Uber and Lyft have demonstrated across the world how digital innovation enabled two entrepreneurial companies to disrupt, with startling speed, the transportation industry across the world. By doing so, they changed the entire structure of the automobile ecosystem, while at the same time giving big value to consumers and travelers.
Even in the face of such clear demonstrations, the executive suite and workers in the oil and gas and chemicals industries are conflicted on the subject of digital transformation.
Executives do know they have to act. The very survival of their companies is at stake. As Jeff Sandhu, the visionary executive producer of Malaysia’s BFM Business Radio 89.9 Tech Talk said in his interview with me, “If you haven’t already started implementing digital transformation, you’re already dead!”
Oil industry executives, it must be said, largely believe artificial intelligence (AI) will provide their company with competitive advantage, and that it’s urgent to create a strategy to move forward. And yet less than half of the companies globally have started on this pathway. A recent survey of industry executives (conducted by MIT Sloan Management Review in the U.S.) said that 60 percent believe it is urgent for companies to form an AI strategy and 87 percent believe that AI will build or sustain a competitive advantage.
The nature of work will change. The workforce will be asked to be more flexible — to be generalists rather than specialists, to be able to think critically rather than perform repetitive tasks. This is the kind of work that millennials and those entering the workforce today want to be doing. It will be better work in many ways. Digitalization will take workers out of dangerous and remote working environments (such as oil platforms) while empowering them to make more strategic decisions for their companies.
But the oil and chemical industries have a problem, a reputational challenge. In this new world of sustainability and global warming, which young technical institute graduate wants to work in the hydrocarbon industry, producer of plastics and emitter of greenhouse gases? As Lord David Howell, former U.K. Secretary of State for Energy, said in a recent forum in London, “The oil and gas industry needs to improve its reputation, and I think that digital transformation can help.”
Meanwhile, experienced workers in oilfields and refineries are not sure what this all means. Will robots take their jobs? What work will they be asked to do in the coming years? How do they reinvent themselves to be valued workers? How will the workplace change?
For the chemical and oil industry worldwide, finding the key to unlock the digital enterprise is critical to keep them flourishing and to make them winning competitors in an increasingly global market.
Supporting Regional Growth
What is at stake is the economic engine in growth regions such as Southeast Asia, India and China. Plastics and related chemicals are essential in growing quantities to make products whose accelerating demand is created by the growing middle class in Asia. Huge capital has been sunk into plants to support this economic habit. A spate of new multi-billion-dollar production complexes is coming online or is on the books. The RAPID $27 billion USD integrated site in Malaysia (which takes crude oil to finished plastics), the PTT Map Ta Phut $10 billion USD expansion, Vietnam’s Ngi Son Refinery and Chemicals $10 billion USD site and the Ratnagiri $50 billion USD complex in India are just a few of those nearing completion or in design.
So how will these increasingly complex and sophisticated behemoths be operated safely, sustainably and profitably? Where will the expertise come from to run them? An effective digital end-to-end software environment becomes the crucial tool that empowers workers to make increasingly complex decisions correctly. It acts as the industrial worker’s digital assistant, and it is the key to optimization of these assets.
This is where digital transformation becomes an urgent and needed-now priority. Knowledge captured in intelligent software will help the eager, but not seasoned, technical workers to augment their skills with guidance in making decisions, in keeping plants safe and in making the decisions that achieve sustainability. Machine learning and artificial intelligence will help workers make sense of mountains of data streaming off of “intelligent machines.”
This enables companies to make the digital moves in the plant that produce the right products, keep everyone safe, deliver to customers on time and make money for the enterprises. Enterprises integrated across the value chain, and even across companies, will bring the agility to the Southeast Asian market to keep them competitive, and in fact leaders, on the world stage.
At last year’s ARTC refining conference in Kuala Lumpur, a key executive of Petronas’ RAPID mega project gave a compelling vision of how they intend to leap into regional leadership, partly by aggressively pursuing digitalization. Petronas talks about the “democratization of decision-making and data,” definitely the sort of message likely to attract the right talent to want to work on this sophisticated, complex and exciting new regional asset.
Will We All Need to Be Data Scientists?
But, ask many oil company workers and leaders, will we all need to be data scientists? How many data scientists will we need to hire? (And where will we find them all?)
This is where the concept called “low-touch machine learning” comes in. It sounds technical, but all it really means is that the intelligence to take streams of data and provide the correct analysis and decisions is all built in to the software. Therefore it doesn’t need to be created individually by the oil companies, but is rather supplied by quickly evolving software products.
So, no, you don’t need to be data scientists. You need to be generalists in understanding your company’s business, and use the information and analysis to make the right decisions for your business.
So Where Is the Money?
Of course oil and chemical companies are businesses, in the business of making profits while they supply energy and essential materials to the regional economy. They have been enticed into investing in intelligent sensor and equipment all over their assets. Having made that initial investment, they are seeing an almost embarrassment of riches in terms of a growing flood of data. But, industry executives are wondering how to channel that river of data into revenue and margin.
Well, for asset owners it comes back to basics. Focus on what the industry calls “operational excellence,” which really is shorthand for saying, “Spend money on applying artificial intelligence and machine learning in those areas which will increase reliability, reduce energy use, remove plant bottlenecks and demonstrate a commitment to sustainability.”
AspenTech is building these new artificial intelligence, visualization and analytic tools into the crucial systems that the industry has already built into their business fabric. This way, the new world is built on the foundation of the investments made by industry over the past 30 years.
So the disruptive technologies are built into the fabric of the business in a way that enables the managers and workers in the oil industry to improve sustainability, reach new levels of profit and efficiency, and transform the way work is done and how energy is delivered to the entire population of Southeast Asia.
The digital oil enterprise (or really energy enterprise) will be transformational!
For more information on applying digital solutions, you can read our recent upstream white paper or downstream white paper, or view our downstream infographic.