The Oil and Gas (O&G) industry has always looked upon the advent of newer technologies favorably. While industry players have been making incremental investments in new technologies, the evolving ‘go green’ mandate has rendered such incremental investments useless.
Increased competition from newer and greener products is shifting the focus towards green technologies. At the same time, the focus on social responsibility is skyrocketing with more and more companies pledging to increase workplace safety. One of the underlying factors driving this shift is the rising costs of meeting environmental regulations and tackling lawsuits by activists. The formulation of Sustainable Development Goals (SDG) goals has also provided the much-required impetus for transformation.
As a result, O&G companies are turning their attention towards adopting greener methods and processes while optimizing costs and improving performance to preserve shareholder value.
Three pillars to creating a greener O&G industry
A three point-framework that combines the deployment of redefined innovation with the identification of right-fit partners and implementation of greener technologies can empower O&G companies and turbo-charge their transformation process. Here’s how:
Deploying redefined innovation
To be truly effective, innovation must go beyond cost reduction to include solutions aimed at lowering capital expenditure such as investments in business expansion and technology solutions. It is important for O&G executives to understand that a dynamic external and internal environment demands that employees experiment at low costs to develop innovative solutions that drive margins while increasing alignment with go-green objectives. Adopting an open systems method in change management and designing services using systems thinking approach is one way to do this. Innovating newer solutions with the goal of achieving a greener world can help achieve the dual objectives of portfolio expansion as well as compliance with SDGs. For example, one of the largest integrated O&G companies in US is working on creating biofuels from plant waste, which could be used for transportation in future.
Identifying right-fit partners
O&G companies have traditionally embraced collaboration and partnership with peers, analysts, consultants and IT companies but have failed to realize their true potential. The problem, however, does not lie in the collaboration or the process of collaboration, but in identifying right-fit partners. This means O&G companies must proactively identify partners aligned not only with their specific needs but also with environmental sustainability. In essence, avoiding too many partnerships is critical to realizing the synergies across such partnerships. The company’s CSR approach and guiding industry regulations can be used as the criteria to filter and identify best-fit partners, and develop and promote clean, green products and solutions. For example, a Netherlands-based O&G company offers a ”Collaborations Overview” on their website to clearly delineate the types of collaborations entered into and set expectations for the type of partners they seek.
Implementing emerging technologies
While adopting technologies has always been a high priority for O&G companies, it is more important to identify disruptive technologies that can add exponential value i.e. technologies that are not only flexible in terms of widespread usage and adoption but also aimed specifically at creating a greener world and driving sustainability. Such technology-based solutions include:
o Asset utilization solutions - Help reduce costs, optimize resources and enable predictive maintenance with a focus on creating a greener world. A Russian integrated O&G company, for instance, is upgrading its Green plant to eliminate the risk of environmentally hazardous oil leaks.
o Secure, cloud-enabled platforms – Assist senior leadership in monitoring and verifying changes on a dynamic basis, resulting in faster decision-making. It is important to strike the right balance between usability and security when deploying such platforms. Leveraging resilient cyber-security technologies like blockchain can help reduce resource usage, thereby contributing to environmental sustainability.
o Augmented reality/virtual reality (AR/VR) and wearables – Applicable across the value chain, starting from scanning geo-physical systems upstream to gauging safety levels in different offshore and onshore sites. Such solutions provide greener ways of reducing risks through lower levels of human involvement and decreasing the carbon footprint of resources at the same time. One such instance is of a UK-based integrated O&G company, which is performing trials with ‘Protective Digital Vests’ in Oman.
o Advanced analytics - While analytics, IoT and sensor technologies have become mainstream for many high-end O&G companies, they are yet to be commercialized by other players across the value chain. The focus needs to be on using the data generated by such technologies. However, lack of process streamlining and lack of access to trained analysts are major stumbling blocks. Empowering employees through training and innovation can help address these challenges and ensure higher alignment with the goal of achieving greener 2020. For example, one of the largest Fortune 500 companies headquartered in California has enabled biodiversity monitoring by analyzing data samples from various sources to mitigate potential risks from its operations.
Embracing a cleaner, greener future
Wider adoption of sustainable goals across the world has called for the O&G organizations to adopt greener practices. However, moving away from the existing fossil fuel usage and adoption would require the organizations to combine emerging technologies and streamline processes. The companies need to become more effective by increasing transparency and enabling better production and operational choices, which have lower impact on their operating environment. As the pressure to adopt a green mindset mounts, O&G companies that leverage emerging technologies and right-fit partnerships will be the best-fit organizations to innovate their way to long-term sustainability.