Andrew Dennis
Digital Transformation of the Oil & Gas Industry (2024)
- Published: February 5, 2024
- Updated: April 18, 2024
The oil and gas industry operates on thin margins and requires quick critical decision-making. An outdated detection system can put millions of dollars in assets at risk. It also can threaten the safety of the entire crew and the public.
Digital transformation can improve outcomes across the oil and gas sector, helping to provide solutions to mitigate these risks, improve operational efficiency, evolve business models, and provide better customer experiences.
In this article, we’ll explore how enterprise oil and gas companies are adopting new technologies to solve complex challenges, streamline operations, and drive business outcomes. We’ll also highlight real-world digitalization examples and use cases, and share best practices for oil and gas organizations to overcome common digital transformation challenges.
What Is Digital Transformation in the Oil & Gas Sector?
Digital transformation of oil and gas companies is the integration of emerging technologies like cloud services, automation, IoT, and analytics across business functions. It disrupts how energy firms operate and serve customers from the oilfield to the pump with streamlined operations and better experiences. The goals of digitalization typically revolve around improving efficiency, driving employee productivity, promoting sustainability, mitigating risks, and providing better customer and partner experiences.
For oil and gas professionals, cloud software and big data tools allow more accurate modeling, data-backed drilling strategies, and optimized production. Tasks that previously exposed workers to hazardous manual labor can now be automated to limit risk.
For consumers, virtual tools and platforms offer options to track usage, predict bills, and explore renewable alternatives as part of the energy transition. Digitalization makes it easier for households and businesses to dial into their unique energy needs and preferences. It’s also easier for them to educate themselves to engage with suppliers as partners.
Digital Transformation Challenges Facing the Oil & Gas Industry
According to McKinsey, 70% of companies initiating digitization projects haven’t moved beyond the pilot phase. What’s standing in the way?
While every organization has contextual challenges that they will need to overcome, here are five of the more common digital transformation challenges facing companies.
1. Updating legacy structures and systems
Digital solutions reinvent how the oil and gas sector operates. But first, companies must confront the aging legacy systems still powering too many assets. Modernizing legacy applications and their contextual processes presents challenges, but there are also new opportunities.
Much of the industry was built on machinery designed for the previous century. While they were reliable, these aging systems lack the connectivity and visibility needed to detect and adapt to today’s increasingly dynamic conditions. Outdated monitoring puts safety at risk if threats go unnoticed.
Outside of the technical challenges of updating legacy systems, there is the people side, which is equally as challenging. Organizations may face stiff internal resistance to changes from employees who are most impactful and have relied on these legacy processes to do their jobs.
Oil and gas companies must address these issues head-on by building a change advocate team or hiring an external digital transformation consultant who can secure trust and buy-in from employees, as well as show early wins to showcase the value and benefits of these new digital tools and processes.
2. Cost of technology
Oil and gas companies must make thoughtful decisions about where to allocate resources. Investing in new digital technologies can modernize operations, but upgrades often come with big price tags. Leaders must strike the right balance between funding cutting-edge innovations and fixing aging infrastructure.
This can be easier said than done when budget constraints are in play. Some companies postpone digital investments, but cutting costs today by delaying technology improvements will eventually backfire.
For example, Southwest had known for nearly a decade that its scheduling system was outdated and could cause significant issues at any time – the Southwest Airlines Pilot Association had warned the company as far back as 1990.
Finally, during the 2022 holiday season, it happened, causing over 15,000 flights to be canceled per day. The IT failure cost the company millions in revenue, damaged brand perception, and negative PR. Southwest knew its scheduling technology required an upgrade, but had actively decided against it to avoid the cost and resources required to undergo such a large change. In the end, the choice to not transform its legacy scheduling system cost them even more than the change would have.
Overall, the key is understanding the value these changes can bring to your organization and having implementation goals. New systems provide the visibility, control, and agility that help businesses adapt, helping to protect them from competition and safeguard them from risks.
3. End-user training and upskilling
Digital transformation relies on the collaboration between people, processes, and technology. Programs should fit specific teams like offshore crews, engineers, project managers, and field technicians. You can customize your training to meet the needs of your specific workforce and customers.
Still, employees who are used to old ways of working may need help adopting new software and digital processes. Training, upskilling, and end-user support should go beyond teaching people how the technology works. It also needs to help them get comfortable with changing how they do their jobs as new tools are implemented.
