(WO) — The process of industrial companies connecting virtually everything digitally is moving inexorably forward, executives said at a Tuesday morning panel discussion at the Schlumberger Digital Forum in Lucerne, Switzerland. Everything is Connected was discussed by Woodside Energy CEO Meg O’Neill, Ecopetrol Group CEO Felipe Bayon and IBM Chairman and CEO Arvind Krishna.
Overview of digital efforts. Asked how Woodside is approaching a larger digital transformation, O’Neill said the recently completed merger (June 1, 2022) with BHP Petroleum is actually helping that effort. “The merger with BHP doubles the size of our company,” explained O’Neill. So it gives us a very significant change in our geographic presence, a very significant presence in North America and a stronger balance sheet. And what that really does for us in the context of connecting for a new future is that we’re very well positioned to be able to invest in the technologies that we need today for energy development, as well as some of the energy sources that will be increasingly needed in the future.”
Meanwhile, Colombian state-owned firm Ecopetrol has developed a bold 2040 strategy for digital transformation. Accordingly, the moderator asked Ecopetrol’s Bayon how his firm’s implementation of digital transformation affects relationships with customers, suppliers and partners. “When we developed the strategy, the strategy until 2040, it was important for us in the midst of very difficult and difficult times with COVID – with very difficult economic conditions for many people, not only in Colombia, but also in the countries where we work – to try plug back in,” Bayon said. “And we’ve been part of the conversation in terms of laying the foundations for recovery, making sure that as we power people, we can be part of that conversation with people. So the strategy is basically that we want to continue to grow in the middle of the energy transition. We want to be very strong on key ESG issues. As such, it puts technology at the center of the conversation about how we actually see our connections to society, the environment, and good governance. And finally, with knowledge, we can transform not only our staff, but also the way we connect with our communities.”
IBM’s Krishna was asked about his efforts to convince operators to embrace the power of digital technology and what factors are holding them back from fully embracing it. He said this is rooted in the process of the industry trying to break away from its history and traditional ways of working. “Look, we’re moving away from traditional operations since the 1920s,” Krishna said. “This is exactly the ‘transition’ that the oil and gas industry has been talking about.” I think artificial intelligence was first connected between processes. You can get all the data from all these processes in all industries, and the value of what AI is unlocking is $16 billion in global productivity this decade. It’s not in the future, it’s in this decade. But of this amount, 1 billion dollars is related to the oil and gas industry. So the oil and gas industry needs $1 billion extra, I’ll call it profit. About half of this is related to sustainable development and reducing emissions. I think that’s an opportunity and that’s something we want to unlock with our partners.”
Implementation and the people angle. When asked if her company’s digital efforts are interactive, and how important it might be, Woodside’s O’Neill responded with an emphatic answer. “Oh, absolutely,” she exclaimed. “And I would like to build on Arvind’s point about capturing the value associated with digital. When you think about it, technology enables things like remote operations, stand-alone operations, improved recovery. As stewards of natural resources, one of our greatest responsibilities is to extract as much oil and gas as possible from these reservoirs. Digital technology is critical to this and it spans the entire company, as you asked, from the geofac to the engineers and production operators on the platform, to the engineers who support the design of the facility. It is absolutely necessary. And, you know, we hope that we can get our share of that billion dollars that Arvind mentioned.”
The moderator referred to the keynote speech made earlier in the morning by Saudi Aramco President and CEO Amin Nasser. In this speech, he referred to an internal view of his staff, the company’s employees and the available talent pool. The bottom line is that industrial companies can shift their focus away from their partners and customers and internally to what they do with your people digitally. The fact is that digital skills are an integral part of working in today’s industry. And it appears to have led not only to a short-term goal of helping workers adjust their skills, but also to a long-term goal in terms of talent training and digital investment.
Accordingly, IBM’s Krishna was asked if there was a gap between the real-time needs of now and the digital needs of the future. “My short answer is actually no,” Krishna stated. “But people don’t like change. It’s just a fact of life. This is not a question for any of you or any of us. Our people do not like changes. So I think you have to be aware of that as leaders and understand how you can help your people make the transition. Simply scolding them or hoping to hire new skills will not work; they are not enough. This is just the first very, very quick observation.
“The half-life of skills is getting shorter,” he continued, “and everyone needs to wake up to that. Fifty years ago, 30 years ago, people were able to remain in the same state [portion of their] profession. Now we are talking about six different directions. This means that the average person will change seven times during their working career. What are we doing as leaders to help improve these conditions in terms of training, health support, etc.? That’s a big part of what we have to do.”
Bayon was asked what a company should do to close the gap when there is potentially a training void, but workers are looking to the digital future.
“Within this strategy that we have created, the third element is to ensure the ability to retrain, retool and retrain people,” replied the CEO of Ecopetrol. “So at least 70% of our people should go through this, Arvind thinks, between now and 2030. And we determined that we could create about $20 million to $30 million in value from that. I think it’s more important to give people opportunities or tools so they can have an even better work-life balance, making sure they can connect to what they’re doing. And it’s interesting that we’re seeing people who used to flee the industry now come back. And they say, “It’s because we see what you guys are leading. We want to be part of this change.”
“I think technology is at the heart of it. So last year alone we were able to get $350 million in technology and digital benefits. It empowers people. So even if we’re looking domestically, it can connect us to people outside society if we’re thinking about things like water management, not just emissions. So there are other things we can do to connect our employees with people from the community side.”
Climate, emissions and ESG. Another angle of discussion was the connection between digital transformation and ESG issues. The moderator asked Woodside’s O’Neill how important it is to explain and effectively communicate the company’s climate policy to employees in order to move them forward. “It’s absolutely necessary,” O’Neill admitted. “We want our employees to be ambassadors for the company, and they need to understand to be able to articulate how the work we do [is solving ESG issues]. And that means providing reliable energy, affordable energy and energy with lower carbon intensity. We produce about 70% gas, which is less carbon intensive than many alternatives when used to generate electricity. That’s good. But we also want to invest in some new technologies and energy sources that are even less carbon intensive. And we believe that our investments in oil and gas today will help the world prosper and help finance this transition to these lower carbon energy sources that are really just starting today. And it’s going to take some time to scale.”
Meanwhile, when asked about examples of different industries where things are working better and the industry can put up a united front, Krishna said, “Let’s just recognize that, first and foremost, we all live off what the sector produces. Another sector also says: I think oil and gas is important for security, industry, building materials and many other things, not just internal combustion engines. So let’s just start with that. I really think that the area that I have been most involved in and have enjoyed seeing progress is cyber security. Let’s face it, cyber is going to be the challenge of this century. And every single one of my providers that I’ve talked to in their office about these issues, they’re all worried about having to stop working. They (cyber hacks) are damaging, they cause a lot of downtime. And I was pleased to see I think 18 companies come together in Davos to see where the oil and gas industry can come together and share best practices in cyber.”
Ecopetrol’s Bayón was asked how important cybersecurity protection is to both him and his organization. – That’s right, – said Bayon. “I once doubtlessly heard someone say that there are two kinds of companies in the world: those that are hacked and those that don’t know they’ve been hacked. That means it’s something that needs to be very, very, very relevant. Another thing is that hackers do not break into the system. They log in. So back to culture, how can we create a sense of that? And I’m with you, Arvind. These are our employees. But I also think technology can help us.
“I believe that this is one of the areas where we need to unite and work together. And this is a big threat. I mean, we’re not managing infrastructure that’s important to our countries, to our regions, and to national security. So we just need to make sure that it (cyber security measures) is always there.”