The oil & gas industry has always been willing to innovate. From the very beginning, leading organizations have developed new equipment, processes, and business strategies that have led to better performance, improved safety, and reduced emissions.
But when it comes to new technology, many companies have been hesitant to fully embrace new solutions.
Energy 4.0 represents the advances in hardware, software, and communications that have the potential to transform the oil & gas production process.
Going forward, organizations that fail to adopt Energy 4.0 technologies will find themselves at a competitive disadvantage to those that have successfully adopted new solutions.
What Is Energy 4.0?
Energy 4.0 technologies have been designed and built specifically for applications in the exploration, extraction, transportation, storage, and distribution of oil and natural gas. Energy 4.0 includes the Industrial Internet of Things (IIoT), cloud computing and storage, artificial intelligence and machine learning (AI/ML), data analytics, and digital twins.
While traditionally viewed primarily as a cost-saving measure, Energy 4.0 technologies are increasingly being seen as a necessity to achieve a sustainable and long-term competitive advantage.
The Growth of Energy 4.0 Technologies
Until recently, many technology deployments have been limited to specific problems or have been implemented to benefit specific business units, with minimal investments in company-wide or transformative solutions.
However, this trend is starting to shift.
Investment in digital technologies is forecast to increase significantly. For example, one report suggests that there will be as many as 18.8 million IIoT devices installed in the oil & gas industry by 2028, up from 7.8 million in 2023. Much of this growth will be driven by applications such as remote monitoring of drilling machinery, bulk storage tanks, and critical downstream infrastructure.
These sensors will produce large volumes of data. Cloud computing and storage solutions make it possible to manage, store, analyze, and use data from multiple sources without the need for on-premises IT infrastructure.
While the adoption of cloud-based solutions is still slow compared to other sectors, the global oil & gas cloud market is expected to grow to $12.4 billion by 2030.
Finally, the rise of AI/ML has created a wide range of opportunities for oil & gas companies to improve operations. Applications ranging from optimizing supply chains to predictive maintenance and emissions reduction all benefit from AI’s ability to recognize trends and patterns in large volumes of data.
It’s no surprise then that 92 percent of oil & gas companies are already investing in AI or plan to do so within the next 5 years.
Important Considerations When Deploying Energy 4.0 Solutions
Cybersecurity
The production process involves critical infrastructure and sensitive data that makes the industry a target for hackers, state-sponsored espionage, ransomware, and other cyberattacks.
A Government of Canada threat assessment found that oil & gas organizations were the most targeted among any critical infrastructure sector. Similarly, a US Government Accountability Office report identified that the industry was vulnerable to attacks that could lead to physical, environmental, and economic damage.
New technologies create new vulnerabilities. But there are important steps that oil & gas companies can take to mitigate risk.
For example, oil & gas companies should segregate IIoT devices from the organizational network, implement end-to-end encryption, ensure authentication at every step, and create user and role-based permissions that restrict access to data and sensitive information.
Talent Shortages
Across the industry, oil & gas companies are finding it difficult to attract and retain employees. Older staff are nearing retirement, while fewer young people are considering joining the sector.
This shortage of talent is hindering the adoption of new technology as organizations are increasingly competing with other industries for data analysis, programming, software engineering, and IT skills.
In fact, one report found that nearly half of all oil & gas executives said that a lack of talent posed a significant challenge to their innovation efforts.
At the same time, technology can reduce the burden on scarce technical resources. Remote monitoring solutions, for example, limit the time technicians spend on-site conducting inspections and allow them to spend more time on repairs and other more important tasks.
Integration
New technologies do not exist in isolation. Any new solution needs to be able to communicate and integrate with existing legacy systems and applications.
Looking ahead, oil & gas companies must also consider future investments and ensure that the solutions implemented today will be able to integrate with technologies down the road. And all this must be done without disrupting ongoing operations or removing vital systems that are already providing value.
A lack of integration can result in silos that limit user’s ability to effectively use the data. Further, silos can hinder the implementation of AI/ML technologies that depend on large, consistent, standardized, and contextualized datasets.
Energy 4.0 Technologies Will Transform Oil & Gas Operations
Investment in Energy 4.0 technologies has only just begun. The next five years will see significant advances in the way that upstream, midstream, and downstream operations collect, store, analyze, and use data.
As oil & gas companies see the benefits of these new solutions, technology will become a requirement to remain competitive and achieve long-term results.
Fortunately, the oil & gas industry has proven to be able to innovate in times of change. With the right solutions, oil & gas companies can improve performance, reduce operations and maintenance costs, achieve greater reliability, and enhance worker safety.