This also isn’t a one-time event, your employees will require constant performance support to keep up with changes, overcome digital challenges, complete infrequently done tasks, and maximize the potential of software investments.
Customers also need to understand how using these new systems benefits them. If all they see is an added layer of confusion and frustration, they’re unlikely to adopt any new technology. If you provide resources and esupport that reduce the learning curve, you can boost adoption rates.
With a digital adoption platform (DAP) like Whatfix, oil and gas organizations can enable their end-users (employees and customers) to fully adopt new technologies, follow complex digital workflows, and achieve heightened levels of productivity through a mix of in-app guidance and contextual support.
Whatfix’s Visual Editor provides a no-code solution to create and launch in-app experiences and elements that provide step-by-step guidance and in-app support to end-users in the flow of work, like interactive walkthroughs, new user checklists, tooltips, tours, field validations, and embedded resource centers.
Software clicks better with Whatfix's digital adoption platform
Enable your employees with in-app guidance, self-help support, process changes alerts, pop-ups for department announcements, and field validations to improve data accuracy.
4. Compliance and security
As oil and gas operations go digital, companies need strategies to follow regulations and protect against hacking. With sites worldwide, companies must follow different rules, depending on their location and the work being done.
For example, offshore drilling has many environmental regulations companies must follow. If new digital tools don’t account for these rules, mistakes can be costly and undo years of building trust.
Bad actors can also try to break into production systems, supply chains, and company data to cause trouble. That’s why guarding information and operations with security policies for every part of your process is critical.
5. Data management
Collecting and managing more data can provide insights to improve efficiency and guide better decisions across operations. However, making the most of this data presents a set of challenges.
Important information often gets lost in legacy systems, and many companies struggle to process such high volumes and integrate additional data from supply chains, markets, and equipment logs to gain a complete picture.
The key is building integrated data architectures. With the right systems, oil and gas companies can tap into their data to gain efficiency, boost resilience, and gain the competitive advantages they need to thrive.
Benefits of Oil & Gas Digital Transformation
Once you understand the challenges of digital transformation in the oil and gas sector, and how to overcome them, you can start to understand how new tech can impact your organization and its bottom line. Let’s take a look at a few of these digital transformation benefits for enterprise oil and gas companies.
1. Reduce the impact of price volatility
Oil and gas companies face considerable price fluctuations driven by many forces. However, digital tools can help firms better predict and respond to this volatility. The key is using data with artificial intelligence to model potential pricing scenarios. This allows companies to forecast supply and demand to make strategic moves.
For example, by using IoT sensors to track real-time production volumes and costs across operations, companies can spot wasted resources or unplanned downtime. The agility helps sustain profits even as markets change. This makes it possible to navigate shifts in the space with more ease.
2. Support change management
The oil and gas industry constantly shifts as markets, politics, and technology evolve. Digital tools can help companies be ready to adapt quickly. Connecting data, communication systems, and project management apps on shared networks lets everyone access the same real-time information.
Predictive analytics also track early signals in the wider landscape, like new policies or industry conversations. This heads-up lets leaders avoid big changes by implementing new training programs or adjusting strategies.
3. Accelerate carbon reduction
For an industry dependent on fossil fuels, this transition can feel daunting. However, through digital innovation, energy companies can transform operations in ways aligned with sustainability.
For example, advanced sensors don’t just boost efficiency, they can also have a significant environmental impact. They provide the visibility required for cutting emissions and can reveal where reductions are possible.
Examples of Digital Transformation in Oil and Gas
What tools and systems are powering change in the oil and gas industry? Here are a few of the most impactful new oil and gas technologies changing the industry’s operations.
1. AI-powered safety management
Keeping workers safe has always been critically important and deeply challenging in hazardous oil and gas operations. Now, new systems provide comprehensive oversight that improves outcomes.
By reviewing volumes of past incident data, AI models can also uncover patterns predicting risks. These insights get incorporated into constantly self-improving algorithms. This can impact your ability to protect people and the environment.
SafetyIQ’s proactive risk management is specifically configured to manage all elements of work that are unique to the oil and gas industry, including safety processes for workers who travel or work alone.
2. Blockchain supply chain management
This industry includes large networks of equipment sourcing, trading, and transport. Tracking these complex transactions can be challenging. Fragmented spreadsheets, paper contracts, and outdated databases all hold different pieces of the puzzle. Blockchain ledgers are transforming that.
According to Deloitte, blockchain technology (with a cognitive layer built on top) records, tracks, and executes the contracts, and detects fraud instances. Equipment sensors confirm the fulfillment of contract terms and, once the agreed-upon amount has been produced, the system can execute payment.
