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Digital Transformation and Energy Production: Making the Leap

Apr 7, 2022

Energy production companies have operated under similar conditions for nearly a century. Oil and gas extraction, refinement, and subsequent energy generation have not changed dramatically since their inception. Granted, new technology has made these processes more efficient, but they are still overwhelmingly analog businesses. It’s time for this sector to make the leap and complete a digital transformation. The most successful players in the industry have already done so. How can your company make the transition to a digital environment?

Digital Transformation and Energy Production

Digital Transformation and Energy Production: Making the Leap

Overcoming History

Rewriting tradition is difficult. Despite incredible advancements in material extraction, refinement, and even energy generation itself, the overall process hasn’t evolved that much from its roots. Drills and pumps still pull oil out of deposits and gas out of fields. Tankers and pipelines still move raw material across long distances. Refineries still use the same chemical processes, albeit with better equipment. Even end-use cases, like internal combustion engines, would still be recognizable to a person from the roaring 20s.

The long-term consistency in oil and gas operations has led to a subconscious idea that this industry cannot be digitized. It was born in analog times, and so it shall remain, or so many assume. Others point to the rise of renewables as a sign that fossil fuels’ days are numbered, so why invest in digitizing a dying industry? These ideas are simply false. The fossil fuel industry still has room to grow, and digitizing can even make it greener! 

Digital Advantages

Going digital provides numerous advantages for businesses in all industries. In the oil and gas sector, however, the benefits are even greater since there are still many aspects of the industry that have yet to be digitized. Completing a digital transformation means you’ll have access to real-time data regarding every aspect of your company’s operations. This data can help you in a variety of ways, as we’ll see.

Most importantly, digitizing your processes makes them more efficient and can even reduce downtime. Your operating costs will drop while you’ll simultaneously see productivity levels rise. The end result of a digital transformation is always improved profitability. But the benefits go beyond your quarterly reports and bottom line. You’ll also have more control over your operations, making it easier to manage them on a global scale. Going digital is essential for any company looking to scale and grow faster.

Renewable Energy Is Already There

Even though we’re focusing on how fossil fuel companies benefit from going digital, analyzing the competition is always wise. Renewable energy producers saw an opportunity to digitize everything from day one. Now they serve as a good model for what you can expect from your transformation. Since solar panels, wind turbines, and hydroelectric facilities are entirely digital by design, they can collect data on smaller scales. A modern solar panel can report data on each of its cells, for instance.

Likewise, individual wind turbines in a farm stream data to central units, which then send that information to cloud-based servers. This gives engineers a turbine-by-turbine map of the farm and its performance. For renewable energy companies, maintenance is easy since they can spot a weak panel or turbine in a field in seconds. Data derived from one deployment will be used to facilitate future deployments. Since modern renewable energy started out digital, it’s taken huge leaps forward in mere decades.

Completing a Digital Transformation

What can those wind farms and solar farms teach us about going digital? The key is to collect data in real time, or as close to it as possible, from each piece of equipment in your operations. This is practically automatic in a modern renewable energy setting since the components used were built with this in mind. But in traditional chemical processes, collecting that data can be a challenge. Fortunately, it’s a challenge your company can overcome.

Although new equipment may have better data collection built in, you don’t necessarily have to upgrade your entire operation. It’s possible to retrofit machines with sensors that enable data collection. Modern networking infrastructure and better short-distance technology like Bluetooth makes it possible to transform any refinery or extraction point to collect data digitally, rather than manually. Once you build your data collection network, the rest is easy. The end result is always worth it.

Technologies Unlocked by Going Digital

Gathering data is only the beginning of the benefits you can derive from going digital. Data enables other technologies with even greater returns for your company. For instance, you can take a more proactive approach to maintenance and thus reduce downtime and maintenance expense. Data visualization can help you identify threats to your infrastructure and ensure its condition. You can even turn data into valuable insights for your company. All of these technologies have one thing in common: Artificial intelligence.

AI can even take control of some of your operations once you are satisfied with its understanding of your data. Automation using AI is critical for growth as it reduces labor costs and speeds up processes across the board. After some time, you’ll even be able to project your company’s performance into the future using predictive models. When disaster strikes, you’ll already have a plan. Where should you begin your digital revolution? It starts with data collection.

Enterprise-Wide Monitoring

The first goal of any digital transformation should be to reach enterprise-wide monitoring capability. What this means is that you should be able to pull data from any piece of equipment at any time to see how it’s performing. This may require retrofitting older hardware with sensors that can deliver data to the cloud. While this process takes time, the reward is worth the effort.

You will be able to monitor all of your assets and detect faults faster. This can save you millions. Consider just one common area of loss for oil and gas companies: Pipeline leaks. A recent US study found that there was, on average, about one leak every two miles of pipeline. However, pipelines are typically inspected at much larger intervals. If your pipelines had better sensor coverage, you could spot these faults without performing physical inspections and operate more efficiently.

Artificial Intelligence

AI is no longer science fiction. You don’t need an advanced supercomputer to bring AI into your organization. Modern cloud computing and software have made AI accessible to the masses. Once you have a robust data collection network, you can feed it into these cloud computers to generate valuable insights.

Preventative Maintenance

Oil and gas companies understand the value of maintenance. A single malfunction can stop an entire production line. However, the traditional approach to maintenance creates redundancy and calls for high labor costs due to the high degree of expertise needed in your engineering team. The traditional way is to perform maintenance at regularly scheduled intervals, even if a particular component doesn’t actually need any service.  

Preventative maintenance takes data and identifies equipment that’s about to fail. When a machine or component exceeds certain operating parameters, you’ll receive a notification. You can automate this workflow to push notifications directly to your maintenance staff. Instead of checking everything and finding nothing, you check only the machines that need maintenance soon. You can schedule downtime more effectively and use your resources more efficiently.

Business Insights

Artificial intelligence can also help your business become more efficient. You’re more than just crude oil and tanks of natural gas. You’re an enterprise with sales teams, accountants, customer service representatives, managers, and more. Their processes also impact your bottom line. Using business data analytics, you can find opportunities to improve how you conduct business. With accurate data, it’s easy to trim wasteful activities and focus on those that generate more value.

Plan B Through Z

The world is unpredictable, but AI can give you an idea of what to expect in the future. Once you have a wealth of data from a variety of sources, you can experiment with hypothetical scenarios. This is called predictive analytics, and it’s how big businesses weather the worst storms.

Just look at the current oil and gas market and how it was upended by Russia’s invasion of Ukraine. The most successful companies have been modeling this exact scenario for months and therefore they had plans in place. Instead of falling behind, they’ve stayed ahead of the competition.

Digitize Your Energy Production

Energy production may not have changed much in the last century, but how we handle it has. Going digital is vital for success going forward. Contact SAAB RDS to start your transformation now.