At the recent EAGE Annual 2018 conference in Copenhagen I heard views of oil and gas executives about the pace of the digital transformation for the industry. The sector has the luxury of a price system that is set by factors outside their direct control. Until the recent oil price crash, it was often set in such a way that it allowed it to generate relatively healthy profits and to tolerate a great deal of inefficiency in its processes.
These days are probably gone and as the energy transition takes hold they will certainly disappear. “That mindset of what made our business profitable was the basis of change,” John Elgen, distinguished advisor to BP said. “Now I think you will see the strong survive and the weak will perish.”
Elgen is adamant that digitization is not about replacing domain expertise, but that the pace of adoption is linked to a basic necessity to remain profitable. “We still need people who fundamentally understand how the earth works, that’s not going away,” he added.
“There have been impacts because of the investment climate in our business, quite frankly we compete for capital with many other economic contributors on the planet, so we have to build a value proposition that attracts capital. If we can’t build it, we can’t execute at the pace of change we want to.”
Attracting new talent
Ashok Belani, EVP technology at Schlumberger agreed that the pace of digital transformation is very slow and one consequence of that is that the bright Millennials are not attracted to seek employment within the industry.
“It could be a lot faster and because the pace of transformation is so slow it has had a snowball effect by decreasing our attractiveness to young people who won’t join our industry,” he said. “The human capital is not that great and there are many industries competing for this human capital. Our industry’s stance must be that it likes the idea of transforming digitally and be passionate about it. If it is not like that we will not attract the right people.”
Belani pointed to a lack of understanding about the opportunities. “The reason the pace is slow is that at the level that people execute there are still plenty of people who don’t know what they don’t know,” he said. “The understanding of what the capabilities are is not good enough, certainly at senior management level in the oil and gas business. They need to learn about it, get passionate about it. If not, learn about it then accept that this is something that is going to happen and to adopt it and move with it.”
Date: Jun 18, 2018