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The drive to digitise Norway’s oil industry

A view towards an oil rig which is pictured in the distance. The sun it setting in the sky.

writer icon Hina Javed     Zukiman Mohamad   |   Business     🕐 23. Nov. 2018

Going digital is the buzzword in many of today’s industries. By that token, stakeholders and experts in Norway’s oil and gas sector are advising that the country would be best served to take the same route.

Norway has recently gone through a challenging period in terms of oil and gas production. This is evidenced by the October 2018 exit of the first oil major – Chevron – from the country. In addition to this, other oil giants have downscaled their presence, including Exxon Mobil, BP and Shell.

“It is part of a global trend that international oil companies (OICs) are harmonising their portfolios to be more efficient. That’s why some of them are withdrawing from Norway because it is a mature area,”
says Eric Rasmussen, an oil and gas partner at Price Waterhouse Cooper.

His company is working with Google, among others, to find new companies and understand how they can positively influence oil and gas. The industry expert delivered a presentation at the recent “Digitalisation Night with PWC & Cognite” event in Bergen, Norway.

The diminished presence of oil majors has given rise to opportunities for new players, who stakeholders believe, will bring fresh innovation with them.

Small going big
“We have also observed that North Sea newcomers will look into more innovative solutions and have an objective for longer production timelines. These companies will look into new innovative and agile ways of exploring and increasing production,”
adds Rasmussen.

“I’m not saying that IOCs are not doing that, but I think the newcomers can actually come up with a solution faster,”
he outlines.

However, he warns of the need for proper mechanisms for checks and balances. “Some of these companies do not have the long-lasting experience of working in North Sea.”

Rasmussen advises that the Norwegian government, through control mechanisms, need to be more supportive and verify concepts when newcomers start to operate.

While the oil majors may be selling or merging their assets to focus on richer pastures, the newcomers will need access to meaningful data in their endeavours. This is where digitisation comes in.

Fresh minds, new innovation
“Digitisation, for me, is innovation. It gives effectiveness and has an effect on both the top line, bottom line, and on profits,”
Rasmussen continues. He believes that the need for digitisation and innovation was born in the region during the 2014-15 slump in oil prices which affected the Norwegian economy in various ways.

At the time, the country’s GDP became stagnant, while experts predicted that the government would, in an unprecedented move, have to tap into its sovereign wealth fund which stood at over $850 billion at the time. Rasmussen recalls there was a huge layoff of oil and gas workers.

“When that was done, it came to a matter of what’s next?“
he asks rhetorically. “You need to start thinking of how we can operate more efficiently. I think that is when you need to start thinking digital.”

He stresses on the need to “liberate” data, adding that new platforms have been created by the downturn. “When you have access to the data, you can start working with it. The downturn brought new life to the digital perspective.”

Paula Doyle, who is Vice President at Cognite, says making data accessible is a key aspect of digitisation. Her company is working on collecting and connecting data related to the oil and gas sector. The purpose is to make it more accessible to stakeholders of the industry. “Many companies can play and act on the data. Therefore, based on the results, the innovation you are driving is quicker and bigger than what it used to be.”

Renewed outlook
Meanwhile, Eric Rasmussen believes that failure to embrace digitisation would make the industry seem backward. “Based on our surveys, one of the key challenges for the industry over the next 10 years will be to attract the right talent,” he says.

Rasmussen also pointed towards this in his earlier presentation, saying 90% of oil and gas executives recognise this challenge. He adds that the same leaders are looking to go digital, improve their carbon footprint and paint a better image of the industry in today’s environmentally responsible times.

Just as importantly, digitisation is giving more relevance to the oil sector in Norway. In Rasmussen’s estimation, it will no longer be considered a “dirty” job and can draw in new blood. “The oil and gas industry has an image among, if you can call them millennials, of not being future-oriented.”

He elaborates that people starting in their careers can begin looking at the industry more favourably in terms of jobs. “I think it will bring a forward-thinking perspective to younger employees, who will see the oil and gas industry as more innovative and a sector that has opportunities.”

The right talent
Rasmussen’s views are echoed by Paula Doyle. She believes digitisation will play an important role in bringing the right type of people into the industry. “When you see people in their late teens and twenties, and the world that they work in, centred around big data, apps and user-friendliness, it is important to make the industry more attractive to them. Digitisation is really the key for that.”

She says being a data scientist was not a job that existed in the oil and gas industry five or ten years ago, but now employment opportunity trends are changing. However, she cautions that oil is still a physical product and professionals with core competence, expertise and experience cannot be ignored.

Incentivise and innovate
Regardless, attracting fresh talent will require incentive and innovation. “I think the Norwegian government incentivises very well in terms of oil and gas research and development. It compares quite favourably to other countries which have oil and gas." 

Doyle believes the government is taking steps in the right direction. She points out that Norway is leading the charge when it comes to innovation and has achieved many “firsts”. She gives the Åsgard Subsea Compression, the world’s first subsea factory, as an example.

“The government does well to use revenues from the oil and gas industries for societal income. It also drives innovation for not only the oil and gas sector, but across industries”
she elaborates. “You can see some Norwegian companies, which have been founded based on this Research and Development money, acting on a global scale."   

She emphasises that authorities have an important role to play in the discovery of new oil driven by digitisation. “Openness and sharing of data needs to be encouraged among all players.”

What the future holds
When asked if Norway still had significant oil reserves, Eric Rasmussen replies, overwhelmingly, in the affirmative. “Oh, yes,” he exclaims. He underlines that there are areas that are not fully explored and these present a significant opportunity. “I think the Norwegian Continental Shelf is healthy and well,” he adds.

“The relatively advanced stage of digital development and investments in digital technologies. across the board, are now yielding strong results for exploration, drilling, production and Health, Safety and Environment.”
He adds that the sector in Norway will be more resilient to another downturn. Rasmussen emphasises that the sector has now become streamlined and standardised.

While the exit or downscaled operations of major oil giants concern some in the industry, Paula Doyle is not one of them. From her point of view, the oil and gas industry is still very healthy. “There are a lot of opportunities in Norway – we see a strong number of greenfields, brownfield developments and indeed exploration.”

She backs up her claims with the fact that independent new companies are taking the reins. “It really doesn’t concern me. Those gaps [left by oil majors] are being filled by very competent companies.”

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