The empirical evidence of climate change is increasing worldwide. Wildfires in Australia, California, and central London provide another wake-up call. The Intergovernmental Panel on Climate Change noted: “Scientific evidence for warming of the climate system is unequivocal.” At and after COP26, nations and organisations are making more commitments, but change now has to happen.
The Oil & Gas industry has the power to address the issue and has started to do so. Total, Repsol, BP, Exxon Mobil and others have all committed to reducing emissions aiming to achieve net zero GHG emissions by 2050. At the heart of the change, these firms need an energy strategy to enable energy transition to greener sources
These are challenging times
The commitments come at a very challenging time for the industry. Every organisation is rushing to digitise their operations to become more efficient. The war in Ukraine and subsequent sanctions on Russia have disrupted supplies, with Oil and Gas prices rising globally worldwide.
As the world emerges from the COVID pandemic, three further challenges have arisen. Inflation is rising quickly, the demand for travel has spiked, leading to much higher demand, and disruption of supply chains continues. The naval exercises by China off the shore of Taiwan are just the latest disruption to supply chains for components. Notably, semi-conductors, where Taiwan supplies 20% of global production and according to Boston Consulting, 92% of the most advanced semi-conductors
The war in Ukraine has meant that Europe, which relied heavily on Russian gas, has been forced to change. In some cases, that will see a return to coal. LNG (liquid natural gas) is one option, but investment has slowed in this sector, and the industry is not ready to ramp up volumes. The best solution is the transition to renewable energy sources such as solar, wind, wave, and hydrogen. However, this is a complex and lengthy process.
Driving energy transition.
Oil and Gas companies must manage their transition to renewable energy. Recent years have seen companies write down existing assets, and they must seek partners to reposition themselves for a low-carbon future. As the attractiveness of oil and gas fades to investors, there are new opportunities for investment in low-carbon energy sources, McKinsey identified six:
- Renewable power
- Electrification (EV infrastructure)
- Biofuels
- Hydrogen
- Carbon capture, utilisation and storage (CCUS)
- Voluntary Carbon markets
All hold merit, but investment in Wind, Solar and Electrification require the creation of an energy infrastructure that is distributed, complex and at a scale that is unprecedented. They will also require digital platforms that support the monitoring and management of millions of connected components with automation that drives efficiency.
Before looking at the digital challenges, an energy transition strategy must also consider the entire end-to-end value chain. For example, how is it sourced, stored, and transported, and where and how is it consumed?
Energy Sourcing
Any large capital investment in energy sourcing is never simple. Unlike fossil fuels, the distributed generation of renewable energy creates additional challenges. Not only is the underlying energy network more complex, the volume and complexity of the physical assets increases the technology requirements for connectivity, storage, and processing power for analytics.
Sophisticated asset monitoring and management systems must include advanced AI modelling capabilities that predicts drops in operational efficiency, predicts failure and creates predictive maintenance schedules to optimise performance across the portfolio.
This requires the collection of data from millions of IoT devices within an infrastructure that can store and process data at an unprecedented scale. Companies should maintain digital twins of existing wind farms and other assets to improve performance, designs and to conduct scenario planning for potential events.
Building large wind and solar farms are not the only means of sourcing energy. There is also an opportunity to deliver solar panels to individual households and communities. Power generation closer to the point of need is far more efficient as transmission losses are around 5% for the US network and around 6-10% for the UK network. This has different challenges with distributed endpoints, requiring some of the same but also different data requirements for national power infrastructure organisations, energy firms, and individual householders.
Energy transportation and storage
There is a fundamental difference between the transportation and storage requirements of renewable energy sources and traditional centralized plants. Traditional plants can be switched on at will to meet demand. Renewable sources are, to an extent both distributed and functional only for periods of time determined by their source, for example, wind and sunlight.
While new technical solutions to these challenges are emerging, such as heating seawater and taking advantage of Seawater source heat pumps, the storage of energy is now vital. An updated grid must support bi-directional transmission to new areas; balancing demand with supply is an ongoing issue. Renewable energy cannot be made available as conveniently as coal-fired power stations. While nuclear can provide one answer, storage solutions are another factor for an energy transition strategy to consider.
An additional challenge is that Global energy demand is still increasing, driven primarily by population growth and electrification of vehicles. As wind and solar farms and other power generation sites are built, the existing national grids need updating to cope with the increasing demand both downstream and upstream and across more areas.
Monitoring these flows of electricity and dispatching (managing) them in a reliable and cost-effective way is very complex and needs a lot of advanced digital platforms. These platforms must be flexible enough so that you can develop, build, and deploy the right solutions to meet demand across the network for generation, storage or supply. The platform needs to manage not only the energy but also the assets they consist of. This is where enterprise asset management, IoT and digital twins will play a part.
