In this article, we’ll discuss the opportunities and challenges of Robotic Process Automation (RPA) in oil and gas sector.
Robotic Process Automation (RPA) technology is well known for its ability to enable machines to mimic human actions to automate tasks. Its ability to accurately execute tasks faster opens up a wide range of opportunities for organizations to streamline their operations and achieve greater operational efficiency. How far can RPA technology help the Oil and gas sector?
With the onslaught of the COVID-19 pandemic, digitalization has become the need of the hour for many oil and gas organizations. In a single month, we have witnessed massive drops in crude oil prices with WTI prices have fallen over 12% this year. Coupled with this, there has also been a decreasing availability of engineers, which has catalyzed the need for digital transformation in companies even more. According to Chandrasekhar S, the CEO of Foresight Opex,
“The pandemic has seriously exposed the vulnerabilities of businesses. This has gone a long way in fueling business continuity initiatives like the adoption of automation technology. In the last 15 years, the average returns from shareholders have been around 2% worldwide. This is a staggeringly low number that can be attributed to inadequate utilization of manpower, allocation of resources, and corruption of the system. Due to this, the pressure on the management to deliver higher profitability has been increasing more than ever. The conventional and computerized systems that have been in place for years are dumb systems with pre-set rules that can’t capture the change in the market to achieve better efficiency.”
However, contrary to popular belief, many oil and gas companies have chosen to forego conventional responses to falling energy prices. Before the advent of automation technology, most companies would have a set of predetermined responses that they would adopt during crisis situations.
This would include:
However, there is one major problem that is associated with using these methods to ensure business continuity- most other companies will be employing the same techniques themselves. This means that taking such steps will result in very low returns. In order to stay ahead of the competition, it is important to look into the alternatives that innovative and emerging technologies provide.
“The need for digitization has become even more prominent post the COVID-19 situation. Most of us were under the impression that oil and gas companies would be cutting costs in most aspects, but surprisingly the opposite holds true. Companies have been expanding their budget for automation technology. This is mainly because they are experiencing a lower availability of engineers, especially in dangerous areas of the site,”
says Hesham Medhat Sayed, Digital transformation consultant at Abu Dhabi National Oil Company.
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So, what techniques can be used to help you stand out from the crowd in the oil and gas industry?
Well, the most efficient step would be the adoption of RPA technology. According to Gartner’s recent research, implementing Robotic Process Automation can reduce an enterprise’s operational costs by a third.
Take the example of DTE Energy, an energy company based in Detroit. The company, which provides energy services including electricity and natural gas to 2.2 million customers, since 2017 has been trying to automate as many business processes as possible. By adopting RPA technology, they have managed to save nearly one quarter million annualized man-hours and have 75 automations in the backlog queue. Throughout 2019, DTE plans to implement 35 more automations in 5 additional business units.
According to the U.S. Bureau of Labor Statistics, the average hourly wage rate in the utility industry was $42.22 in February 2020. That means DTE’s efforts have already garnered more than $8 million in savings. They could easily achieve this feat by investing in the right technology and automating multiple business processes.
Apart from cost reduction, RPA is considered a superior alternative to conventional methods for a number of other reasons as well. Unlike staff layoffs, it won’t generate any sort of negative press or controversies. It can also pay dividends during a crisis and increase ROI to a large extent. It can efficiently automate a number of oil and gas processes like exploration analytics and analysis, well production analysis and industrial automation integration, operational reporting, compliance, and optimized drilling performance. For example, gas pipeline compliance is a rules-based process, which makes it an ideal candidate for automation. It allows companies to monitor all the aspects from an operations standpoint and raise exceptions when necessary.
Evidently, the adoption of RPA comes with a host of benefits for oil and gas companies. So, what is stopping these companies from investing in this kind of technology?
According to Biji Thomas, Principal Consultant at Bettroi,
“The oil and gas sector is not the fastest adapting industry to technology changes because of regulatory issues, safety systems, and the myriad standards that are currently in place. Companies often reuse specifications that are decades old. There is also the very little scope of changes during the building of the plant.”
