UKCS data and digital maturity survey

Deloitte report for UK Oil and Gas finds the sector wanting. The fine report’s fine print suggests otherwise.

How do you sell digital into a business that has been digital for decades, was in the forefront of big data, has been doing analytics and digital twins forever in the form of simulators of just about every facet of its business? The answer is by changing the terminology and moving the goalposts. This is pretty much what the authors of a recent ‘UKCS data and digital maturity survey’ (UKDDMS) have done. The terminological shift is that today, ‘organizations need to have digitalization in mind, not digitization‘. What exactly does the extra ‘al’ entail? Offshore teams using ‘tablets’, onshore folks using ‘digital twins’ and most important, ‘a significant shift in mindset’. The goalposts have been moved by a brand new ‘digital operations transformation model’ from Deloitte, a roadmap to digital nirvana that ‘helps to understand the maturity of the industry compared to others’.

So first, what exactly is ‘digital’? UKDDMS defines it thus: ‘For the purposes of this report, [digital] represents the use of data and technology to gain additional insight, support better decision making, reduce risk, improve efficiency, and ultimately drive improvement in business performance’. You can’t disagree with that. You might observe that this is a rather unsurprising categorization of the use to which computing (let alone digitizing, digitalizing or what have you) has put in the oil and gas business since (at least) Exxon’s Messrs. Douglas, Peaceman and Rachford rolled-out their first 'digital twin’ back in 1950!

UKDDMS determined that around 60% of surveyed companies have digital transformation programs, the ‘overwhelming majority’ of which are less than three years old. Moreover, ‘digital initiatives only provide their full value when rolled out at scale across the organization. Most initiatives are not at this point. It sounds more like the UK’s oil and gas sector has not so much failed the test, it hasn’t really even sat the exam!

The 37-page report available from OGUK* actually has some quite encouraging findings that run counter to the overall dissing. Attitudes towards data are reported as ‘consistent’. They are in fact consistently pretty good with over 2/3rds of respondents reporting satisfaction with their data set up. One curious graph appears to show a positive correlation between ‘digital investment to date’ and ‘amount of manual data re-formatting required’ that suggests that the digital transformation is working in the wrong direction. The old issue of data formats remains challenging. Converting well data ‘from LIS to DLIS’ is cited as problematic, again suggesting a digital retrenchment rather than a transformation.

UKDDMS steps away from its ‘survey’ remit with some bold, if unsubstantiated claims, notably that ‘there is at least $15/bbl of opportunity that could be addressed through digital transformation of onshore processes’. Of course, no one is saying exactly how ‘opportunity’ is valued.

Respondents were asked to rate the value of different technology investments with some interesting results. Maintenance & Ops Readiness, Reservoir Engineering, Info Governance & Management were rated as ‘best value’. Applications & Systems Mgmt., Employee Performance Mgmt. and 3D Modelling were worst. Performance management least value? Why are we thinking turkeys not voting for Christmas?

Technologies that are widely used or have widespread ongoing rollout include ‘reporting dashboards’, the cloud and mobile. One senses that SharePoint is doing well. Another finding is that ‘innovation’ i.e. exploring digital initiatives is, in the main, performed in house or ‘in collaboration’. Little digital technology is bought off-the-shelf, a far cry from the days of ‘buy not build’. This is interesting when you look back through the report to the ranking of different industries in terms of their digital maturity. Do hospitality, the media, retail and real estate (all of which are cited as being far more ‘mature’ than oil and gas) do their digital innovation themselves?

A related curiosity is that software vendors are reported as having much better ‘end to end’ innovation processes than operators. Collaboration is cited as being a good thing with OSDU and CFIHOS cited as having ‘widespread traction’ which may be a bit of an exaggeration. Barriers to transformation are ‘legacy structures and processes’, lack of investment and lack of leadership.

UKDDMS concludes somewhat paradoxically that ‘although the value of digital is widely recognized, and the digital journey is well underway for most, 73% of practitioners are yet to see a positive impact’.

Comment: We conclude that the main problem with the digital transformation is that the very concept is dissociated from the business. Digital transformation comes as a suite of hammers looking for suitable nails to hit. While reviewing UKDDMS we received an email from Rigzone announcing Rystad’s grim UKCS production forecast where production ‘will never again exceed two million barrels of oil equivalent per day on the UKCS’. The big digital question is how much IT dollars are likely to be spent by a sector on its knees.

* Oil and Gas UK.

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