The Oilfield Digitalization Opportunity Executives Can’t Afford to Miss

At the Baker Hughes GE Annual Meeting this week in Florence, Italy, a CEO began his presentation with this bold adage: “Digital strategy = Business strategy.” Executives on nearly every panel pointed to the digital opportunity.

As the oil and gas industry invests in the digital transformation to improve competitiveness, companies should seize the opportunity to integrate methane emissions management into their broader digital agendas, as a key way to maximize value and stay competitive in the low carbon energy transition.

Leveraging the digital transformation to tackle methane

The oil and gas industry is embarking on a holistic digital transformation, one that is disrupting virtually every facet of the business. Digitalization of the oilfield, which includes innovations such as automated asset management, predictive maintenance and industrial internet of things (IIoT), has the potential to unlock tremendous value – up to $1.6 trillion.

Because of this value creation potential, 80 percent of upstream operator respondents to a Microsoft/Accenture survey said they planned to invest either the same or more in digital technologies over the next 3 to 5 years.

A new report written in collaboration with Accenture Strategy, “Fueling a Digital Methane Future: The role of digital technologies in minimizing global oil and gas methane emissions,” examines how to leverage the oil and gas industry’s digital transformation to optimize, accelerate and scale global methane mitigation.

Integrating methane into the digital ecosystem

Digital means disruption, and the historical approach to methane management is prime for change. Today, field staff are deployed, asset by asset, on a time-based schedule to search for leaks with handheld instruments. While a manual, calendar based approach can be effective, it isn’t always efficient.

If oil and gas companies and technology providers integrate methane emissions management into broader digital agendas from the start, they can harness these technologies to determine where the biggest problems are, in real time. The science shows that 80 percent of methane emissions are caused by 20 percent of the leaks. Digitally-enabled leak management has the potential to immediately identify that 20 percent. Not only could digitally based methane management significantly reduce overall detection costs, it could reduce the windshield time of workers.

Digitalization has no boundaries

There are opportunities for digitalization of methane management irrespective of a company’s current state in the methane reduction journey.

For example, industry leaders that have committed to ambitious, time-bound methane reduction targets, such as the thirteen member companies of the Oil and Gas Climate Initiative, can actively test and deploy digital methane solutions as a critical tool for actualizing their commitments and verifying emission reductions.

Last year, Shell selected C3 IoT as its artificial intelligence platform, which will leverage AI for predictive maintenance on thousands of pieces of equipment. If these predictive maintenance algorithms were trained to correlate equipment performance with emissions events, they could start to predict leaks before they happened. Furthermore, the algorithms could detect patterns in leaky equipment by vendor, thus enabling the company to leverage its purchasing power for lower-emitting products.

Meanwhile, companies that are investing in digital oilfield broadly can explore integrating emissions management into digital programs, allowing the company to potentially leapfrog early phase, manual steps.

Abu Dhabi National Oil Company (ADNOC) recently announced  a planned investment of $1.8 billion by 2023 in emissions abatement projects, including methane mitigation. This investment coincides with numerous digital initiatives, such as the launch of its Panorama Command Centre, a new digital hub.

Aligning the company’s methane mitigation initiatives with its larger digital agenda could unlock trapped efficiencies from traditional leak detection techniques and position ADNOC as a leader in digital methane.

Don’t go digital alone

Realizing the full potential of a digital methane future will depend on collaboration across stakeholders and value chains.

Leading oil and gas companies have the opportunity to recognize the value and efficiency potential of integrating methane management into broader digital initiatives and set an agenda internally that seamlessly integrates methane management into operational excellence.

Technology firms and oilfield service providers that develop new business models to embed digital methane reduction solutions into their broader industry offerings can gain a competitive advantage by in turn making their clients more efficient and carbon competitive.

Smaller digital oil and gas startups can differentiate their offerings through environmental performance benefits. Kelvin Inc., for example, has demonstrated, through its work with BP in Wyoming, increased production and reduction in cost as well as significant reduction in emissions events.

Finally, traditional methane technology providers stand to benefit from expanding their offerings to include capabilities that enable integration with an increasingly digital methane world. This might include smart wearable devices, cloud-based data storage, or flexible backend architecture that can integrate with other systems.

For the methane technologies of today to stay competitive tomorrow, they need to go digital.

Digital methane management has the potential to crack the code on widespread, cost-effective emissions reductions across the global oil and gas value chain. All companies, regardless of where they stand today on methane mitigation, can explore digital methane projects.