The Role of Automation in the Future of Energy for Oil & Gas

by | Jul 6, 2023 | Automation, Future of Work

The oil and gas industry is in a state of transition, largely because of increasing demands. Regulatory, economic, environmental, and geopolitical components are influencing the future of energy for oil and gas companies. Modernizing processes and operations is imperative to push the sector toward resilience and survival. A key part of this change is the ability to leverage automation.

How will automation facilitate this transition, and what opportunities lie ahead to secure the future of energy?

Challenges in the Pursuit of Modernization and Digital Transformation

As the oil and gas industry looks to the future of energy, key parts of the journey are modernization and digital transformation—but the reality is complex, involving many different stakeholders, regulations, priorities, and logistical concerns. Pursuing any digital transformation initiative comes with the weighty tasks of considering all these factors and creating a path toward efficiency. Let’s look at some of the challenges you might face.

Higher Operating Costs Hinder Progress

In many areas, budgets for oil and gas are decreasing. There are fewer dollars to move operational projects forward for a variety of reasons including volatility in the market, the potential for a recession, and geopolitical turmoil. Revenue remains steady, but forecasting it requires many assumptions that haven’t played out yet.

Another concern is that operational costs are rising, and because the industry is capital expense-heavy, companies can’t just pinch pennies to reduce those costs. Especially concerning is the cost and availability of labor. The oil and gas sector, like many others, is contending with labor gaps. Workforce numbers from the Bureau of Labor Statistics (BLS) for the field saw unemployment drop to 1.8 percent in May. With fewer workers in 2023, production cannot grow at the rate it did in 2022. Additionally, to retain the workers they have, companies are increasing compensation. ExxonMobil did so by an average of 9 percent in 2022, which amounted to a 15-year high in raises at the company.

Companies have to invest more in their recruitment strategies to keep their pipeline flowing, and these budget strains require a reliable solution.

Compliance and Regulations Are Only Becoming Stricter

The oil and gas industry is steeped in compliance and regulations that impact every area of the business in some way. Adherence is a multifaceted—and non-negotiable—process. With many regulatory bodies in the U.S. and around the world eyeing oil and gas, managing all these regulations and their associated costs is becoming increasingly difficult. 

Oversight must be part of all operations, and there must be constant observance of the data regarding adherence to regulations and safety protocols. As a result, oil and gas companies are struggling to digitally transform these processes in an attempt to ensure they’ve crossed every t and dotted every i.

Infrastructure Upgrades Are Necessary and Costly

The oil and gas industry is mature, which means it has aging infrastructure, equipment, and technology. Without upgrading these things, the industry may see little advancement in finding, producing, transporting, and refining oil and gas. Digital transformation and the future of energy for oil and gas is dependent on renewal and updates. 

Unfortunately, legacy systems are hard to migrate, integrate, or decommission without substantial costs. With those costs in mind, oil and gas companies are pursuing digital transformation with little traction. Few have had substantial victories here; 70 percent of projects have trouble moving past the pilot phase. The industry recognizes the great value in digitization, but the digital transformation journey is often a bumpy one for companies in the oil and gas sector, which tend to be massive, global, and complex.

These factors create a volatile environment, making efficiencies harder to attain. The ability to harness the power of automation, both Robotic Process Automation (RPA) and Intelligent Process Automation (IPA), is integral for the future of energy in oil and gas.

How Can Oil and Gas Get the Most Value from Automation?

Automation is a broad term with potential application in every area of the oil and gas landscape. It can accelerate digital transformation and help you realize operational efficiency.

Here are some use cases for both RPA and IPA in oil and gas.

Leveraging RPA in Oil and Gas to Drive Efficiency

RPA takes repetitive processes off of human employees’ plates and gives them to digital robots. With RPA, oil and gas companies can do many things to save time and money, including:

  • Automating purchase order generation and billing validation
  • Consolidating data from the trading floor so analysts have it available immediately
  • Managing contracts via bots that send alerts when renewals are coming up
  • Implementing compliance checks and balances related to reporting
  • Aggregating data from IoT devices in the field to understand performance
  • Creating better customer experiences with self-service options to manage inquiries that don’t need human intervention

Making Automation Smarter in Oil and Gas with IPA

IPA adds Artificial Intelligence (AI) to RPA, enabling automation to do more than simple tasks. The oil and gas industry can use IPA for:

  • Analyzing data from IoT devices to support predictive maintenance and asset management
  • Defending against cyberattacks, which are a growing threat to oil and gas companies
  • Enabling interoperability between legacy systems and new technology
  • Monitoring and detecting leaks or abnormalities in pipelines
  • Automating rig and well drilling, which would require less labor, improve safety, and speed up the process

With RPA and IPA, the future of energy for oil and gas can be more consistent and efficient. 

Automation Delivers Operational Efficiency 

The benefits the sector can achieve from automation center around operational efficiency, which is the primary goal of digital transformation. In such a fragmented and expansive industry, the implementation of automation must deliver big results. Here are some of the advantages you can realize:

  • Cost savings: The industry expects to save $237-$813 billion by adopting intelligent automation as a result of lower expenses around production with shorter timelines.
  • Fewer errors: When automation takes over repetitive, rules-based tasks, the risk of human error is gone.
  • Improved customer satisfaction through better experiences: With better tools, customers can resolve their issues faster and have a better opinion of the business.
  • Improved decision-making: Insights from real-time data put companies in a better position to resolve issues and make determinations with a full view of any problem.
  • Enhanced safety: If automation can remove humans from the most dangerous elements in the field, they’ll be less at risk. Additionally, automatic leak detection enables companies to act immediately to protect communities.
  • More satisfied employees: Automation enables more meaningful work, allowing people to be critical thinkers and problem solvers. When employees aren’t wasting their intelligence and expertise on the mundane, companies can see increases in engagement and retention.

How Can Oil and Gas Companies Begin or Resume Their Journey to Automation and Efficiency?

To hit those digital transformation and modernization objectives, your organization must have a defined automation and efficiency path. Maybe you’ve already started, stopped, pivoted, and resumed—but do you have everything in place to succeed this time? 

Here’s what our experts recommend:

  • Align digital transformation and automation because they need to be on the same trajectory.
  • Use Process Mining to understand the true steps of a process before automating it.
  • Define use cases for RPA and IPA, starting with your goals and then working backward.
  • Create a Center of Excellence (CoE) to stand as the central source of truth and governance for automation initiatives.
  • Work with experts in the automation space to plan, test, refine, and scale.

The future of energy for oil and gas is bright—so long as the industry embraces and commits to automation. Improvements are possible across the board, with one of the most critical being the ability to build the future of your company with more meaningful work.

Learn more about automation and meaningful work by reading How Automation Plays a Key Role in Meaningful Work.

How Automation Plays a Key Role in Meaningful Work

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