INNOVATION AND TECHNOLOGY IN THE ENERGY INDUSTRY

By Tsvetana Paraskova

Oil and gas producers and their supply chain contractors are using cloud computing, big data and analytics, smart devices and the Industrial Internet of Things (IIoT), artificial intelligence, augmented and virtual reality, 3D modelling, digital twins, and robotics to assist them and have safe and cost-efficient upstream, midstream, and downstream operations.

At the same time, energy firms look to develop innovative solutions to help them advance low-carbon energy projects and make those projects scalable, feasible, and profitable.

Alongside investments in oil and gas, energy majors are testing and developing technologies to tackle carbon emissions and enter into partnerships to study carbon capture and storage (CCS) and hydrogen solutions.

Innovation in clean energy technology needs more efforts, both in the R&D department and in terms of massive additional investments, in order to make a meaningful impact on the global efforts to lower energy-related emissions and curb the rise in temperatures to the limits set in the Paris Agreement, the International Energy Agency (IEA) says.

Oil & Gas technology markets set for continuous growth

Meanwhile, investments in new technologies and the markets for AI, robotics, digital twins, and AR and VR are expected to jump this decade, various analyses and reports have shown recently.

In the UK, oil and gas companies are increasing investments in new technologies for improved operations and sustainable energy sources, bolstered by high demand and rising prices, a research report by global technology research and advisory firm Information Services Group (ISG) showed in March.

“The most competitive and sustainable oil and gas companies in the U.K. will be those that are building a strong digital foundation,” said Ola Chowning, partner, North Europe, with ISG.

Jan Erik Aase, partner and global leader, ISG Provider Lens Research, commented, “Oil and gas companies have a role to play in the U.K. reaching its overall environmental goals.”

“Service providers are helping them adopt digital tools for identifying and managing their carbon emissions,” Aase noted.

In a separate report in March, ISG said that oil and gas enterprises in the Nordics are adopting new digital technologies to boost output, reduce carbon emissions, and cut costs as they navigate multiple industry disruptions.

“Decarbonisation will be a major issue for oil and gas companies in the Nordics for years,” Aase said, commenting on the report.

“Many global and regional service providers can help them carry out carbon monitoring and reporting and renewable energy projects.”

Globally, the market of AI in oil and gas is expected to earn $7.99 billion by 2031, rising at a compound annual growth rate (CAGR) of 13.5%, an Allied Analytics report has found. Growing demand for quick fault identification and quality improvement, lower production cost, and security requirements have largely driven growth in AI in the oil and gas market, according to the report.

Robots are set to be the oil and gas industry’s growth engine, a report by GlobalData has found

Robotics has been a part of the industry for decades, but now digitalisation and integration with other technologies have helped diversify robot use cases. A myriad of robots are now involved in oil and gas operations, including terrestrial crawlers, quadrupeds, aerial drones, autonomous underwater vehicles (AUVs), and remotely operated vehicles (ROVs), GlobalData says.

“Robots will be the industry’s growth engine, and the oil and gas sector will greatly benefit from emerging use cases,” says Anson Fernandes, oil and gas analyst at GlobalData.

“Industrial robots with analytical support from digital technologies is expected to become the mainstay across the oil and gas industry, especially in the upstream sector, where personnel safety and operational security concerns are heightened.”

Energy majors could play leading role in the transition

Technology and innovation could also help oil and gas companies become leaders in the energy transition.

According to McKinsey & Company, many oil and gas companies are well positioned to become leaders in the energy transition.

“This is not only because of their global scale, the risk appetite of their investors, their large balance sheet and cash positions, and their long-standing relationships with energy customers and stakeholders, but also because of their unique capabilities related to offshore projects and hydrogen and sustainablefuel production and transport,” McKinsey consultants and partners wrote in an article in February.

Those companies can win with their experience and expertise in low-carbon energy development such as offshore project development, hydrogen production, and fastcharging services for EVs, according to the consultancy.

“The rise in investments in clean and renewable technologies provides compelling evidence that power markets will continue to change rapidly. To stay ahead of the curve in the power value chain, oil and gas players will need to be thoughtful, strategic, and intentional in playing to their strengths. There is no time to waste; the industry cannot afford to wait to see what happens,” McKinsey concluded.

Digitalisation – The backbone of the energy transition

Digitalisation is the backbone that will support the energy transition, a global survey of 350 C-suite executives conducted by MIT Technology Review Insights has found. Companies need to focus on accelerated digitalisation to help decarbonisation and emissions reduction, and to drive innovation, MIT Technology Review Insights said in a report sponsored by Shell and titled “Digital technology: The backbone of a net-zero emissions future”.

The energy sector is eager to develop carbon sequestration technologies, the report found. “The high share of hydrocarbons in the global energy mix means that for energy companies to meet their decarbonisation targets, carbon capture and sequestration is essential, especially factoring in GHG Protocol Scope 3 emissions that can be traced back to a company but not directly produced by the authors of the report

Energy industry leaders, an exception among executives from the many industries in the survey, show a high willingness to experiment with new digital technologies, and more openness to new technologies in general, the report found.

“Digital technology is going to be fundamental to running the future energy system,” said Dan Jeavons, vice president of computational science and digital innovation at Shell.

In clean energy technology, more efforts are needed to drive innovation and get the energy system on track with the Net Zero Emissions by 2050 Scenario, the IEA said in a recent progress report on the industry.

“While most of the CO2 emission reductions can be achieved by 2030 with existing technologies, the path to 2050 relies on technologies that are not yet ready for widespread uptake, particularly in sectors that are hard to decarbonise such as heavy industry and long-distance transport,” the international agency said.

Therefore, innovation and technology will be crucial to accelerating clean energy adoption, as well as helping the energy industry continue to provide reliable energy supply with a lower emission profile.