and gas sector are working harmoniously with their peers to create open systems that will ensure digital transformation initiatives can be done at a low cost and with very little disruption. When there is a safe path to digital for these companies, it will unlock significant cost savings and efficiency for the wider process automation industry.
- Ed Harrington, director, The Open Group Open Process Automation Forum