By logging every deal from parts orders to routes on decentralized, encrypted blocks, blockchain creates a single source of truth. Timestamped records also verify regulatory compliance permanently. This makes it easier for everyone to be on the same page.
3. Cloud computing for storage and analysis
Cloud computing provides the flexible foundation the oil and gas industry needs to gain insights. Scalable cloud servers can store equipment data and run complex algorithms. Machine learning models look at sensors to help you find opportunities for improvement.
Cloud capability also democratizes access, allowing decision-makers across units to reference the information that’s most relevant to them. This organization-wide transparency helps teams pinpoint areas for change and meet market demands.
For example, AVEVA’s solution offers leading operational intelligence tools and a suite of planning and scheduling, real-time optimization, and visualization applications help operators go from reactive to proactive.
4. Predictive maintenance with big data
Replacing equipment too early or too late can wreak havoc on your business and budget. With modern technology, clear dashboards can help you recognize deteriorating conditions days or weeks early, allowing targeted repairs before failures. Predictive algorithms also optimize budgets by precisely allocating spending and crews.
This predictive maintenance can protect your bottom line from the costs of penalties and incidents. Sustaining consistent output and minimizing downtime also provides more reliability in a traditionally unstable industry.
Luxoft’s solution uses big data collection and analysis, cloud, and predictive maintenance technology, to monitor each time the fracking equipment is being used, determining if it’s in good working order or not long before the equipment is on the verge of breaking down. When the software detects abnormal parameters or determines it’s time for scheduled maintenance, users automatically receive a preemptive alert with suggestions on the next steps.
5. Oil production software
In the past, it was challenging for oil producers to make the most of their resources. Centralized enterprise software now optimizes every barrel for profitability. Real-time data dashboards flag any issues for quick troubleshooting. Analysts can simulations to pinpoint ideal well placements.
Integrated systems like this help balance cost efficiency and crew safety. The result is maximized production. It’s also better for the environment, as producers can source more responsibly.
One ScienceSoft customer gets information about oil wells and the state of their equipment through their software. The tree-structured data representation allows the user to find and access the needed information easily.
6. Exploration software
Locating underground deposits once heavily relied on human intuition from years in the field. However, exploration software rapidly narrows drilling targets and minimizes wasted investments. Technology now complements veteran expertise.
Exploration software using machine learning assigns favorable probability scores to locations that are likely to be profitable. Then, simulations concentrate capital only on the best zones in different price scenarios.
With sophisticated data visualization, interpretation, and analysis tools for the systematic evaluation and modeling of key geological risk elements, SLB’s exploration software solutions have helped many thousands of our customers increase their prospecting success rates.
7. Oil and gas engineering software
With today’s complex energy assets, no single engineer can design an entire system alone. Virtual modeling software brings cross-disciplinary teams together into one digital workspace, in the same way, that online office apps power remote teamwork.
Structural engineers test offshore platforms in storms while pipeline engineers assess terrain. Chemical and environmental experts check the plans too. Requirements stay centralized so everyone is working toward the same goal. These professional insights combined with data analysis fuel better outcomes.
Surfer from Golden Software empowers customers to explore the depths of their data. Surfer’s extensive modeling tools help people analyze, visualize, and communicate findings with accuracy and precision.
8. Manufacturing execution systems (MES)
By tracking metrics like equipment abnormalities, inventory levels, and process deviations, algorithms flag dips in quality or mistakes. Alerts can prompt workers to implement real-time fixes before everyday issues turn into extended downtime. Executives also gain visibility into operations to see where changes need to be made.
The goal is adding technology and speeding up routine but critical checks, so people can focus on tasks that require more skill and human judgment This makes teams more efficient and reduces stress in fast-paced environments like production floors.
MES from LYNQ gives professionals in the oil and gas industry the ability to improve productivity, quality control, and operational efficiency. This is done by integrating and coordinating multiple aspects of production. This streamlines processes, reducing costs, and enhancing effectiveness.
9. Oil and gas asset management software
Losing multi-million dollar assets like offshore oil rigs or transnational pipelines leads to financial and environmental consequences in the oil and gas industry. However, tracking all of those assets without the help of technology isn’t easy.
Modern asset management software centralizes real-time tracking to give you visibility. Systems monitor telemetry across compressor stations, container vessels, and more, alerting managers to abnormal vibrations, particulate levels, or other anomalies weeks before failures occur.
