The oil and gas industry has always placed a large emphasis on utilising the latest technologies to improve the efficiency and effectiveness of their operations. Despite this, radical change is often avoided with advancements being carefully and slowly implemented over a longer period of time.
Technology can be adapted and applied in many ways to transform the oil and gas industry. These technological advancements vary in application but can ultimately help operational efficiency throughout the sector. In addition to this, technological advancements allow for increased safety and a reduced environmental impact as well.
Within the sector itself, there have been quite a few major technological breakthroughs in the refining operational processes. These include the digitalisation of many of the administrational and operational procedures to help save both time and money.
One of the most popular interventions to note is the Internet of Things (IOT). This technological advancement can radically improve the oil and gas industry. This evolution can help reduce the overall operational downtime whilst also saving costs by streamlining and automating certain processes.
NOC and IOC philosophies on technology adoption
A national oil company (NOC) is an oil and gas entity that is either fully or majority-owned by a national government, state, or territory. These include the likes of Saudi Aramco, Rosneft, or KOC. NOCs slightly differ administratively and operationally from their independent counterparts, international oil companies. (IOC).
National oil companies are run and administered by the state. This allows them a level of political influence that is not granted to international oil companies that they compete with. In addition to this, NOCs count for the vast majority of oil reserves around the world. This places them in a position where technological advancement remains extremely important. They sense, adapt and reconfigure operations to match and adopt the latest advances in technology.
The international oil companies such as BP, Royal Dutch Shell, and Exxon Mobil are driven by investors and technological advancements. These firms answer within an operational structure that is financially motivated to make the most out of limited resources. This underpins their philosophy of leveraging technology to maximise both their operational efficiency and financial returns.
Despite this difference in philosophies, national oil companies still have the ability to embrace technological advancements and operate at the same levels of efficiency as IOCs in order to maximise their returns for their respective states. Technology can be utilised at scale to minimise the gap between them to drive further innovation and efficiency within the sector.
ADNOC technology centre
The Abu Dhabi National Oil Company has dedicated serious resources to invest in advanced technology that can help transform and digitalise the oil giant and surrounding Middle East. They have created a state-of-the-art facility to help foster and drive technological innovations in the sector.
With this, the United Arab Emirates leads the way in the region with strategic investments in advanced technology such as artificial intelligence and automation to help build operational efficiency, data analytics to respond quickly to market dynamics, and smart asset management technologies for a sustainable future. This investment and centre serve as inspiration for others in the region to similarly invest in technology and innovation for the future.
The energy mix of the future
When discussing the future of energy production, many techniques and tools can be used to help make some of these large-scale decisions. This is another space in which technology can help evaluate large amounts of data to guide decision making around the industry.
Renewable energy is set to overtake the oil industry within the green economy. With this being said, oil and gas companies are not ready to see their dominance slip away and be replaced by new energy companies. This is why most oil and gas companies have strategically invested resources to help them transition along with the times.
However, both NOCs and IOCs need massive investments into new technologies, practices, and methods in order to remain relevant and sustainable in the future.
Within the oil and gas industry, capital expenditure has evolved to reflect a more diverse investment plan for the sector. Despite firms in the space differing on what they have invested in, many oil and gas companies have expanded into green energy solutions such as solar power, wind turbines, and CCS for a hydrogen-powered economy.
In addition to this, the capital expenditure dedicated to the exploration and production of oil has steadily declined over the years. Although technological advancements have helped to decrease these kinds of costs over the years, the underlying message is still one of diversification.
Big data and prescriptive analytics play a large role in deciding on what to invest in and how to allocate resources during times like this. Utilising technological advancements can help streamline this process through comprehensive data analysis that allows for risk-averse and data-driven decision making.
Blue hydrogen and net-zero pledges
With the climate crisis gaining momentum, 130 countries from around the world have pledged to support a net-zero carbon emission economy. This covers all greenhouse gasses and aims to achieve net-zero by the year 2050. Although climate change is an issue that affects us all, there has been significantly more interest by IOCs to transform their operations and evolve for a greener economy.
Whilst IOCs and other independent energy companies invest in green energy, many consider an economic shift toward hydrogen to be the most realistic goal for the global economy. This has also raised some controversy as extracting hydrogen can be done in a more energy-intensive way (green hydrogen) or a more efficient way (blue hydrogen) that creates carbon along the way.
Due to this, many stipulate that extracting hydrogen in this way cannot be considered to be net-zero unless additional innovations are put in place to capture and store that carbon.
The global market is continuously evolving and shifting. Technological advancements have allowed the oil and gas industry to transform and digitalise for the modern environment.
Although some national oil companies may not be as quick to implement massive changes, major investments are being made into research and technology to help transform the oil and gas industry to meet the needs of the present whilst still preparing sustainability for the future.