How oil industry can save $100B in the 2020s

We spend a lot of time talking about digitalization, the Industrial Internet of Things (IIoT), cloud and all those other fun buzz words that I suspect make many cringe. It’s been a long, hard road for digital transformation, but it seems like there might finally be a light at the end of the tunnel, at least for some.

Independent energy research and business intelligence company Rystad Energy recently released results of an in-depth study that found that “as much as $100 billion can be eliminated for E&P upstream budgets through automation and digitalization initiatives in the 2020s,” according to a press release.

“Many key industry players are setting optimistic goals, but the realization of these initiatives largely depends on how freely data is shared amongst companies and how commercial strategies are deployed to drive this development. Because of this, it could be years before we see full adoption. However, based on our analysis of 2018 capital spend and operational budgets, we believe savings could easily reach $100 billion,” said Audun Martinsen, head of oilfield services research, in a statement.

Raystad says that automation and digitalization have the potential to reduce drilling costs by as much as 10-20%. Going further, facility and subsea costs could be reduced by as much as 10-30%.

“In addition to cost savings, digitalization initiatives can also increase productivity by increasing uptime, optimizing reservoir depletion strategies, improving the health, safety and environment of workers and minimizing greenhouse emissions—all of which have significant value creation,” Martinsen said.

The company reports that digitalization and automation initiatives are being supported by suppliers who are offering ever-more-connected products, as well as the growing affordability of data storage and processing.