How Technology Is Changing the Oil and Gas Industry

Technician sitting in a control room monitoring a process petrochemical plant.

Once considered to be merely on the horizon of the oil and gas industry, automation has taken center stage in recent years. With technological advancements catching up to the human imagination, there has been a gradual shift to automated technologies in virtually every industry. By reducing the time, error, and risk involved in human labor, today’s sophisticated automation tools can be hugely beneficial to companies of all kinds.

For the oil and gas industry, in particular, the shift to automation was as a matter of necessity. When prices for oil fell by 75% over 20 months beginning in 2014, the industry was forced to modernize. Four years later, prices have recovered, hitting record levels in the United States. With this new technology — and the major advancements sure to come — the oil and gas sector is poised for unprecedented success. But it is also important to consider whether these machines may replace workers, and how employees’ duties may shift.

Automation in the Oilfield

The technology being used in the oil and gas industry today is highly sophisticated. At Devon’s WellCon center, engineers are able to view a project remotely on screen, monitoring a 2-mile-long well being drilled 10,000 feet underground. If the drill wanders away from the “sweet spot” — which can be as small as 10 feet across — an alert is raised, and the engineers call the crew for adjustments. Such precision can only be achieved with a machine, making this one of many benefits the industry can gain from automation.

Other key advantages include:

  • Monitoring capabilities — With automation, oil and gas companies are able to keep track of their pipes and networks with an unprecedented amount of oversight. With systems like RealSens and investments in terminal automation, companies can monitor entire pipeline networks and remotely detect leaks. Plus, onshore and offshore pipelines are able to be observed for safety using autonomous underwater vehicles and unmanned aerial vehicles. This is done to ward off criminal activity, terrorist attacks, and even repair damages. Weather monitoring systems, meanwhile, can be used to detect changes in seismic activity, as well as ocean and atmospheric levels.
  • Reduced operating costs — According to McKinsey & Company, effective use of digital technologies could reduce capital expenditures by up to 20%.
  • Predictive maintenance — Advanced analytics can now be implemented to detect issues preemptively, before equipment breaks down. By taking these proactive measures, companies can decrease maintenance costs by as much as 13%.
  • Reservoir limits — Companies have been able to increase reservoir through the use of digital automation technologies.
  • Safety — With automation, workers no longer have to go out into the field to make risky repairs. Instead, augmented reality can be used, or workers can operate drones to make needed repairs.
  • Efficiency in marketing and distribution — Advanced analytics provide oil and gas companies with a better picture of consumer habits and desires, while allowing for optimized pricing models and more efficient supply chain management. For example, geospatial analytics can provide insight into route optimization and assist with location planning for different networks.

Weighing the Human Cost

Any discussion of automation will inevitably touch upon the technologies supplanting — or shifting the roles of — human labor. Though the industry has been doing well since the 2014 crisis, employment in the oil and gas sector is still down 21% since 2014. “It seems like they’re doing more with less people,” says Eric Neece a former roughneck for GE Oil & Gas, in a recent Wall Street Journal article.

Devon, for example, is down 5,500 employees from December 2014, and laid off 300 workers this past April. Meanwhile, the company has invested more than $100 million in advanced technologies including fiber optic cables and augmented reality. As a result, towns built around the oil and gas economy have been affected, with old industry facilities being converted for other uses.

Does this mean workers will be completely supplanted by automated technologies? No, says Jim Claunch, vice president of operational excellence for Statoil. “The more jewelry we put on the wells and pads out there, we’re going to have people that are making sure the sensors are working and the communication is working — the whole nine years.”

The human element will still be needed, just for different applications. Jon Krome of BHP Billiton says, “Is technology going to outsource everybody? The answer is absolutely not. Is it going to take an edge off of some of the very high-risk, perhaps most manual, of the labor force? Absolutely.”

In fact, the more refined these machines become, using algorithms to enhance their learning, the more workers will be able to perform their duties with enhanced safety, efficiency, and sophistication — and less training. This will create new opportunities for more workers. Instead of being replaced, the “role of the human operator changes … They will be responsible for making sure they feed clean, relevant data into the algorithms,” according to Peter Wang, a geophysical technical advisor for Paradigm.

Adaptation Is Key

Automation offers a range of unique benefit for companies looking to improve their business operations and reduce costs, making technological investments a wise decision. For the people that these systems and tools are replacing, the transition is disruptive. However, these changes will ultimately be very beneficial for the industry as a whole.

Ultimately, it is up to oil and gas companies to adjust. To illustrate this, Scott Desmarais of McKinsey & Co., cited the changing automotive industry as a parallel. “A mechanic 30 years ago didn’t use electronics whatsoever. Today, they’ve almost got to be an electronic tech in addition to pulling that engine out.”

Lastly, though, consider this encouraging example in the oil and gas industry: Henry Hopkins of BP used to rely on instinct when deciding which wells to inspect. Now, a computer algorithm maps his route, and he uses augmented reality glasses to send a feed to BP technicians in Denver, who then send him directions and key data, showing him how to perform the complicated duties required. Hopkins is still needed. Knowing how these glasses work and his intimate knowledge of oil wells from years of hands-on experience make him a vital part of the team — an ideal synthesis of technology and human labor.

 

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