Digital innovations are upending some of the most deeply held and long standing orthodoxies of our modern life. Many of the orthodoxies in oil and gas are ready to tumble.
Imagine yourself 200,000 years ago, when life was more rugged and dangers were everywhere. Minding your own business, you’d come across some wild animal without warning. You relied on the primitive part of your brain, the amygdala, to help you to detect and reactinstantly to this situation, boosting your heart rate and triggering higher order processes to help you decide whether to fight the threat or, more likely, take flight.
This most certainly made you, the early human, a jittery and jumpy beast, and in a perpetual state of near panic. It takes a lot of energy to be on high alert all the time, so eventually, as a learning creature, you figure out that certain settings, like dark caves or tall grass, sometimes harbour some hidden danger, like lions or tigers. You learn to avoid these potential threats, lower your guard, and burn less energy just staying alive. Most importantly you teach these same life-saving rules to your offspring.
The Lion King, a Disney cartoon feature, reveals these kinds of life rules to great effect. In the movie, the water hole is a reasonably safe place for young lions to go, but even so, Zazu the Horn Bill flies alongside Simba and Nala, less for protection and more for his ability to alert the pride in case something goes awry. Mufasa carefully instructs Simba not to venture beyond the prideland’s boundaries. Bad things await young lions foolish or careless enough to stray too far.
I call these kinds of rules the orthodoxies of life—principles or guidelines that everyone believes, and no one really questions or challenges because they are generally reliable.
For example, when my children were growing up, I carefully taught them not to talk to strangers, and not to get into a stranger’s car. Underlying this rule was my fear that they might be abducted. I might try to explain the logic behind the rule to my child but how can you expect a 6 year old to grasp the meaning of abduction? Did they really get it?
And now, using Uber, I call up a complete stranger and get in their car.
DIGITAL UPENDS ORTHODOXIES
Digital innovations are upending many of the orthodoxies that underpin how we think about the world. Uber is just one example but there are many more.
- To be a big hotel, you needed to own the hotel building. And along came AirBnB, which converted millions of unused rooms in buildings around the globe into rentable space. AirBnB is now the largest hotel chain and doesn’t own any rooms.
- To distribute music, you needed the logistical skills to handle the distribution of CDs. And along came Napster and Apple Music, which allowed customers to both make endless copies of music and to create their own playlist composed of just the music they like.
- To buy a book, you needed to visit a book store. And along came Amazon, which carried an unlimited selection of books and fast delivery to the home or office.
- To rent a movie, you had to go to a Blockbuster kiosk for a VHS or DVD. Along came Netflix, which offered access an unlimited number of titles available instantly, for a monthly subscription.
- To find out the weather forecast, you turned on the radio or TV. And along came Google Home, which tells you the forecast if you ask.
- To be entertained, your family watched one TV screen together. And along came WIFI and tablets, letting individual family members watch what they want, when they want it, commercial free.
I was asked recently to present my views on how digital innovations would impact the oil and gas industry, and I pointed out a handful of key long standing orthodoxies about the industry that look poised to tumble.
ORTHODOXIES THAT NEED TO BE JETTISONED
Here are five orthodoxies about oil and gas that can now be abandoned.
1) Data is proprietary
Oil and gas believes that all data is proprietary, must remain inside the firewall, be highly protected and secure. Data is recorded as an operating cost, which minimizes the capital allocated to it. At one time, collecting and storing data was very costly, and that cost created a barrier. Today, data now struggles against these constraints. It’s so cheap and easy to generate, collect, store, distribute and replicate data that data now wants to be free. Consider how cheap and easy it is to move a gigabyte of data to the cloud.
What Napster proved was that data wants to be free. What Apple Music now demonstrates is that data with a tiny price tag (a song) will be purchased over and over again. What Google demonstrates, with its free high quality map data, is that data will be reused, reconfigured, combined and adapted with abandon.
As an industry, oil and gas is blessed with enormous holdings of data, and generates copious quantities every hour, but it can’t begin to analyse it all any more, and it’s missing out by holding dear to the idea that only the industry can make sense of it.
