2021 Top Operators Report: Back-Office Automation, Data Driven Decision-Making Is Driving Next Wave Of Operational Efficiency
Editor’s note: Last year, when assembling the 2020 Top Operators Report, the COVID-19 pandemic had shuttered the global economy. Oil demand had been reduced by over 20 million bbls/d and prices were at lows not seen in decades.
The mood of the Canadian industry was grim. After five years of being rocked by wild price volatility the pandemic hit like a knockout punch.
The 2021 Top Operators Report looks back at how Canada’s oil and gas leaders pivoted to meet the challenges of 2020, and how they are positioning their organizations for future success.
Once again, we have tapped into the experience of professional services firm KPMG in Canada to provide insight into what strategies operators could pursue to thrive in the current environment.
The report also features a broad swath of the insights and opinions from industry leaders gleaned from Daily Oil Bulletin coverage, along with commentary from data providers Evaluate Energy and CanOils.
The COVID-19 pandemic put many oil and gas operators and oilfield service companies in survival mode.
But that doesn’t mean the push to find operational efficiencies through digital transformation slowed, said Narmin Vasanji, partner, Advisory Services, Management Consulting at KPMG in Canada.
“Working from home proved people could work in different locations. We saw more use of collaboration tools like Zoom and Teams. It forced people to think differently,” she said. “People were thinking of software as a service in the middle of the pandemic. A lot of companies were also looking at data warehouses and data lakes to improve analytics and insights for nimble decision-making.”
“Companies with the resources to weather the storm are now thinking about how to utilize technology and automate. They see it as a competitive advantage,” she added.
The advent of cloud computing is a key driver accelerating the digital transformation, said Vasanji. Larger companies are now accessing their enterprise resource planning (ERP) software over the cloud, providing greater flexibility and easier integration of new data sets. Consolidation in the industry is adding urgency to the shift.
“We’re seeing a lot of consolidation and we will see more consolidation. These all come with synergy targets, often 20-30 per cent in savings,” she said. “Companies need to merge systems and create one source of data truth. For the back office, they need to merge functions post integration, and that creates some challenges. On the operations side there is less impact to staffing but companies always need to get efficiencies out of the transaction.”
“There’s ample opportunity to become more efficient,” she added, highlighting automation in the back office as one often over-looked area. “During the cycle when commodity prices ramp up, companies don’t focus on back office costs. Then there’s a downturn and they layoff employees, leaving those left at the company to perform the jobs of many. The inefficiencies remain.”
Automating repetitive processes is one opportunity, said Vasanji. “Financial processes are a good area to find efficiencies such as invoice automation or automating time sheets from workers in remote locations. This creates capacity for finance teams to focus on forecasting and analysis to help operations make better decisions.”
Even greater opportunities exist through the use of data analytics, said Vasanji. By applying predictive analytics or visualization tools to data, companies can begin to look forward and improve decision-making. For example, basic spend analysis throughout the supply chain to better understand where money is going, to process mining tools that enable visualization of processes to address issues and take action.
Technical data used by geologists, engineers and other disciplines to inform decision-making is also evolving, said Terry Jbeili, geoLOGIC systems ltd. president and chief operating officer. geoLOGIC recently partnered with the Daily Oil Bulletin to survey industry professionals on data usage in current work flows and to identify areas of improvement. The survey results were released in a white paper.
“What we learned is there is a need for technical disciplines within organizations to have easier access to multiple data sets and advanced visualization tools to drive efficiencies,” said Jbeili. “Operational efficiency ranked as the number one reason for using data by the respondents. Other major use cases included project planning and business development (M&A).”
With funds for capital investment in limited supply, Jbeili said having accurate, comparable data and interactive visualization tools to help target spending towards the highest return assets is essential.
“There is an extremely complex interrelationship between reservoir geology, rock characteristics and how different technologies applied during the process of field development interact with the reservoir and affect performance,” said Jbeili. “How well asset teams understand the reservoir and make relevant engineering and technology choices has a major impact on asset value. This requires the ability to validate and integrate numerous data sets and to be able to understand how shifting different variables impacts overall productivity.”
The vast majority of survey respondents reported challenges in integrating different data sets into their workflows. Data silos continue to be a challenge that needs to be addressed, he added.
There is also increasing demand by other technical disciplines to access existing and new data sets, said Jbeili. One example of this is the need for data for environmental disclosures related to ESG reporting. Accessing the needed data sets and visualization tools through cloud computing could help “democratize” data and improve decision-making throughout organizations.
“Cloud computing provides flexibility for lighter data users within large companies who may only use a handful of data sets in their regular workflows,” said Jbeili, adding that in smaller companies it could provide access to data for all disciplines at a lower cost due to not needing to maintain legacy systems.
Forty per cent of survey respondents said their data is cloud-based. Among this number, some companies have totally moved to the cloud, while others are running hybrid systems with some data cloud-based and some hosted internally.
Companies that have migrated data and intelligence tools to the cloud say it provides improved security and lowers costs. Savings are being driven by the reliability of cloud computing, with less downtime experienced by users due to the automation of many processes and with data updates and software updates completed without outages.
Other key benefits to cloud computing cited by survey respondents include scalability, accessibility, flexibility, data and intelligence sharing, and collaboration opportunities — benefits which will only expand as more data sources drive companies’ broadening spectrum of energy intelligence applications, analytics and workflows as well as their need to integrate and report on these data and insights.
It’s not just large companies that can benefit from the digital transformation, Vasanji added. Around one-third of small- and mid-size companies are looking to automate to get rid of paper or are moving to the cloud.
“Everything is scalable,” she said. “There is ERP software for differing sizes of clients, and some are more affordable for smaller companies.”
- Digital / IT