ARC is always encouraged when operators and end users go public about their strategies and plans to take the journey on the path towards Digitalization and a digital transformation. As more and more E&P companies, including supermajors and large independents, continue to praise the possibilities created by Big Data, Statoil is emerging as one of the leaders in the space. Most importantly, ARC believes that Statoil correctly recognizes that technology alone will not ensure real digital transformation and that necessary cultural changes and getting employee buy-in during any transformation is also vital to success.
Statoil recently announced its digitalization roadmap to the year 2020, in which the company has forecast that it will spend NOK 1 billion to 2 billion (US $1.2 million to $2.35 million) on new R&D for digital technologies, as well as implementation of them.
The strategy for digitalization is meant to improve safety, security and efficiency of Statoil’s operations, according to the announcement. The company has outlined three areas for which it has determined hold the most potential for “rapid technological development.” The first area of improvement is digitalization of work processes, which will increase efficiency by minimizing the need for manual, repetitive tasks. The second area is advanced data analytics and machine learning, which will increase understanding of the large amounts of complex data already available. The third area is robotics and remote control operations, such as robotic drilling, which will increase safety and reduce costs by reducing human activity in “physically intensive activities.”
As such, Statoil also has announced seven new programs that will focus on developing technological innovation in these areas:
- Digital safety, security and sustainability: Using data to reduce safety risks, improve learning from historical incidents, strengthen security, and reduce the carbon footprint of our operations.
- Process digitalization: Streamlining of work processes and reduction of manual input across the value chain.
- Subsurface analytics: Improving data accessibility and analytical tools for subsurface data, enabling better decision-making.
- Next generation well delivery: Enhancing utilization of well and subsurface data for planning, real-time analytics, and increased automation.
- Field of the future: Smart design and concept selection by maximizing the use of available data, and integrating digital technologies in future fields.
- Data-driven operations: Using data to maximize asset value through production optimization and maintenance improvements.
- Commercial insights: Improving analytical tools and data accessibility within our commercial areas to enable better decision-making.
“Digitalization can help improve the safety and security of our operations, both by means of data that provide us with a better decision-making basis, and through reduced exposure in risky operations,” Statoil CEO Eldar Sætre said in the announcement. “A combination of digitalization, standardization and a culture for continuous improvement may drive cost reductions, and form the basis for increased value creation and activity.”
The company also announced the establishment of its new Digital Centre of Excellence, which will facilitate the company’s digital endeavors. It will possess “dedicated units for data analytics, machine learning and artificial intelligence.”
The announcement is sure to be followed by similar announcements from other large E&P companies in the coming months and years. The E&P industry has waited long enough to make the transition from stand-alone iron to digitally connected systems and equipment, and it will undoubtedly realize the true value of these technologies, long after 2020.
Still, companies that have resisted the change should take notice of Statoil’s activities. The plan that the firm has described could be a model, not only for one single company to follow, but for the entire industry. As other E&P companies begin to adopt these types of technologies in a widespread fashion, the oilfield services sector also will be pressured to follow suit, to meet the needs of oil companies. Those that don’t may be left in the dust.
ARC believes that the “lower for longer” market is ‘fertile ground’ in which the seeds of digital transformation can take root and grow such that companies will be less concerned in the future about the price of oil and more concerned about employing sufficient numbers of qualified and technically fluent employees that will be running the digital oilfields of the future.