The Future is Digital

Innovation in automated solutions and data management systems is transforming the way oil and gas companies work across the globe. Large mergers like last year’s GE Oil & Gas and Baker Hughes tie-up show that large industrial players are taking a technologically focused future seriously.

PEMEX could be an example. Transforming into a productive enterprise of the state after its overhaul by a new leadership team in 2016, PEMEX has realigned its strategy to focus on efficiency, profitability and productivity as it reels with the rest of the industry from the plunging oil prices that forced companies to deeply rethink cost structures. It is not alone.

Daniel Gutiérrez, Director of Pepperl+Fuchs Mexico, says that his firm’s technology is helping performance at Latin America’s largest petrochemical plant, Braskem-IDESA’s Etileno XXI project in Coatzacoalcos, Veracruz. “We make it possible to maintain facilities online and survey a plant remotely,” he says, “which allows companies to identify issues before they develop into more serious problems.” Increased connectivity between decision-makers and the plants becomes an additional benefit.

CAPEX VS TIGHT BUDGETS

A top challenge that threatens to outweigh the benefits is that it sometimes becomes difficult to promote new technologies in times of tight budgets like those of recent years. In PEMEX’s case, the “perfect storm” of low oil prices, a corporate restructuring and the Energy Reform led to severe budget restrictions for the NOC. Its planned spending for 2017 is around US$19.7 billion, 18 percent below the US$24 billion it had in 2016.

Gerardo Tamayo, Director General of engineering solutions distributor Sumimsa, warns against a penny-pinching mindset that could shortchange safety and maintenance and points toward the state-owned company’s accidents in recent years as a cautionary tale. In April 2015, four workers lost their lives in a fire on PEMEX’s Abkatún A platform and three others were killed on the same platform when another fire broke out in February 2016. “It is important to highlight that safety must not be compromised by budget cuts or any other factor as it will put human lives at risk,” he says

AT RISK ON THE CLOUD?

While new technologies could increase safety in the physical realm, they introduce new, virtual risks, especially when it comes to how oil and gas companies store and manage their data. Cloud storage is already commonplace for smartphone users and this type of virtual architecture is quickly seeping into operations across many industries.

Its introduction into the oil and gas industry has been notably slower due to the sensitive nature of the data well operators manage. Any given well has dozens of parties with interest in its data, whether for trade advantages or intellectual property. “Oil and gas operations will become more dependent on the cloud and different types of software but this will create new cyber risks” predicts Sebastián Aguayo, Subdirector of Energy for Marsh Brockman and Schuh México, a global insurance brokerage and risk management firm. His concern was echoed in GE’s 2016 annual report to shareholders, in which CEO Jeffrey Immelt highlighted cybersecurity as one of five key risks to strategic execution.

Michael Günther, Director of Energy for Marsh Brockman and Schuh México, points out two key areas of cybersecurity risks faced by oil and gas companies. “The first is cyber liability,” he says. “Companies that are custodians of their clients’ sensitive data are responsible if someone steals this information.” Hacking to cause intentional harm to operations is another risk area for companies and Günther warns that it is not always covered by reinsurance policies.

INTERNET INFRASTRUCTURE

While insurance companies can create contingency plans and teams to tackle a hacking emergency, technology solutions companies are ramping up efforts to keep up with regulation surrounding the infrastructure of Internet Service Providers (ISPs). “All ISPs must comply with certain rules and regulations,” says David González, Managing Partner of Net Brains, “but after that, one must look at the specific infrastructure that will be used to decipher all the incoming and outgoing data.”

As the oil and gas industry evolves into an era defined by digitalization, virtual platforms and automated solutions, some challenges and benefits are yet to become visible. Despite the uncertainty, it is clear the industry is undergoing a technological revolution that will have far-reaching consequences for safety, security and performance. As Mexico offers countless new ventures to the private sector stretching across the value chain, there is an obvious opportunity to lead in the digital realm.