Change for the better

Scott MCClurg explains how automation will help the oil and gas industry do more for less

Cost and efficiency savings have been watchwords within the oil and gas industry for decades. The sector has never lacked challenges, both operational and economic. However, the most recent oil price downturn has focused the mind on doing more for less on a scale never seen before.

The convergence of technological change, global regulation and an emphasis on a sustainable, future-fit energy supply has led to fast-paced re-assessment of how oil and gas companies can change for the better.

One theme to emerge through this process is digital labour. The role of automation in the oil and gas industry has gradually developed for many years and is now gathering momentum.

A recent report from DNV GL1 suggests automation will be one of the key drivers of oil and gas technology development. This seems to affirm the outcomes of a study of global finance leaders conducted by EY2 last year, which found that two thirds expected automating processes to become a priority for their organisation.

Automation, or specifically Robotic Process Automation (RPA), is attractive to oil and gas companies due to its potential to bring down costs and increase productivity.

Advances with technology such as data analytics, big data and control systems offer oil and gas companies the opportunity to systematically and safely complete work – especially where it is otherwise considered dangerous or high-cost.

This was the thinking behind Schlumberger’s acquisition of automation technology and solutions specialists, Omron Oilfield and Marine, earlier this year. The purchase indicates that oilfield services companies are starting to make moves to capitalise on future demand for automation in oil and gas.

Furthermore, that trend seems to be resulting in an optimistic view of the potential employment opportunities amongst industry workers. While the technological revolution may see some workforces cut, it also poses an opportunity for employees to take on new, more skillorientated jobs. Studies are showing considerable appetite for upskilling and retraining, as oil and gas employees look to leverage the efficiencies and benefits of a more automated industry. Automation will require human involvement in maintenance and engineering, as well analysis of new and higher volumes of data generated.

One particular area the industry has already identified as a strong fit for automation is the monitoring of pipelines, both onshore and offshore. Automation is proving ideal for the frequency of monitoring required. Autonomous Underwater Vehicles (AUVs) are featuring more and more often to efficiently discover potential vulnerabilities.

As well as effective deployment in on-site activities such as pipelines and drilling operations, new, automated processes and technologies can also be adopted in-office. This can result in improved internal communication and more efficient data sharing and management having the potential to enhance performance.

Automation can also help combat the skilled labour shortage being felt by the energy sector. It has led companies to rethink operational strategies by implementing automation or digitally-connected infrastructure. The hope is, unsurprisingly, that this will help increase productivity and efficiency. Having easier, quicker and more efficient access to data and real-time information regarding operations and maintenance can also help the industry improve production levels.

There is room for lessons to be learned, of course. Thankfully, the oil and gas industry does not have far to look for inspiration on how to apply automation for efficiency.

The aerospace and automobile industries are two prime examples of where IT is an integral part of their production processes. Indeed, a partnership was announced last year between the UK oil and gas industry and research institutes, with the aim of tapping into the aerospace and automotive industries for lessons on innovation. The principle behind such a coalition is that other capital-intensive industries can provide examples of successful long-term transformations, in particular during times of economic strain.

While progress has been made, some challenges still exist. The oil and gas industry is one sector where companies are still negotiating the complexities of a fully developed automation strategy.

There are questions that need to be addressed, too, such as striking the right balance between physical and digital labour. The sector must preserve its strategic outlook and protect the skills provided by human capital such as insight-driven analysis, abstract thinking, creative problem-solving and leadership. Even if automation leads to an increase in data and a plethora of new processes, the management and refinement of this new dawn cannot be achieved in a vacuum.

There is little doubt that there will be more automated equipment deployed at all stages of the oil and gas value chain in the near future. If the sector, and its big players in particular, remain open to learning lessons from other industries it will start to discover that you can do far more for less.

As the global population is widely expected to reach 10bn by 2050, the energy industry has a job on its hands to meet demand. So, it is increasingly looking at innovative ways to increase efficiencies. It is about having better access to information across exploration and production operations and maintenance and if it can effectively work hand in hand with human expertise, automation and digitisation will keep the industry competitive for the decades ahead.

1 Automating oil and gas:
2 DNA of the CFO:

HSBC corporate banking
Scott MCClurg is Head of Energy & Sustainability, HSBC Corporate Banking. HSBC serves c17 million customers in the UK and employs approximately 43,000 people. In the UK, HSBC offers a complete range of personal, premier and private banking services including bank accounts and mortgages. It also provides commercial banking for small to medium businesses and corporate and institutional banking services. HSBC Bank plc is a wholly owned subsidiary of

HSBC Holdings plc.
HSBC Holdings plc, the parent company of the HSBC Group, is headquartered in London. The Group serves customers worldwide from around 3,900 offices in 67 countries and territories in Europe, Asia, North and Latin America, and the Middle East and North Africa. With assets of US$2,492bn at 30 June 2017, HSBC is one of the world’s largest banking and financial services organisations.

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