Reports about the death of oil and gas have, at times, been greatly exaggerated, and predictions about the terminal decline of fossil fuels vary widely. While some talk in decades, others more optimistically talk in centuries.

This variance owes much to advances in technology. Globally-available and reliable connectivity, IoT, and robotics, among other technologies, are making it possible for energy companies to extract oil and gas from locations that until only recently were deemed too inhospitable.

Equally, refining techniques have made it possible to improve the quality of crude; and whereas the economics of shale challenged its viability, technological advancements have recently seen production costs slashed, opening up yet further resources for energy-hungry businesses. Elsewhere, the continued growth and increasing competitiveness of solar photovoltaics (PV), wind, hydro and geothermal energy make anticipating future demand for fossil fuels near impossible to accurately predict.

The expiration date of fossil fuels may be in dispute, but their impact on the environment is not and it is incumbent on fossil fuel-dependent energy producers to clean up their acts and bring new efficiencies to their operations. IoT and other next generation technologies hold much potential here; a fact that has not escaped respondents in this research project. While just one in five (22 per cent) energy respondents have IoT solutions in place today, a further 62 per cent have plans to do so within the next two years, and respondents are exploring a whole host of other complementary technologies, from automation and robotics to augmented and virtual reality.

With prices stabilising at 50 per cent of previous levels and forcing efforts towards efficient operations, oil and gas producers today are focusing not on volume, but on profitable volume. Profitable volume is achievable through automation and optimisation.

— Chuck Moseley, Senior Director, Energy

At a time when oil prices are hovering at around $50/barrel and are expected to stay there for the foreseeable future, these technologies offer the chance to transform previously manual, expensive and precarious processes into cheaper and safer digital ones. Inspecting difficult-to-access offshore oil rigs, for example, used to require an engineer and, in some cases, could see production shut down for days.

Today such tasks can be carried out by drones. Similarly, active oil and gas pipelines used to be monitored manually, which made identifying and responding to accidents or issues quickly a challenge. Sensors, however, can be deployed to monitor these pipelines in real time. As the downswing in the oil market rolls on, these smart technologies will continue to take hold in the industry.

Longer term, all eyes are on renewables to meet the planet’s burgeoning energy demands and it is arguably solar that holds the most obvious and immediate promise. Plummeting panel production costs and increasing energy generating capacity saw the unit cost of solar PV-generated energy drop below that generated by fossil fuels in 2017. The economics of solar PV are set to become more attractive still in the coming years as grids get smarter and batteries for residential and commercial solar installations become more affordable. While battery technology exists today, it is, for many, prohibitively expensive.

As prices drop as manufacturers achieve greater economies of scale and PV cells improve we will see a fundamental rebalancing of the energy market, with households selling energy back to the grid through smart grid and IoT technology.

However, all of these advances are contingent on the energy industry overcoming two distinct challenges: security and connectivity, and it is clear that respondents in this research are yet to master these elements. A more connected, technology-dependent energy industry is a more vulnerable one and, being of strategic importance, energy producers are a prime target for cyber criminals.

Although it is a different industry, the 2014 attack on a German steel mill demonstrates the damage that a well-targeted attack can have. The attack, which saw a virus enter the mill’s network via an admin system and write off the steel presses, couldn’t have happened years ago because the connection didn’t exist. A similarly successful attack on a power plant would be catastrophic.

Uncertainties remain about the future of the energy sector.

What’s clear, however, is that the energy company of the future will need to be increasingly digitised in order to meet energy consumption demands in a cost-effective and environmentally-friendly way. To accommodate the transition, hard engineering and software skills will be required. Fresh faces will arise in the C-suite; in particular, those who have a firm grip of the digital imperative and the opportunities and challenges this presents. As utilities in general look to replace ageing infrastructure for better reliability and for regulatory purposes, there is an opportunity to introduce new technological elements to optimise performance.

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