Digitization of the Petroleum Industry - Essay Example

From the table, the lowest price of Brent is January 2015 at 47.76 USD/bbl. while the lowest price in WTI is in the same month at 47.22

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The choice of JPT is JPT 44 of May 2015.The issue comprehensively covers deep-water projects, smart field technology, multilateral or extended-reach wells and zonal isolation.

Making data pay by Stephen Rassenfoss

Stephen sites a lot of talk about digital oil fields and their energy potential. Interesting enough is that the operators of the digital fields still rely on paper manuscripts. After retiring from Chevron a company he served in the introduction of digital technology in the oil fields, Jim Crompton acknowledges that 80% of the operators still use paper. He goes ahead to term the digital systems like SCADA as technologies of the future. The article looks at the digital divide, managerial will, and production optimization.

How economic evaluation will affect digitization of the petroleum industry

The oil industry is not a stranger to the digital evolution. As early as the 1980's, companies had started considering digital technologies with a focus on the reservoir, production, safety, and health as well as boosting their global managerial operations. As the business structure and exploitation have revolutionized over time the potential of the sector has been growing. This second wave of revolution seeks to change the industry, propelled by a series of macroeconomic, technological and industrial trends.

The economic findings

The digital transformation is said to harbor the potential of unlocking the financial potential of the industry. The boom is estimated to be in $1.6 Trillion. The economic value is analyzed as per the benefits gathered in the industry, the customer and the society at large.

The amount of digitization is further projected to be at $2.5 trillion. Thus can be achieved if organizations that already exist to relax their operational and organizational constraints and the impact of the future technologies like the cognitive computing are put into consideration.

Looking at the projected figures regarding oil and gas returns, the companies expect an additional one trillion. The wider society is set to benefit from the digitization with amounts up to $640 billion; customers will save up to $170 billion, about $10 billion will be set from productivity improvement, $30 billion from the reduction of water use as $430 billion will be gathered from reduced emissions.

Environmental benefits will also be realized because of reduced CO2 emissions by about 1,300 million tons, avoiding 230,000 barrels wasted on oil spills and saving 800 million gallons of water.

Digitizing the supply market in oil and gas industry

The challenge facing the petroleum industry is the management of costs of exploration and operation. The businesses struggle to operate during low prices to keep the costs in control as they maintain the experts who will be substantial once the market recovers.

Most companies tend to minimize on investment which may sometimes not benefit the company. Selectivity regarding the place to invest can help counter financial stress, and that should not deter investors from considering digital technologies.

Innovation is an important pillar in the maintenance of leadership. This principle governs most if not all industries. As much as the company comes up with innovation and production, technology should also be applied to reduce structural inefficiencies that result from the supply chain.

Digitizing the supply chain can ensure asset availability, and integrity improves with predictive maintenance, increase the visibility of demand drove supply chain, manage processes through automated manufacturing and planning, optimize and monitor energy consumption and guarantee personal safety through protective gear and mobiles.

Most companies are investing in business-to-business electronic integration for cost cutting and improvement of efficiency. A study involving 200 companies was carried out by the University of Tennessee bears interesting findings. The questionnaire sort to find out issues like supply chain, inventory visibility, response of customers to demand and new enterprise resource planning intergration.95% Acknowledged big improvement in their electric connection, 68% understood that their client had easier communication using business-to-business electronic integration. Another survey by Accenture showed 72% of supply chain thinking of uncertainty as being the greatest risk in their business while 52% attributed weak operations to the outdated IT systems.

How Digitization of Petroleum Industry Relates To the Demand Market

Oil and Gas Analytic market size stood at USD 4 billion in the year 2015. The market is expected to skyrocket year to come due to the application of drilling and exploration, asset performance, refining, storage, and fleet. The increase in exploration and discovery activities in the world will boost the global market trend over the coming years.

The digital technology has precipitated an enhanced workforce and cost-efficient research and operation of the oil companies. There is a constant massive demand of oil and its product as the third-world countries gear towards modernization.

Market demand analysis helps the companies make real-time decisions hence minimizing operation cost and improving productivity. It assists in finding the real cause of losses in production through data analysis.

Innovation is crucial in satisfying the market demands and having a competitive edge in the market. Companies that constant launch new products are more likely to succeed in the market and a good example is Shell.

There is a projection of an increase of the oil market from $24.60 billion in 2014 to $38.49 billion by 2024.The annual growth rate is anticipated to be at 4.6% during this period.The pattern filling trends are expected `to increase basing the projection of dominant parties in the growing digital oil fields. The digital oilfields are projected to witness the entry of new companies.

The increasing demand for oil and gas market is projected to grow by 40%, and the figures are expected at $3.18 billion by the year 2019.Companies look at the expanding market and target them. In their quest to expand the companies require more manual labor that can't is met leading to need for technology. Safety and right of employees should also be put into the account; companies ensure this by minimizing manual labor a diverting to mechanization. Exploration in rural areas means the need for electronic technologies in monitoring the regions.

How Digitization of Petroleum Industry Would Be Affected By the Time Value of Money

The companies that seek to implement digital extraction and operation will have the upper hand with time. It is an error where most people have access to the internet. The internet serves as a marketing tool. Approaches to customer concerns, products, operation, and services are real-time, and the market is rich in information. The businesses models are evolving regarding functioning and abilities to connect with customers and talents.

The initial investment in technology can be expensive, but in the long run, it is beneficial. The wastage incurred and inefficiencies are tamed realize significant profits. Fluctuations in the value of oil will not significantly affect companies that have migrated to the digital platform since their production and operations are minimized.

SPE References

JPT-Home - spe.org. (n.d.). Retrieved February 23, 2017, from https://www.bing.com/cr?IG=A4FC3FD71C624EADA2BAA2F6FFE769F0&CID=0AACAEFECAAA6CCF0797A4CCCB9B6D07&rd=1&h=ItmOf23fJ_xKBpzUXqncEDG2wCR3Cwpp8sOG5aXdYl4&v=1&r=https%3a%2f%2fwww.spe.org%2fen%2fjpt%2fjpt-main-page%2f&p=DevEx,5062.1Other References

Stefano Martinotti, Jim Nolten, and Jens Arne Steinsbo. (n.d.). Digitizing oil and gas production. Retrieved February 23, 2017, from http://www.mckinsey.com/industries/oil-and-gas/our-insights/digitizing-oil-and-gas-production.

Digitization of the Oil & Gas Industry and Opportunities Ahead. (n.d.). Retrieved February 23, 2017, from http://www.bing.com/cr?IG=20F8C818CB9743C78E9BF432DC50B922&CID=004CB61ACBAC60F71EBDBC28CA9D619F&rd=1&h=QKdVfkZu8yZHHtXvs3b1udZWbPU0Mi9I69_iiRfBx0Y&v=1&r=http%3a%2f%2fwww.cleantech.com%2fdigitization-of-the-oil-gas-industry-and-opportunities-ahead%2f&p=DevEx,5090.1.