Oil firms saving costs through asset digitisation, optimisation, post-Covid-19
Aderemi Ojekunle is a Businessamlive Reporter.
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October 1, 2020674 views0 comments
- Chevron, Schlumberger already teaming with Microsoft to deploy tech-based processes
- Microsoft’s multi-cloud initiative to herald negative carbon emissions by 2030
- By 2050 tech company to remove all emissions it produced since 1975
Ben Eguzozie, with wire report
Digitalization and optimization of oilfield assets have emerged as the principal cost-cutting mechanisms as oil and gas companies continue to face threats of efficiency, sustainability and profitability in their projects, in the wake of the COVID-19 era, panellists at a Microsoft, Africa Oil & Power and the African Energy Chamber webinar under the theme, ‘Leveraging the Power of Technology for Oilfield Optimization,’ have observed.
The experts examined how digital applications are capable of uniting real-time data with advanced analytics to improve decision-making and boost efficiency and sustainability for oil and gas companies in the face of threats to efficiency, sustainability and profitability. In essence, Covid-19 pandemic has accelerated technology adoption as an integral component of oil and gas projects.
Lower production costs are paramount to a revamped global oil sector with technology to spearhead cost reductions. The COVID-19 pandemic has accelerated technology adoption as an integral component of oil and gas projects, the panellists observed.
According to Vaseem Khan, global vice-president, digital, analytics and innovation, and chief innovation officer at McDermott, Africa has the opportunity to leapfrog traditional oil and gas operations, thanks to technology.
“Technology is an enabler for sub-Saharan Africa to become more competitive and become one of the most prominent producing areas globally,” Khan said.
Meanwhile, Microsoft is collaborating with Chevron and Schlumberger to deploy optimized technology-based processes looking to accelerate data analysing, thus triggering new exploration opportunities, and speed-up time to first oil.
Dizando Norton, Microsoft’s multi-cloud specialist, presented Microsoft’s initiatives to boost technology adoption in the oil and gas industry while lowering carbon emissions footprint in line with the Paris Climate Agreement.
“By 2030, Microsoft will be carbon negative, reducing emissions by more than half. By 2050, Microsoft will remove all the carbon the company has produced since its founding in 1975,” he noted.
According to Norton, there are a number of transformative projects currently taking place in the eastern and southern Africa energy space, adding that, “These projects are supported by Microsoft’s enabling cloud services allowing customers to increase efficiency while reducing operational costs.”
Babajide Agunbiade, the business development director at National Oilwell Varco, while looking at the perceived high cost of entry to technology, said he believes the long-term vision is a crucial aspect of technology deployment. “Customers need to move away from the short-term financial aspect and look at the entire lifecycle of the project which can have up to a 30-year lifespan.”
Vaseem Khan further added that “technology is becoming cheaper and more accessible. The cost of deploying technology is now a minor expenditure in the project. Technology is the most efficient when looked at as an integral part of the project. Implementing a holistic vision will allow decision-makers to implement technology in a stable and rational way, with immense rewards down the way.”
Osama Hanna, WW energy industry core team/industry digital strategist at Microsoft, gave the example of a project he led with an industry stakeholder regarding well corrosion. Following a government regulation regarding well maintenance, Microsoft implemented a real-time monitoring solution to proactively detect corrosion, ultimately reducing corrosion by up to 46 percent, thus avoiding a potential “plug & abandon” down the road.
The panel also touched upon the role of technology in a post-COVID environment. According to Khan, “COVID-19 has acted as a technology accelerator. Technology adoption has dramatically increased during the pandemic.
It has allowed many projects to continue or resume faster and has shown many operators that remote work is an efficient way to maintain operations while lowering costs. The new normal is to use technology in order to deliver projects efficiently, in a cheaper manner. Technology is not an option for the future, it’s necessary at the present.”
Agunbiade stressed the importance of lowering costs thanks to technology in a context of long-term lower demand for oil.
“COVID-19 has brought peak oil closer. Demand for oil is set to decrease continuously from here. This situation stresses the importance of lower costs in all aspects of the petroleum business: material selection, improved research and development, remote work. All these crucial topics can and must be supported by technology,” Agunbiade said.
Hanna, highlighting that efficiency is the central topic for the post-COVID era, said: “Looking forward, efficiency will be a key challenge for all operators in the petroleum space. The price of a barrel is decided by the market, but companies can have an impact of their operational expenditure by optimizing efficiency across the value chain, whether we speak about human resources, equipment, technology, and so on.”
Checks by Business A.M. indicate that Covid-19 led to contraction of the global GDP by -4.9 per cent, according to the International Monetary Fund (IMF). The oil and gas industry, like many others, was alarmingly affected by the contraction.
Cushman & Wakefield, in a report on the impact of Covid-19 and oil price declines, said demand for petroleum products collapsed at a time when global output was ramping up, fuelled by rising shale oil output in the U.S. As a result, global oil prices collapsed for the third time in the last 13 years. This decline is compounding the impact of the pandemic in cities where the oil and gas industry is an important or even dominant contributor, to the local economy.
This picture, is however, different from 2018, when higher oil prices, lower offshore development costs, and improved gas demand outlook made the oil and gas industry more confident in approving investment in new projects whose total worth has exceeded $110 billion since the beginning of 2017, research and consulting firm Rystad Energy said in its analysis at the time.