Oil and gas industry is catching up on analytics, cloud and other digital capabilities to address aging infrastructure and energy transition, ISG Provider Lens report says
Oil and gas companies in North America face an array of major changes driving trends that require more i********* in digital technologies and skills, according to a new research report published today by Information Services Group (ISG) (Nasdaq: III), a leading global technology research and advisory firm.
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“To survive in the coming years, companies need to master the use of data, analytics and green energy sources — or find partners with that expertise.”
The 2022 ISG Provider Lens™ Oil and Gas Industry — Services and Solutions report for North America finds that volatile prices, an unpredictable economy, the war in Ukraine, decarbonization and other factors pose problems that are forcing oil and gas companies in the region to become more data-driven and technologically adept. This transition is proving especially hard in North America, where the industry has older infrastructure and an older workforce than in other regions.
“Oil and gas lags behind many other industries in implementation of digital technologies,” said Dale Hearn, ISG partner in Energy and Utilities. “To survive in the coming years, companies need to master the use of data, analytics and green energy sources — or find partners with that expertise.”
Companies need new technologies to operate more efficiently, deliver better customer experience, manage both old and new assets and defend their systems against rising cybersecurity threats, ISG says. For many North American oil and gas firms, this means adopting hybrid cloud environments for data collection, storage and AI-based analysis.
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The production, processing and transportation of oil and gas generate huge amounts of data from assets that in many cases are located in remote areas, such as offshore drilling platforms with more than 100,000 sensors producing gigabytes of data daily, the report says. The industry is investing in centralized asset monitoring systems to optimize asset usage, uptime and worker safety in the field. This requires careful integration of IT and operational technology (OT) processes. In North America, data collection and analysis are especially important for managing assets reaching the end of life, such as low-flow wells that need to be safely decommissioned.
Oil and gas companies face less pressure to diversify into carbon-free energy businesses in North America than in Europe, due to less aggressive regulations, ISG says. However, the need for new business models is emerging and requires digital solutions for implementing solar, wind, geothermal and other energy sources, and in some cases new customer-facing infrastructure such as EV charging stations.
The industry is taking on these new requirements without enough employees skilled in both traditional systems and digital technologies, the report says. Particularly in North America, it will be a challenge to attract and retain IT staff, making partnerships with service and solution providers increasingly important.
“To carry out energy transitions, oil and gas companies need new skills and knowledge that are in high demand,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research. “Service providers are helping them bridge the gap.”
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