Previous attempts at digitalization have failed because they never achieved enterprise scale. However, GE says new tools and technologies can help the oil and gas industry overcome past challenges and secure efficiency and productivity gains.
Low oil prices are reducing companies’ revenue but global energy demand isn’t slowing. The International Energy Agency predicts world energy demand will grows by nearly one-third between 2013 and 2040.
“This increase in demand can only be met by leveraging all available energy sources,” writes Marco Annunziata, chief economist and executive director of global market insight at GE, in a blog about the new report. Oil accounts for about 30 percent of energy demand today — oil, gas and coal make up about 80 percent — and while renewables will likely make up a larger piece of the energy pie in the future, “oil will remain an important part of the equation,” Annunziata says.
So how does the industry meet the growing demand for energy while becoming more efficient and environmentally sustainable amidst uncertain oil prices and increasing environmental regulations? In the report, Digital Future of Oil & Gas & Energy, Annunziata argues that Industrial Internet solutions — combining sensors with cloud-based, big-data analytics — provide the answer to these challenges by maximizing productivity and lowering operating costs.
Digital technologies will also improve the oil industry’s environmental performance, says Ashley Haynes-Gaspar, general manager, software and services at GE measurement and control.
“Digital technologies drive operational efficiencies that optimize resource productivity,” Haynes-Gaspar told Environmental Leader. “For example, we’re delivering analytical insights that allow heavy oil producers to fine-tune the amount of steam used in the extraction process. With a better understanding of the correlation between the steam activity and the production results, operators recover more oil with less water use.
“Digital technologies can also help maintain safe and reliable pipelines,” Haynes-Gaspar says. “Our Intelligent Pipeline Solution aggregates and analyzes several streams of data, providing operators a comprehensive view of their pipeline networks and enabling them to make more informed, proactive decisions.”
The last several years have seen a sharp reduction in the cost of sensors, and in the cost of collecting, storing and processing data, thanks to cloud-based technologies. The instrumentation of existing infrastructure has therefore become more cost effective, and data-driven insights can be obtained at lower cost.
Meanwhile, the first generation of industrial internet products and services has proven it can deliver efficiency and economic gains — an average 20 percent performance improvement for companies across several industries, GE estimates.
The next generation is the “industrial-apps economy,” the company says. GE estimates that, by 2020, more than 100,000 software developers will be building apps on Predix — its cloud-based platform that will be open to third parties to develop apps for industrial use — and generating some $225 billion in economic value.
“The adoption of these digital solutions should be part of a broader strategy,” Annunziata writes. “But the true challenge will be to meet a growing demand for energy in a way that is efficient and sustainable from both a technical and environmental perspective — and to mitigate the cyclical swings in capex, production and prices that could otherwise cause substantial future shocks to the global economy.”