2) Work is too complex to automate
A key orthodoxy in oil and gas is that the work to be done is complex and cannot be automated, so don’t try. It requires high levels of skill,years of training, human intelligence to execute and is usually conducted in dangerous settings. Oil and gas is no place for robots, only engineers can engineer, and only geologists can combine the art and science of interpretation.
Bot technology originated in the online gaming sector years ago to automate many tasks in games like assembling weapons and purchasing stores. But bots conferred such an advantage to those players capable of programming them that they were banned. Bots are not permitted today on platforms like LinkedIn, and you’ll be booted off if you’re caught using them.
Any business today that is not feverishly trying to figure out how to use bots is like a farmer in 1900, looking at the tractor, and thinking that oxen are still the way to go. Or an engineering school stuck on the slide rule. Robotic tools coupled with artificial intelligence will overhaul job after job.
3) Metal is forever dumb
Much of the metal in oil and gas is pretty dumb—it lacks modern sensors, computational smarts and communications support. This is to be expected—most of the installed oil and gas infrastructure predates the rise of modern digital capabilities. Adding sensors to operating devices like pumps is usually deemed to be too costly because of the management of change process.
But the cost of sensors has been tumbling, and will continue to fall until they approach zero. Newer designs don’t even need mounting holes. They can simply be strapped on and tap into the vibrations, heat levels and noise outputs. Sensors will soon be disposable, to be flushed into pipelines as smart balls (instead of pigs), or part of a drill bit, or bolted to the side of a pump.
The early adopters are learning that all of the objections the industry raises to slow-walk to sensor deployment are simply not real, including the arguments about cost, power needs, security worries, and the management of change process.
4) Technology doesn’t integrate
I’m delighted, in my home life, that my various services, from such outfits as Facebook, Google, LinkedIn, Apple, Amazon, Paypal, Garmin, Spotify and Dropbox, all work together seamlessly. Is it perfect? Not by a mile, but it’s pretty good. In fact, when they don’t work together, I notice.
Compare that to work. I’m baffled, in my work life, that my various services, such as my company credit card, my payroll account, and my performance scorecard, still behave as if they are islands unto themselves. Yes, single sign on was a big step forward, but that step was taken 5 years ago.
There is something inherently wrong with the systems architectures of large enterprises when they are so out of step with what we all now take for granted—the seamless integration of a variety of best in class solutions from any number of vendors. Technology does integrate.
5) People need lots of systems training
Oil and gas technologists and business owners believe that regardless of the technology or process they freshly adopt, it will require extensive training for their people. This immediately dampens any enthusiasm to change anything because of the hassle of dealing with the change process. The root cause is that the industry under invests in designing the user experience whenever it embarks on some technology enabled change, leading to hard-to-use systems that require a lot of training.
But when was the last time you had to sign up for a training course to use some service you’ve downloaded? Uber, AirBnB, Car2Go, Facebook, Pokémon Go, Wechat, Twitter, Telegram? Do these services even have training? Wechat has a billion users, and no training department. Sure, Apple has its Genius Bar, but do you know anyone who’s ever visited there?
The one dimension of digital technology that has yet to make a meaningful appearance in oil and gas is the user experience overhaul to achieve a frictionless, rapid roll out and zero training launch. The nifty inventions from the consumer world (likes, gamification, endorsements, badges, rewards, stars, feedback) could make a huge contribution to the cost and quality challenges of the industry.
Don’t get me started.
Never before have so many key assumptions of how we embrace life come under such pressure to change. Thank goodness, and I can’t wait for them to come to oil and gas.
Geoffrey Cann is a former senior partner of one of the big 4 consulting firms. He has a deep passion for the impacts that digital technology and innovation are having on oil and gas. His career in the industry, spanning nearly 30 years, has taken him to oil and gas companies in Australia, China, and his home base in Canada, to help drive digital transformation. You can follow him on Twitter (@geoffreycann or @digitaloilgas), visit his website at www.geoffreycann.com, listen to his podcast (search for “Digital Oil and Gas on your favourite platform), or simply connect with him on LinkedIn.
The views expressed herein are those of the author and do not constitute professional advice. Readers should not rely on any predictions and should ensure that before they make any decisions they contact their own independent professional advisor.