Experts discuss the digital transformation of the oil and gas industry

Digital is becoming the way to go. Photo by Towfiqu Photography, Getty Images

With the disruptive challenges the energy industry faces on a daily basis, the need for digitization has never been more apparent. In "Bits, Bytes, and Barrels: The Digital Transformation of Oil and Gas," authors Geoffrey Cann, retired partner at Deloitte Canada, and Rachael Goydan, Deloitte Consulting LLP managing director, analyze the current landscape for digital technologies in the energy business.

In this Q&A, we will get an exclusive peek into some of the key themes that Cann and Goydan discuss throughout their book, touching on the barriers to digitization and all that it can offer to the energy industry.

Amy Chronis, Houston managing partner, Deloitte LLP: What exactly is digital, and is the definition changing over time?

Rachael Goydan: Simply put, digital is comprised of three elements: data, analytics, and connectivity. It could be anything from a smartphone, computer, or car to a refrigerator or doorbell. Digital objects have the ability to generate data and do analytics and computations. They also have to be connected with other devices to be considered a digital object.

We have been seeing exponential growth over the last 5-10 years in terms of what digital is capable of, and what that means to the energy industry. Digital is constantly evolving, and its impact may even be different tomorrow. In oil and gas, there are now more ubiquitous forms of unstructured data being used, such as sounds, vibrations, or photographs. It has become relatively inexpensive to have computing power on a device and the accessibility of programming languages has grown.

AC: Digital has disrupted other industries, but is disruption possible in oil and gas?

Geoffrey Cann: There are many digital concepts that can disrupt business in oil and gas. Much like the cloud car and designer fuel, which allows consumers to pick their fuel origin, the use of artificial intelligence to interpret streaming data from cameras could introduce truly robotic eyes on oil and gas assets 24/7. Historically, the oil and gas industry has been change-averse, so the timing and size of the impact is expected to vary by sector.

Our research has found that technology suppliers, service providers, and retailers may be affected the most by digital disruption. Explorers and producers may be affected less, as their business is often already driven by data. The midstream segment has heavy assets running 24/7 that are hard to take offline, and they cannot add new technologies easily. The impact they feel will likely be less than tech companies.

In resource value, digital has already begun to disrupt. For example, some companies are using high-definition photography to take pictures of drilling cuttings, which are then pieced together via cloud using artificial intelligence and machine learning. These drilling cuttings can have one million times better resolution than with seismic.

AC: I've heard you speak about digital in oil and gas in the past, and you frequently say that digital isn't about the technology but about how people work. Could you give some examples here?

RG: Leaving digital to chance doesn't work. Companies may benefit from having information technology professionals bring expertise, cybersecurity, corporate infrastructure and assets, a help desk, virus detection and remediation, and so on. Companies may also benefit from having operational technology people, who have knowledge of the facilities, contributing a solid understanding of the sources of change resistance and how to address them. These groups will work together with the business. Some companies even have a separate digital team that helps them with change management, using a clean sheet of paper approach.

Companies also may need to recognize that there are different ways of working. Agile methods are how digital gets done versus the waterfall method. They are almost opposite ways of doing work with different speeds. Digital requires some companies to change the way they do things. Changes are to happen on a monthly, weekly, and even daily basis.

AC: Is it true that digital in oil and gas has as much potential as in other industries?

GC: Companies in upstream oil and gas are now being valued more on cashflow than traditional reserves valuation. At its heart, digital is about efficiency, which is top of mind for a lot of clients as well. To give the best return to investors, oil and gas companies may need to consider focusing on efficiency and productivity rather than focusing on reserves growth.

Oil and gas has the opportunity to tap into a key feature of the digital world: an ecosystem of resources that includes incubators, university labs, accelerators, and startup groups. Our research has shown companies in oil and gas are much less tapped into this new community of digital innovation. Because digital changes so rapidly, the industry may benefit from plugging into the existing ecosystem to take advantage of the skillsets and capabilities that are out there.

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Emily Cisek, CEO and co-founder of The Postage, joins the Houston Innovators Podcast to discuss tech optimizing after-life planning, B-to-C startup challenges, and a national expansion. Photo courtesy of The Postage

Anyone who's ever lost a loved one knows how stressful the process can be. Not only are you navigating your own grief, but you're bombarded with decisions you have to make. And if that loved one wasn't prepared — as most aren't — then the process is more overwhelming than it needs to be.

On top of that, Emily Cisek realized — through navigating three family deaths back to back — how archaic of a process it was. Rather than wait and see if anything changed, Cisek jumped on the market opportunity.

"I just knew there had to be a better way, and that's why I started The Postage," Cisek, co-founder and CEO of the Houston-based company, says on this week's episode of the Houston Innovators Podcast. "My background had historically been in bringing offline businesses online, and I started doing some research on how I could make this space better. At the time, there really wasn't anything out there."

The tech-enabled platform allows users of all ages to plan for their demise in every way — from saving and sharing memories when the time comes to organizing pertinent information for the loved ones left behind. And, as of last month, users can no generate their own last will and testament.

"We launched the online will maker — it wasn't in my roadmap for another six months or so — because every single person that was coming in was looking at something else on our platform, but then going to the will part and asking, 'Hey is this something I can create here?'" Cisek says.

Recognizing that this was a good opportunity to generate new users, Cisek quickly added on the feature for a flat $75 fee. Then, members pay $3.99 a month to be able to edit their will whenever they need to and also receive access to everything else on the platform.

Cisek saw a huge opportunity to grow with the pandemic, which put a spotlight after-life planning. The silver lining of it all was that more people were discussing after-life planning with their family members.

"We're having more open dialogue about life and end-of-life planning that I don't see any other scenario really bringing that to light," she explains. "In some ways, it's been positive because having the conversation with people has been easier than it had been before."

While anyone can access The Postage's platform, Cisek says she's focused on getting the word out nationally. Following some imminent funding and partnerships, national marketing and growth campaigns are on the horizon.

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