As per a study by Kimberlite, just 1% of annual downtime can cost oil and gas companies $5.037 million. Oil and gas organizations on average suffer losses of $38 million annually due to unplanned downtime.
The impact at the bottom line includes repair costs (71%), labor costs (40%), transportation costs (37%), and equipment costs (14%). The data shows that the unplanned downtimes are costing immensely, however, the majority of oil and gas organizations are using the reactive and planned approach – which are lesser effective when compared with the predictive approach.
How can Digital Transformation help?
The Predictive approach accompanied by digital transformation is directly connected to the frequency of downtimes. Implementing the predictive approach leads to 36% lesser downtime, in comparison to the traditional maintenance methods. The predictive approach leads to saving $34 million annually due to the data-based condition monitoring approach.
To reap the benefits of the data-based digital transformations in the oil and gas companies, the following measures must be ensured:
- Accurate collection and management of the equipment data
- Applying the process and domain knowledge on the available data
- An effective maintenance strategy to ensure the effectiveness of the data-based insights
Game changers for digital transformation in oil and gas
The convergence of IT and OT
Operational data is generated and captured through sensors to be integrated into the IT systems. This often occurs in real-time. The major challenge in bridging the gap between IT and OT requires thorough technological integration of the operational data and the control systems (SCADA), middleware, and the core IT resource management. For achieving accurate real-time data capturing and processing, establishing tandem amongst these systems is essential. In oil and gas, asset performance management and condition monitoring will heavily depend on the IT and OT convergence due to the often geographically distributed assets.Applying connected ecosystems
Integrated and data-driven digital platforms can encourage better collaboration and efficiency amongst participants of the ecosystem. This helps in a better flow of information, fast-tracking of preventive measures, and practicing operational transparency.Blurring the physical-digital gap
When it comes to digital transformation, the digital narrative gets fixated with the data-driven ecosystem. However, to truly reap the benefits of the digital phenomenon, O&G companies should invest conscious efforts in modernizing their physical assets such as rigs, pieces of equipment, etc. Virtualization of the assets through digital twins and digital threads, the longevity and performance of the assets can be increased. Also, virtualization helps immensely in adopting new businesses and technologies.Asset Performance Monitoring
A lot of offshore sites of O&G operations have the challenge of unfavorable weather conditions which can result in delayed actions after a shutdown or downtime. Minimizing downtimes is vital for optimal operations. Predictive Analytics plays a crucial role that can enable the operators to simulate equipment performance such as pumps, turbines, and compressors. This can be achieved through advanced machine learning-enabled pattern recognition and anomaly detection. Alerting of potential failures can also be used to take preemptive actions to avoid probable machine failures.
Benefits of Digital Transformation
Apart from the obvious benefits of the efficient operations and reduction of downtimes, going digital involves a myriad of benefits for the Oil and Gas companies.
- As per areport by the World Economic Forum, Digital transformation in the Oil and Gas industry could generate the value of approximately $1.6 trillion.
- Digital transformation in the industry can save around $640 billion for the overall society. This figure involves approximately $170 billion of savings for the customers, around $10 billion of benefits from the improved operations, and $30 billion from reducing water consumption and $430 billion from lowering hazardous emissions.
- Environmental benefits of the digital transformation can result in reducing the carbon footprints by approximately 1,300 million tonnes that can save 800 million gallons of water and preventing oil spills of 230,000 barrels.
To keep the momentum going in the digital wheel, implementing cross-discipline and multi-stakeholder routes will be pivotal in gaining a competitive advantage in terms of utilizing the true value of the digital ecosystems for oil and gas organizations.