By Irina Slav
If there was one thing the last oil price crisis proved, it was this: despite the devastation that low oil prices can wreak on an industry, they can also make oil and gas production more efficient for less money. If there is one thing this crisis is proving, it is that oil and gas companies can do this remotely. In what could well be the industry’s next step towards digitalization, oilfield service providers have been moving more and more of their operations to remote offices—some are even moving some operations to the homes of their employees. And once again, they have been doing more with less, prompted by oil prices falling off a cliff this spring.
The Wall Street Journal’s Colin Eaton reported earlier this month that Baker Hughes and Schlumberger both had two-thirds of their drilling activity supported by remote work during the second quarter of the year. For Schlumberger, this was up 25 percent from the first quarter. For Baker Hughes, it was up 20 percent.
Eaton also quoted a Halliburton executive as saying the move from the field to the remote operations center or the home has been an eye-opener in that it has shown the industry that remote work was not as much of a challenge as previously believed.
And this means the trend could become a stable one, just like it has for Big Tech.
Google and Facebook were among tech companies that extended their work-from-home policies until at least the summer of 2021. Some, such as Twitter, have told employees they could keep working remotely forever. But drilling an oil well requires the physical presence of a crew. It is not all done on a computer… except it increasingly is.
The oil and gas industry has been rather selective in its adoption of digital products to optimize its business. This may be about to change, a survey by analytics and advisory firm Quantzig recently revealed. According to the survey, the industry should go all-in for digital to utilize the potential of information technology, and the time to do it is right now.
“Such a transformation will require organizations to implement a focused digital strategy backed by technology adoption,” said Quantzig. “It will also need investment and commitment to revisit and revamp processes, infrastructure, and systems. All the enablers required for a successful transformation will have to come into play for the industry to harness the true potential of digitalization.”
Jobs Gone Forever
Automation is a big part of the digitalization of the oil industry. It will eventually render many jobs in the field—manual jobs—obsolete. This means that some jobs lost now to the oil price collapse will not be coming back.
Back in February, Baker Hughes’ VP of Ventures and Growth, Taylor Shinn, told Oilprice.com in an interview that digitalization did not necessarily mean the loss of jobs. It would actually make it easier to retrain employees and re-assign them, he said. But this was before the pandemic struck, obliterating more than 40,000 jobs in Texas alone, according to data from the Texas Alliance of Energy Producers.
In the perfect storm of low prices and low demand, job losses were inevitable from the start. Going remote and going digital will make more job losses inevitable. Yet it is very likely that they will create new ones, too.
The rise of the digital worker
In December last year, the Houston Chronicle’s Sergio Chapa reported on the rising number of tech labs set up by oil and gas companies to drive forward the digitalization of the industry. These labs were hiring people for positions that had words like “data”, “agile”, and “cloud” in their names.
As Chapa noted in that report, it was not only a way to take advantage of what many are calling the fourth industrial revolution. It was also a way to make work in oil and gas more appealing to a generation that is more hostile to this industry than those before it as a talent shortage loomed on the oil horizon.
Yet this shift is first and foremost about bringing oil and gas in the digital era more comprehensively. Drillbit sensors are fine, and so are 3D printed turbines, but the industry is moving towards comprehensive digitalization, it seems, and the pandemic is speeding up the process because remote is safe.
Geo-data major Fugro recently said it had completed the first fully remote inspection of an offshore platform in the North Sea. It used a remotely operated vehicle and its remote operations center in Aberdeen. This is just the first instance of what is likely to become standard practice, also featuring virtual reality products such as Baker Hughes’ Phantom View, drones, and smart drills.
Baker Hughes told the WSJ’s Eaton that 40 percent of the users of its remote operations services since the start of the year were first-time users. Schlumberger reported that it planned to boost its digital business substantially in what is becoming the new normal for the industry. Halliburton last month struck a deal with Microsoft and Accenture to advance its digital capabilities.
The big three are going digital. It will cost thousands of jobs, but it may yet create thousands more.