Integrated records retention also helps with regulatory reporting, allowing executives to strategize equipment upgrades that align with emerging technologies and sustainability policies. This can significantly reduce risk.
By eliminating manual processes with Quorum’s solutions for remote SCADA monitoring and field data capture, an Oklahoma-based E&P Company got the tools it needs to maximize production. They saw immediate cost savings and less downtime.
10. Virtual employee training
With distributed teams working together to tackle everything from deep sea drilling to gas transport and refining, consistent onsite training across oil and gas operations is necessary. Virtual platforms can help employees get up to speed and test their knowledge about what to do in times of crisis.
With virtual walkthroughs of emergency response situations, everyone on staff can better understand the protocols they need to keep up with. Remote accessibility allows employees to brush up on their skills at any time after onboarding.
For example, Luminous Group offers a mixed reality that allows the user to see the real world around them. This is then supplemented with 3D holograms to guide them through a task. Mixed reality is best suited to help the user carry out a real-world task, like removing equipment.
With a digital adoption platform (DAP) like Whatfix, oil and gas companies can enable their staff with in-app guidance for contextual onboarding and real-time training. With Whatfix, create in-app support like Tours, Task Lists, Flows for interactive walkthroughs, and more that provide moment-of-need support to staff in the flow of work.
11. IoT-enabled smart sensors for equipment
In modern oil and gas operations, small smart sensors play a big role in maintaining smooth and safe production. Having them on pipelines, drills, and machinery can completely shift your operations. These devices can gather data on temperature, pressure, gas levels, and more. Expert teams remotely monitor the sensors to catch equipment issues early.
For example, imagine a pipeline having a gas leak. Nearby sensors quickly detect the change levels. Then, it alerts instantly you of the potential hazard before it becomes a larger problem. This early warning system allows a rapid response to fix the leak, avoiding risks and expensive full shutdowns.
Over time, the predictions will get more precise as machine learning capabilities get more advanced. For now, they help oil and gas companies monitor multiple aspects of a site, even the things that humans can’t easily watch or detect on their own.
According to Deloitte, IoT promotes the connection of everything in oil and gas. That includes connecting machines, facilities, fleets, networks, and even people to sensors and controls. This works to automate and improve the maintenance and operations of the machine and the entire system.
Oil & Gas Digital Technology Clicks Better With Whatfix
Digital transformation is challenging, costly, resource-intensive, and has lengthy implementation and migration cycles. Accelerate your oil and gas digital transformation by enabling your customers and crew with contextual in-app guidance and real-time support with Whatfix’s digital adoption platform (DAP).
Whatfix provides oil and gas enterprises with a no-code editor to create in-app, moment-of-need support and contextual guidance to employees and customers on all technologies and process changes. This reduces time-to-proficiency and achieves new levels of productivity and proficiency through better software adoption, as well as provides customers with self-service, personalized, and guided user experiences.
Whatfix empowers oil and gas organizations to:
- Create in-app Flows and Task Lists that guide employees and customers step-by-step through digital processes and applications.
- Enable end-users with Self Help, providing a searchable help wiki that connects to all your help and support documentation, FAQs, help desk articles, and more – that overlays on your digital UI.
- Notify end-users of application process updates, compliance changes, company announcements, and more with Pop-Ups and Beacons.
- Provide contextual Smart Tips that enable end-users with timely information that nudges them to take the correct in-app action.
- Use Field Validation to ensure data is entered in full, in the correct format.
- Collect end-user feedback such as NPS, training and onboarding feedback, and bug identification with In-App Surveys.
- Analyze end-user behavior with User Actions and Enterprise Insights by tracking custom in-app events to optimize user journeys, segment users into cohorts, identify areas of friction, and more.
With Whatfix, you can understand how technology is being used and what is being underused. This makes it easier to adjust software training and adoption strategies. All to empower customers, crew, and back office staff to maximize the value of digital tools.
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What Is Whatfix?
Whatfix is a digital adoption platform that provides organizations with a no-code editor to create in-app guidance on any application that looks 100% native. With Whatfix, create interactive walkthroughs, product tours, task lists, smart tips, field validation, self-help wikis, hotspots, and more. Understand how users are engaging with your applications with advanced product analytics.
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Software Clicks With Whatfix
Whatfix's digital adoption platform empowers your employees, customers, and end-users with in-app guidance, reinforcement learning, and contextual self-help support to find maximum value from software.
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