Energy consumption
Historically energy strategy has been iterative. As new technology emerges, more plants were brought online to cope with the demand. An energy transition strategy delivers, and arguably requires a revolutionary rather than evolutionary approach. There is a real opportunity to take an end-to-end view of energy demand and supply in key end use sectors like transportation and buildings, both residential and commercial.
Designing smart energy management systems that can effectively use all the levers available to reduce energy waste, improve energy efficiency and source clean energy will significantly the journey to net zero.
As buildings are updated to reduce energy consumption and include renewable energy generators, energy companies must ensure that their digital platforms can monitor and dispatch energy usage as close to the endpoint as possible. To understand energy usage they need to involve in the planning of lighting, heating and cooling systems across construction projects. Energy companies have a role to play, and their strategy must include the digital platforms that enables them to better understand the requirements both before and during their life. Vehicle electrification is an equally multifaceted challenge.
Vehicle electrification
This issue becomes even more complex when considering the different transport needs. For the long haul, the answer might be hydrogen rather than electrification. Smaller sprinter vans will work for local distribution, but these will need charging hubs. Private cars need charging points in public car parks and at households. Solving these problems needs data; this is where a partner that has done this before and understands the challenges is critical.
In addressing these challenges, it is important to consider the context. The digital aspects of the project should consider the customers’ experience. That experience should be safe and secure.
Security by design is critical, and lessons must be learnt from the past, especially in what is becoming a connected world. Transportation electrification is not simple; ensuring that charging points are available in public and private locations is a huge and complex undertaking. One thing that has been learned from digitisation is that access to data provides insights to increase efficiency and identify innovation.
An end-to-end view should also consider the consumer experience of the endpoint. Where else can they add visible value to the end customer? For example, in the US, a school bus contractor will gain value from the reduced energy consumption and costs that a vehicle electrification process brings.
However, the end consumer, the parents, will want to know if their child is on the bus, where the bus is, and their eta. The children may want USB chargers and internet access to stay connected. The future technology platform should look at the requirements of all stakeholders in the journey. Similarly, in other industries such as retail, logistics and mining, it is more than just a question of consumption.
Addressing The digital challenge
Energy transition is not the only priority for investment in digital technology within the oil and gas industry. Other considerations include:
- Safety and Security: Organisations must continue to improve safety and security across their existing infrastructure. Cyberterrorism is increasing; according to Dragos, between 2018 and 2021, the number of ransomware attacks on industrial control systems (ICS) within the Oil and Gas industry increased by over 500%.
- Digital transformation: Gartner defines digital transformation as: “the process of exploiting digital technologies and supporting capabilities to create a robust new digital business model.”. To remain competitive, firms must continue to move these initiatives forward, adding automation and analytics to every part of their business to increase efficiency.
- IIoT and IoT: Implementing IIoT and IoT technology have changed how businesses operate, from preventative maintenance to efficiency improvements.
Whilst the urgency for energy transition has recently risen, but these investments are not mutually exclusive. An effective energy transition must consider and include these other investment areas. This makes the technology challenges not only complex but broader. The new digital infrastructure must be secure by design. It must align with the digitisation that is occurring across the business rather than separate. Finally, lessons from the deployment of existing IoT platforms must be leveraged for the immense scale of those required to implement the energy transition strategy.
You cannot do this alone
To solve these complex challenges, organisations need several components. They need access to people with the right skill set. Some of these are internal but external partners that can bring digital skills such as security, analytics and IoT knowledge to create a collaborative team to solve the challenges are important.
Energy organisations need to be able to track and manage their next-generation energy network. They must be able to sense and respond to natural threats through climate change events or cybersecurity incidents. They need a digital energy orchestrator to help reinvent their grid for the future.
bp and Infosys have partnered to develop an integrated Energy as-a-Service (EaaS) offering which provides advanced visibility into energy usage to help businesses enhance energy efficiency and meet decarbonisation goals. Why Infosys? Infosys is a recognized leader in Energy Transition. It won several awards in the recent HFS Energy Transition Services, 2022 report. HFS recognised “Infosys’ ambition across the energy transition and broader sustainability is matched with its deep energy history, rapid growth in its utilities practice, and an industry-leading sustainability services team that includes high-level strategy.”
Infosys is also the main partner for Net Zero markets at ONS 2022 in Stavanger, where more than 70,000 Oil and Gas industry leaders gather to learn from high-profile decision-makers and global influencers engaged in the world’s energy discussion.
Infosys is a global leader in next-generation digital services and consulting. Over 300,000 of our people work to amplify human potential and create the next opportunity for people, businesses and communities. With over four decades of experience in managing the systems and workings of global enterprises, we expertly steer clients, in more than 50 countries, as they navigate their digital transformation powered by the cloud. We enable them with an AI-powered core, empower the business with agile digital at scale and drive continuous improvement with always-on learning through the transfer of digital skills, expertise, and ideas from our innovation ecosystem. We are deeply committed to being a well-governed, environmentally sustainable organization where diverse talent thrives in an inclusive workplace.
