A new study by Rystad Energy estimates that as much as $100 billion can be eliminated from upstream oil and gas budgets through automation and digitalization initiatives in the 2020s.
Service companies are reinventing themselves to help operators unlock these savings, researchers said.
Rystad estimates that in 2018, $1 trillion was spent on operational expenditures, wells, facilities and subsea capital expenditures across more than 3,000 companies in the upstream space.
While there are varying degrees of potential savings within offshore, shale and conventional onshore activity budgets, Rystad said that in total, around 10% of this spend can be erased through more efficient and productive operations thanks to automation and digitalization.
“Many key industry players are setting optimistic goals, but the realization of these initiatives largely depends on how freely data is shared amongst companies and how commercial strategies are deployed to drive this development. Because of this, it could be years before we see full adoption. However, based on our analysis of 2018 capital spend and operational budgets, we believe savings could easily reach $100 billion,” Rystad head of oilfield services research Audun Martinsen said in a statement.
Operators have predicted that automation and digitalization will reduce drilling, facility and subsea costs from 10 to 30 percent, but because not all operators or developments have the same capacity to reduce costs, adoption across the entire value chain will be closer to 10 percent by the end of the next decade.
The painful oil market downturn has given upstream operators and service providers a strong incentive to adapt and become more efficient or be forced to close down shop, researchers said.
“A race among suppliers is currently underway as companies roll out new digital products; the last three months alone have seen major releases by Schlumberger, Baker Hughes and TechnipFMC,” Rystad said.
“One of the largest digitalization initiatives to date was recently launched on 17 September 2019, the result of a collaboration by Schlumberger, Chevron and Microsoft. This ambitious project aims to visualize, interpret and ultimately obtain meaningful insights from multiple data sources across exploration, development, and production and midstream sectors.”
Another driver of digitalization is that data storage and processing have become significantly cheaper, and the increased connectivity through the so-called “Internet of Things” has allowed more data to be efficiently digested, researchers said.
“Nonetheless, the digital systems of an offshore platform can have around 5,000 to 15,000 sensors, and connecting this myriad of data points is not a straight forward process. Given the complexity of digitalization efforts, it is likely that investments will be primarily aimed at new greenfield projects, while aging producing assets will not be a priority.”