By: Ashis Kumar Pattnaik, Senior Consultant, Mid & Downstream Oil & Gas, CSTG

The new age digital spectrum has engulfed the entire Oil & Gas value chain, bringing with it massive digital transformation of upstream, midstream and downstream industries. Digital Transformation is one of the core innovation strategies being used by leading mid and downstream O&G industry today. Refineries are using digital solutions to increase asset utilization through higher production efficiency, including performance of multi-plant sites and integrated value chains. For larger organizations the key challenge is to accelerate value creation and to deploy methods that transform operations ahead of competition.

What will digital adoption change?
The objective is to build a culture of continuous improvement that includes customers and field operations. What mid and downstream O&G companies need is an intuitive and user-friendly, real-time KPI management system that easily adapts to changing demands and market dynamics. The ultimate outcome will be an efficient decision support system that optimizes operations and maintenance planning by providing remedial recommendations that could help avoid potential failures. It should be able to deliver process improvements and higher business value through:

• Collaboration – Collect and analyze production and maintenance data of the plant to ascertain production performance and asset health related alerts and notifications in real time
• Transaction Management – Digitize the handling of transactions between terminals, pipelines, fractionators etc. with the aim to integrate all operations with commercial activities
• Optimized Logistics – Using digital technology to optimize scheduling, dispatch, pricing and invoicing processes. This will also help collaboration between various logistics providers and commercial users
• Better Decision-Making – Provide analytics-driven business and operational insights to improve asset performance
• Risk Management – Insights into possible risks from multiple sources will provide a comprehensive view of market, credit and operational risks

So what’s blocking the flow?
The time for O&G enterprises to expand their digital capabilities is now, but rapidly shrinking petroleum reserves, increasing demand, strict environmental policies and price volatility are posing some big hurdles to digital adoption. Moreover, the downstream O&G business is a conservative industry with restrictions that make it difficult to adopt newer technologies.

Companies are project-focused and safety conscious, and they value execution excellence and predictability. And because the industry has used automation and data processing for decades, many believe they are already up to speed with digital technologies and almost consider themselves digital natives. On top of this, the industry’s structure also poses some challenge. Oil companies rely on oilfield services companies and engineering, procurement, and construction firms to carry out key activities. This creates mutual interdependencies and makes it difficult to forge a consensus for change.

The key issue remains that O&G companies prefer age-old practices, such as using data analytics to improve operations and basing decisions on siloed data, leaving a huge untapped potential for digital transformation. According to The World Economic Forum, USD 1.6 trillion of value could be unlocked in the O&G industry by implementing digital transformation. They need to combine the power of operational improvements with the organizational change required to unleash the full digital potential. Mid and downstream companies could see additional opportunities to the tune of USD 100 billion and USD 275 billion, respectively. Static regulations, an aging workforce, and the inability to share information across the industry are some of the restrictions blocking this growth, but we hope that soon they will realize the value and allow digital transformation to unlock value.