6 Ways Demand Driven Value Chains are Disrupting the Oil & Gas Industry

[Former Member]

Across the globe, oil and gas businesses are using new, connected processes to monitor assets in real time, improving asset productivity by up to 20 percent, accident frequency by up to 85 percent, and real-time inventory management by up to 60 percent. BG Brazil is using supercomputing data to revolutionize seismic data processing, allowing researchers to perform highly sophisticated seismic visualization. Mansfield Oil manages global petroleum supply chains without owning any actual petroleum assets.

These are three examples of how demand-driven value chains in digital economy are breaking down organizational barriers across the oil and gas industry. The result is a shift away from traditional, vertically integrated business models that depend on the control of vast resources and expansive human capital to manage these resources. A new business model is emerging that values process automation, real-time data analysis and application, and highly skilled employees to orchestrate these processes.

In the digital economy, information access is the new competitive differentiator. To succeed in the digital economy, oil and gas businesses must utilize disruptive technologies to leverage information access for superior cost control, energy diversification, and outcome-focused services. Is your oil and gas company prepared for these changes?

The New “Digital Energy Network”: How Connected Processes are Changing Oil & Gas

Digitally enabled and connected processes utilize new technologies, interactive devices, and real-time data to reduce risk, increase efficiency, and empower businesses to make better-informed decisions. For example, Vantage Drilling streamlined its communications by 25 percent, thanks to connected processes that overcame offshore satellite latency problems. Using technology advances in drilling and completion efficiencies, Continental Resources now saves an estimated $1 million per well drilling. These processes reflect a broader transformation from a traditional, vertically integrated oil and gas business to digital energy network.

Here are six key ways that demand-driven value chains and the new digital energy network are disrupting the oil and gas industry:

1. Real-time analytics. Digital business processes eliminate unnecessary and manual transactional work. Real-time analytics trigger automated, rule-based decision making, which streamlines management.
2. Better decision-making. Real-time, on-demand analytics can be made readily available to all stakeholders inside and outside a company. This improves decision quality, profitability and productivity.
3. Predictive and self-learning systems. Enhanced machine-to-machine collaboration includes maintenance simulations of asset repair procedures. Delegating complex business processes to machines means an increased demand for highly skilled workers who can orchestrate these complex systems.
4. Interactive and touchless technologies. Augmented reality and drones improve safety and productivity. These technologies are driving the employment shift from transaction workers to skilled exception handlers.
5. Flexible business-to-people relationships. The right information on the right device at the right moment is powering the digital revolution. Digital energy companies require effective and adaptive digital communication both within their organizations and between assets, workforce, customers, service providers and additional stakeholders.
6. Increased demand for highly skilled labor. Demand-driven value chains are automating manual tasks, enriching jobs, and creating more meaningful work. People continue to be key assets in the digital energy network. While their roles are changing, their value within these networks is growing. Highly skilled workers who can orchestrate these complex systems are in high demand.

Looking Forward: Collaboration, Process Optimization & Personalization

Demand driven value chains are disrupting the oil and gas industry. A whole new world of product and service opportunities will be made possible when energy providers are hyperconnected with a business network of energy-consuming product manufacturers and retailers. Key predictions moving forward include:

Collaboration. New, outcome-based business models are already emerging through the collaboration and integration of energy, vehicle, heating and cooling equipment; mobile devices; and financial product providers to deliver desired consumer outcomes.

Process Optimization. Across the globe, the digital economy is transforming businesses by empowering decision makers with new insights to optimize processes. These data-driven, actionable insights help oil and gas companies maximize their limited resources with real-time resource allocations, more agile infrastructures, and sophisticated applications.

Personalization. Leading oil and gas companies are already using these technology advances to gain a competitive edge across all value chain touch points, including customers. For example, developing hyper-personalized products and services and a more unified end-user experience will strengthen customer loyalty. Earlier this year, Brent Potts from SAP wrote about how the digital economy would impact personalization. Imagine offering fleet drivers specific routes optimized to their personal preferences or delivering a preferred type of fuel to a gas station at the exact moment it runs low. The ability to deliver tailored products and experiences will be a key differentiator.

Bottom line:

The oil and gas industry is in a unique position to leverage the efficiencies and growth opportunities made possible by the Internet of Things (IoT) and the digital economy.

This starts with the adoption of a new, demand-driven value chain. From connected hydrocarbon logistics processes and connected assets to a connected workforce and connected customers, demand driven value chains are profoundly changing the oil and gas industry. Moving forward, connected processes will be simplified and optimized, extending beyond a single enterprise to create the digital energy network of the future.  Find more information on the value of digital transformation for oil and gas here.