Automating Upstream Supply Chain Leads to Efficiencies, Cost Savings in Oil & Gas Industry
By: McKinsey August 26, 2014
The rapid progress of technology, such as big data and analytics, sensors, and control systems, offers oil and gas companies the chance to automate high-cost, dangerous or error-prone tasks. Most oil and gas operators are starting to capture these opportunities and would do well to accelerate their efforts. Companies that successfully employ automation can significantly improve their bottom line.
While automation offers many potential benefits in the upstream supply chain of exploration, development and production, some of the biggest opportunities are in production operations, such as reducing unplanned downtime. Given the oil and gas industry’s substantial increases in upstream capital investment, optimizing production efficiency is essential. Automation creates several opportunities to that end: maximizing asset and well integrity (by which is meant optimizing production without compromising health, safety and the environment), increasing field recovery and improving oil throughput.
With the substantial production volumes of offshore production platforms, even small improvements in production efficiency will have meaningful financial impact, as additional throughput translates directly into more revenue. In the low-volume regimes of current unconventional mature assets—oil sands, for example—carefully targeted automation steps can cut costs and, more important, can also improve the reliability of production equipment, leading to higher revenues that can extend an asset’s economic life.