Streamlining Processes

The oil industry has been hit hard this year and companies are struggling to keep afloat financially. With the price of a barrel of oil selling for almost half of what it was in 2014, consumers are rejoicing, while companies are experiencing diminishing profit margins. Oil companies are feeling the impact of these lower margins – according to MIT Technology Review, the energy analysis firm Platts found that the U.S. rig count decreased by over half since May 2014. But the good news is that even while the number of active rigs dropped at alarming rates, data analytics offers hope.  

Real-Time Data Analytics 

With lower profit margins, oil companies are turning to technology to create a stronger balance sheet. The aim of the technology is to increase the efficiency of capital employed in producing a barrel of oil equivalent (BOE) by using data analytics to reduce costs and create wider margins. In fact, according to the same MIT Technology Review article mentioned above, many oil companies are now investing as much in information technology and data analytics as in exploration and production. Just a couple of years ago when profits were at an all-time high, this distribution would be inconceivable.  

It’s not a surprise that the oil industry is turning to data analytics – almost every other industry from retail to healthcare has done the same. However, what many continue to struggle with is how to have the right strategy and technology in place to make sense of the data pouring in from sensors being placed everywhere from pumps to drill bits. This proliferation of sensor and communication technology makes up the oil and gas industry’s fundamental Internet of Things (IoT) challenge, the effective marriage of petroleum engineering and data science skills to create value.

If done right, there are tangible benefits that can be achieved from making better decisions by analyzing data being collected from the field in real-time. For example, operators can determine that wells, pumps and motors are working correctly, not experiencing downtime and are performing in the most efficient manner. And if a problem does occur, alerts and notifications are immediately dispatched to the correct employees. Also, with the oil and gas industry facing increasingly stricter regulations and greater government involvement, being able to analyze data in real-time is a crucial part in meeting and reporting on these standards.

Actionable Insight

When coupled with algorithms that diagnose problems and predict potential failures using sensor data flows, business process management (BPM) can greatly improve the effectiveness of processes while driving down costs. For instance, a BPM platform can help an organization: 

    + Increase efficiency: Eliminate manual processes that are time consuming, error prone and costly, as well as drive standardization in the organization to reduce costs.
    + Improve transparency: Take action based on insights gained through real-time process analytics and relevant dashboards.
    + Gain visibility: Identify specific bottlenecks to optimize workforce management and predict what benefits one can expect next from process changes.
    + Improve quality: Assure consistency and avoid manual errors by getting employees to follow the same optimized and standardized processes to reduce costs.
    + Adapt faster: Quickly respond to changing business conditions and transform a business and information technology via flexible business rules and process intelligence.
Overcoming Challenges 

It is important to remember that there are unique challenges for the oil industry when it comes to IoT adoption, and these won’t be overcome overnight. Common challenges include organizational siloes; projects with multiple stakeholders (regulators, contractors, and multiple internal departments from land acquisition to engineering, finance and accounting organizations), complex work processes and a corporate culture that is not quick to change. In fact, organizational and cultural issues are often more difficult for companies to address than the actual implementation of the technology. 

For any organization looking to build out its usage of data analytics, the implementation of a BPM is critical. While the payoff can be huge, transformation often requires patience, and a prioritized methodical approach that allows an organization to change its culture while integrating new technologies and restructured workflows. 

Donald Fisher is senior director of industry solutions, energy and utilities at Software AG. For more information, visit

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