Canada’s oil and gas sector may have never experienced the confluence of business challenges brought on by COVID-19, but it has also never had a greater opportunity to accelerate digital transformation to emerge stronger and more durable.
Even before the pandemic began, the industry was grappling with supply and demand issues, a move to greater environmental stewardship and the shift towards a service-based business model. Now there are many question marks about the long-term impact the current crisis will have on pricing, capital and liquidity.
The one thing that hasn’t changed amid all this is the value of data and the role of digital tools. Those who win will use them to bring strategic value within oil and gas companies and to the customers they serve. Much like other sectors which have expedited their digital transformation efforts (like the move to online ordering in retail, for example), the oil and gas industry has an even greater impetus to make the most of the technologies available to them.
As the former CIO of Shell Downstream, I can tell you that the benefits — from reliability improvements to production optimization and worker efficiency — will help better prepare companies in this sector for future disruptions.
Of course, the path to digital transformation is not always clear, which is why at Salesforce we recently partnered with the IT Media Group to produce The New Resolve: Digital’s Imperative For Canadian Oil and Gas. It is filled with research and interviews with oil and gas IT executives that help point the way forward.
The big takeaway from the report is that, in many ways, successful digital transformation is a journey not unlike the one we see as resources are extracted, moved, refined and distributed. Here are some of the highlights:
The Digital Upstream
Drilling for oil might represent the beginning of the energy sector’s value chain, but digital transformation starts with simply being open to exploration. Given the pressures oil and gas firms are already under, moving to adopt digital processes and tools will raise conversations around risk, cost and return on investment. These conversations are important, but they need to lead towards constructive, positive outcomes.
This will take IT leaders who help shift the culture and business leaders who back them up on initiatives, such as Husky’s Innovation Gateway Program. It will also mean partnering with industry associations and trusted vendors for assistance, as Suncor and Cenovus are doing.
Finally, it’s important to have the right infrastructure in place to make exploration successful. In this case we’re not talking about oil rigs, but adopting cloud computing, the way firms like Precision Drilling have done, as a foundational element to maximize the value of data.
The Digital Midstream
Collecting and transporting resources for eventual production and consumption is a process the oil and gas industry understands very well, but the digital equivalent is a little more complex.
The Internet of Things (IoT) is allowing oil and gas firms to put sensors on equipment that can help them monitor and optimize performance. This could mean preventing leaks in a pipeline, or getting ahead of sand intrusion on production.
Introducing automation can also improve the safety conditions of oil and gas processes, as Teck Resources is demonstrating with remotely controlled dozers and backhoes.
Connected workers will be able to hold the power of digital transformation in the palm of their hand as industry-specific enterprise applications become available to them via smartphone. Examples here include Trican, which is using Salesforce field service management technology to intelligently schedule and dispatch equipment that has reduced admin work by 50 per cent.
The Digital Downstream
I’ve sometimes referred to the downstream as “everything that isn’t the upstream.” It’s where oil and gas companies trade products, manufacture and blend, refine oil products and petrochemicals, serve B2B customers (e.g. aviation. marine, lubricants, bitumen and specialities) and then B2C customers (e.g. retail gas stations and lubricants).
The breadth of the downstream side of the business offers a helpful way to think about the enormity of what digital transformation and data-driven decision-making can do. If you think of converting data into insights as a sort of “refining” process, you quickly see that it goes beyond day-to-day operational issues but leads to a more customer-focused and better run business.
Manufacturing data could mean using technologies like artificial intelligence (AI) to spot operational trends that a team of humans might miss and take action to improve a process. It could mean using data analytics to improve the way processes are designed, or the performance of assets so that unplanned maintenance and outage costs are reduced and safety improved.
Just as we are all consumers of oil and gas in some fashion, digital transformation will help oil and gas employees become smart consumers of data. They will be empowered to bring greater efficiencies to operations, reduce construction costs and distribute their insights to stakeholders all the way up to the C-Suite. This data will also improve safety and environmental performance. Empowering the field workforce by delivering critical data to them, connecting them live to experts in the office when they are working on the asset, will bring numerous benefits.
Ultimately, thriving through the 21st century energy transition means moving from just selling products to selling services that enable your customers to be more successful as they use your products. Data around a process can be used to bring together an ecosystem of people that makes a customer -- and therefore your company -- successful. And of course, as we move from a hydrocarbon-dominated product set to supplying energies in the form of electrons or hydrogen, the need to differentiate through customer-centric thinking and services will become even greater.
Transforming a company isn’t easy. It is all about shifting the culture -- introducing data-driven ways of working and behaviour backed by a real desire to change. The goal should be to find new and valuable business models that customers, employees and the third parties who work with you will embrace. Sharing one set of data will be the key to adding value and benefiting everyone who engages with your company. Use your data to drive success in your ecosystem, in other words, and you will create the kind of loyalty that will serve the industry through the current crisis and well beyond it.
