We are usually skeptical as to surveys conducted by vendors and consultants designed to demonstrate a need for more of whatever they are selling. But what of this intriguing conclusion from a survey by Accenture, that found only 3% refiners reported seeing significant value (defined as over $100 million) from digital technology.
'Digital Re-Definery*’, Accenture’s third annual study on digital technology in the refining industry, was based on a survey of 145 oil industry professionals, including C-suite executives, functional leaders and engineers at refineries globally. The survey found that, ‘over the past year the number of refiners reporting that digital technologies delivered a margin improvement of more than 10% in refining operations dropped from 11% to 3%; the number reporting that the technologies delivered margin improvements of 7-10% dropped from 19% to 11%; and the number reporting that digital delivered margin improvements of 2-6% dropped from 46% to 38%’.
The report continues with ‘furthermore, only 3% of refiners (compared with 6% in 2018) reported seeing significant value from digital, defined as over $100 million […] the challenges of achieving scale for digital initiatives across an asset base is stopping refiners from capturing the full value that digital can offer.’ According to the study, only 28% estimate that digital is driving $5 million or more in value for their refining business.
Accenture puts a positive spin on the numbers citing the current ‘next big thing’ i.e. advanced data analytics, as the top digital technology du jour, followed by ‘platforms’, internet of things sensors and edge computing. Paradoxically, digital spending continues to increase, with 56% of respondents reported investing ‘more or significantly more’ in digital technology than a year ago, mainly in production planning, maintenance and capital projects. But refiners are now more realistic in assessing their digital capabilities as only 44% of respondents this year categorized their use of digital technologies in refining operations as ‘mature or semi-mature’, down from 48% last year.
Accenture has it that people are the cornerstone of success. But people are also responsible for underperforming digital transformation: ‘the number of refiners citing resistance from their people and the culture in their organization as a barrier to wider digital deployment rose sharply this year, to 48%, from 33% last year’.
Accordingly, refiners appear to be addressing these issues. Five in six (83%) are taking actions to address the convergence of information technology (IT) and operational technology for their refining operations, including changing the role of IT, creating new organizational structures for digital, forming steering committees, creating a new C-level position, or a combination of the above.
According to Accenture’s Tracey Countryman, ‘Refiners are still working out how to optimally deliver results within site operations. There is no one answer on how to best organize the integration of your information technology and operational technology, as this depends on company culture and leadership strategy. Having launched many proofs of concept, refiners must now revisit the operational processes to enable scale and pace.’
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The online survey was conducted in January 2019 by OGJ (Oil & Gas
Journal) Research, supported by Accenture Research. More from Accenture.
Comment: As we wrote back in 2016,
AI, ML and so forth have a venerable ancestry in oil and gas. Back to
the very earliest days of computing in fact. What has changed since the
early days is the ballyhoo surrounding digital technology and the
claims for a constantly increasing value to be derived from
computerized operations. It is hard to ringfence and report on
the monetary value of a particular technology, but the ‘value’ cited in
the Accenture study of a few million dollars worldwide is indeed small
when compared with the ‘billions’ promised by early practitioners of
the digital oilfield, or the further billions ‘left on the table’ by
those still futzing with pre-AI physics-based methods. These numbers
are also rather paltry when compared with the bill for digital. No, we
don’t know how much Accenture charges for its services. But a report in
the FT has it that BP has signed a $1.2 billion, 10-year contract with
the ‘secretive’ Silicon Valley data-analysis company Palantir!
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