From bytes to barrels

The digital transformation in upstream oil and gas

The lower-for-longer downturn and moderating operational gains have provided an extra incentive for digital advancements, and perhaps turned the opportunity into a need, for companies to save millions from their operating costs and, most importantly, make their asset base smarter and more efficient.

Advancement in technologies, the falling cost of digitalization, and the ever widening connectivity of devices provide a real competition-beating opportunity to upstream oil and gas (O&G) companies who play the digital revolution right. Companies can benefit from a strategic road map that helps them assess the digital standing of every operation and identify digital leaps for achieving specific business objectives. More importantly, it could push them to embrace a long-term goal of transforming their core assets and, finally, adopting new operating models - the journey from bytes to barrels.

The prize of going digital is clear, but for most companies, getting there is not easy. A coherent road map could help make sense of the digital muddle and drive more value.

This paper, first in the series of digital transformation in oil and gas, presents Deloitte’s Digital Operations Transformation (DOT) model - a framework that explains the digital journey through 10 stages of evolution, with cybersecurity and digital culture at the core - and uses it to ascertain the prospective value for seismic exploration, development drilling, and production segments.

Increased productivity, safer operations, and cost savings 

Rapid changes in the digital world, a complex web of interdependencies between technologies, and even many names for the same technology often make it difficult for the industry to enable its digital transformation. For instance, out of the more than 200 technologies ever listed on Gartner’s Hype Cycle from 2000 to 2016, over 50 individual technologies appeared for just a single year, while many took years longer to register mainstream success.  

Although rapid prototyping (“fail early, fail fast, learn faster”) of new digital technologies is acceptable in many sectors, capital-intensive businesses such as O&G can’t solely rely on a trial-and-error approach or take a multi-technology route to address a problem. 

"Consumers and IT-based firms know the early bird gets the worm, but oil and gas players would rather be the second mouse that gets the cheese. This is because it's more costly to be the first to adopt new oil and gas innovations”

Further, current digital narratives in the O&G marketplace are often narrow and follow a bottom-up technology language. What could help the industry is a structured, top-down approach that not only overcomes this digital deluge but also helps O&G executives to draw a comprehensive road map for company wide digital transformation.

Put simply,the approach should answer three strategic questions on digit —“How digital are you today?,” “How digital should you become?,” and “How do you become more digital?”

Decoding the digital deluge: The DOT model

Given the diverse starting points and an array of choices, O&G companies could benefit from a coherent framework that helps them achieve their near-term business objectives, measures their digital progression through stages of evolution and, above all, gives them a pathway to ultimately transform the core of their operations, the real assets and the business model itself. 

The Digital Operations Transformation (DOT) model is such a road map—a digital journey of 10 milestones, where the leap from one stage to another marks the achievement of specific business objectives, and puts cybersecurity and an organization’s digital traits at the core. Although the journey technically completes at stage 10 for a specific asset or operation, it should be broadened and extended into a never-ending loop to include a wider set of assets or business segments, the entire organization and, ultimately, the ecosystem of a company, including supply chain and external stakeholders.

From bytes to barrels

The prize of going digital is clear, but for most companies, getting there is not easy. A coherent road map could help make sense of the digital muddle and drive more value.

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