Resources Industry: Digital Transformation Trends
Expected digital transformation trends in the resource industry include Artificial Intelligence (AI) and Cybersecurity. Drivers of AI include the need to obtain and interpret the massive and complex data available in the industry for effective production, solve the problem of an aging workforce, and reduce the threat to life for miners working in risky mine slots. The adoption of AI will also help to increase productivity as it will enable industries to optimize operations in more sites as opposed to using manual systems. Drivers of cybersecurity include digitization, which makes companies more vulnerable to security threats, and the surge of ICS-focused adversaries.
Trend 1: Artificial Intelligence
- According to a PwC survey of CEOs of oil and gas companies globally, 80% of the CEOs agree that AI will transform the way companies do business in the coming five years. About 65% of these companies have either implemented or are planning to implement AI in their operations.
- A report on the latest trends in the oil and gas market projects that by 2022, oil and gas companies in North America will provide the biggest market for AI. These companies will invest in AI to reduce their cost of production and increase production efficiency.
- To get the benefits of AI technology fully, however, companies should access whether the data in their possession is adequate; that is clean, available digitally, right, and most importantly if its frequency and resolution go hand in hand with the variability of processes.
AI Trend Drivers
- A January 2020 interview of JohnPaul Portelli, one of the Lead Technology and Innovation personnel at Canadian Natural, shed light on the value and drivers of AI. Canadian Natural is Canada's largest oil and gas producer.
- According to JohnPaul, AI is driving the digital transformation trend because it enables companies to tackle large and complex data, which would be impossible to do using traditional methods.
- According to the PwC survey, "Today, technologies centered around data are making an especially big impact. The industry produces a lot of data, and advanced analytics like machine learning and artificial intelligence (AI) give new ways of interpreting this and creating previously unknowable insights."
- The need for a higher level of productivity is also driving AI technology. In the past, as JohnPaul says, "subject matter experts have only looked at their plant or specific area of responsibility, so you have people optimizing for their field. AI gives us some opportunity to optimize across a larger operation or collection of plants..."
- Barrick Gold, the largest gold mine in the world, is also increasing the use of AI. The company is using AI to curb the issues of an aging workforce and the threat to the life of miners working in risky mine spots.
Examples of the Use of AI in North American Resource Companies
- More than 30 oil and gas companies in Canada have used site-inspection AI to help them monitor their sites remotely. Such a system creates alerts and generates reports based on data from field devices. The result is a reduction in site visits by 50%.
- A top Canadian company launched a 3-month pilot, where they installed sensors on 60 wells, all of which had connections to a remote optimization system. The result was a CA$1.50-per-barrel saving in operation costs.
Trend 2: Cybersecurity
- While in the past, companies have focused their cybersecurity efforts on Internal IT systems, they are now increasing focus on operations technology (OT). OT includes software and hardware used in industrial processes. Any attack on OT can cause problems such as outages, safety concerns, and financial losses.
- Nyrstar, a mining company that deals with metal mining and processing and has four operations in North America among other countries, reported being hit by a ransomware attack that targeted its servers.
- "According to a survey, 68% of respondents have stated that their company had suffered at least one security compromise involving information loss or operational disruption in the past year (2017)."
- According to a report on global AI and gas, the challenges that companies could encounter in implementing cybersecurity are "lack of awareness about oil and gas security solutions, difficulties in implementation for complicated operational technology, and the vulnerabilities associated with cloud technologies."
Cybersecurity Trend Drivers
- The "growing trend of bringing your own device (BYOD) in the industry poses further challenges for the security infrastructure," is pushing companies to up their security efforts.
- According to the PwC survey of CEOs, "59% of global oil and gas CEOs see cybersecurity breaches as a threat to their growth prospects. As assets become increasingly connected to the network, it’s important to protect critical digital infrastructure against cybersecurity attacks by monitoring threats, pinpointing vulnerabilities, building reliable controls, and promoting a culture of security awareness."
- The increase in digitization of the oil and gas industry opens it up to cyberattacks, heightening the need to implement effective cybersecurity solutions. Such attacks include misuse by insiders, attack of web apps, and loss of property.
- Oilprice.com reported a growing cyber threat to North American countries stating that "The complete “energy infrastructure sector” (e.g., electric, oil and gas, etc.) of all countries are at risk as companies and utilities face multiple well-resourced ICS-focused adversaries..."
Examples of the Use of Cybersecurity in North American Resource Companies
- Chevron Corporation, which produces on and offshore oil crude oil and natural gas, has seen an increase in its productivity thanks to Microsoft's security-enhancing cloud services, including OneDrive and Office 365.
- "Apache Corporation, a Houston-based oil, and gas company, with around three billion barrels’ equivalent of oil and natural gas reserves uses Microsoft’s customized and modified security framework that considers everything from physical to logical access to application security to data protection to data continuity needed in the industry."
You can find more information about digital transformation trends in the North American resource industry here.