Digital Collaborations Set To Begin Unlocking Production
Authors: Presley Jennifer 
Published: August 2023

_

In the brave new world of oil and gas production, digital alliances are emerging as a powerful tool for minimizing costs and maximizing efficiencies while ensuring safe and reliable operations. In the fast-paced world of business and innovation, an old proverb often rings true: “If you want to go fast, go alone. If you want to go far, go together.”

Innovative industry collaborations are making a difference, with traditional oil and gas service firms like Baker Hughes and SLB forming strategic partnerships with cutting-edge digital technology providers, leveraging the expertise of both to advance abilities and operations.

By leveraging technology such as artificial intelligence, automation, and remote operations, the oil and gas industry can monitor valuable resources with increased granularity and deploy its talented teams to concentrate on mission-critical endeavors, driving growth and maximizing their potential for success.

By harnessing the power of digital, oil and gas companies can now access real-time data, enabling them to make more informed decisions and streamline processes.

On the flip side, the digital technology companies involved in these partnerships gain valuable insights and domain knowledge from their energy counterparts, leading to tailored solutions to meet the specific needs of the energy sector and potentially opening new market opportunities.

Need for Value

The driving force behind these collaborations is the shift from a grow-at-all-costs mentality to one focused on value per barrel, according to Nikhil Patel, partner at McKinsey & Company.

“These collaborations reflect a broader need for value from digital,” said Patel. “We’ve had multiple rounds of market price challenges and multiple rounds of oil and gas companies pulling the usual levers to bring costs down and production up. Those cannot be pulled much further. Digital remains one of the few means to improve performance meaningfully.”

The challenge, Patel said, is finding a way to thrive and succeed at the goal of increasing the value per barrel of production.

“Digital is central to that,” he said. “Digital transformation isn’t new to the industry, which has invested billions of dollars into digital. The results, however, have been ambiguous to date.”

Patel said there’s a question about what is holding the oil and gas industry back from delivering on the full promise of digital.

“While everyone believes in its potential, many companies, after a decade of trying to make it work, are stepping back and asking, ‘What will it take?’”, he said, adding that McKinsey has found in its research on the degree of success and failure that less than 30% of digital transformations succeed.

The answer can be found at the heart of those collaborative partnerships that understand and respect the knowledge and skills of each partner.

“Oil and gas companies are really good at producing barrels in a capital- and risk-heavy environment, but struggle to keep up with digital change,” he said. “The tech companies are setting the pace of digital change but aren’t built to drive change into the oil patch. They’ve recognized that they can do something special by combining their strengths and offsetting their gaps.”