Additionally, there are a few other key challenges that businesses are wary of during RPA adoption and they can be seen as follows-
Pipelines are often considered as one of the most important segments in the energy industry. Over 200,000 people are working in the oil and gas pipeline construction industry alone. Since this segment is perpetually growing, there is a grave need to monitor and manage several miles of pipelines in a cost-effective and safe manner. RPA solutions go a long way in aiding pipeline management by processing reports from field crews. For example, most companies will have to process around 300-350 weekly maintenance reports from the workers. The manual summarizing all of these reports is extremely time-consuming. RPA solutions can summarize safety reports in minutes so that supervisors can provide quick feedback to their field crews.
Oil & gas companies that choose to automate their close process expedite close time, improve transparency, and reduce risk at the same time. RPA solutions can also be used to implement automated checks. They can increase the working speed by 30-50 percent.
In the oil and gas industry, most of the existing oil fields are owned by the government, but the exploration costs are usually taken on by a joint venture between domestic and foreign players or paid on an agreement basis. This can make the revenue splitting process a challenging task. The process of managing this distribution of revenues is known as joint interest billion (JIB) which divides the revenues and expenses based on the agreements made with the partners. Since this is a standardized process, it can easily be automated with RPA solutions
The payment process required for the leases can also be automated by RPA solutions. Additionally, the technology can be used for the generation of reports on different leases across geographies, metrics around profitability, and project future trends. Since RPA allows executives to add more value to their daily work, they can transform the oil and gas industry to a large extent.
RPA bots can contribute significantly to the shipment processes, especially in areas like communication with responsible forwarders and shipment data updates in the system. Optical Character Recognition tools used in RPA allows the bot to read standardized images and scanned documents and make special marks related to the shipment details.
The prices of oil barrels are very dynamic in nature. Most of the oil and gas MNCs try to digitize their operations to stand out from the competition and reap the benefits of lowered costs. RPA solutions can reduce the manpower cost by 25-35 percent in back-office operations. Furthermore, it can also reduce 30,000 man-hours per year in the supply chain area alone.
Robotic process automation can aid in managing customer demand by processing orders and common inquiries much faster than ever before. For instance, an RPA system can evaluate new customer applications and automatically contact the customer if there are fundamental errors. Following up on these errors through automation gives customers faster service allows your staff to focus on inquiries that require human intervention.
Solutions that are incorporated with RPA technology can help in check and alerts management in the field operations. It allows stakeholders and top managers to eliminate repetitive field operations management and be involved only in processes requiring human decision making.
The oil and gas sector is strictly regulated, and these regulations are rule-based. Bots can perfectly fit such processes as they can monitor all the aspects of gas pipelines related regulations, from operations compliance to exception alerts.
Programmed bots help in multiple source-related data gathering and compilations for analytics and planning purposes. It is also a great communication tool within setting up partnerships with other oil and gas companies within production and exploration projects.
When you implement RPA into your business operations, you will be able to reduce implementation costs to a large extent. This is because automating fewer and simpler processes will require less IT resource effort. Standardizing and simplifying processes will reduce the amount of complex exception logic that must be configured or developed. Removing unnecessary or unrelated steps in the process may also present opportunities to reduce the number of integration points between systems, which can be a significant cost driver.
One of the biggest benefits of implementing RPA in a business environment is that it enables employees to focus on high-value tasks by eliminating repetitive and routine operations. Some aspects of business operations require human intelligence for proper execution.
Introducing new technology like RPA into an organization can often increase IT operating costs by consuming infrastructure resources either on-premises or in the cloud be it CPU, memory, storage, bandwidth, or otherwise. However, the benefits that can be reaped from the integration of such solutions outweigh the cost of maintenance to a large extent. Lesser, simpler processes will lead to smaller sustainment burdens for your IT support staff with an evidently lower number of processing errors that require troubleshooting. Patches, upgrades, extensions, and enhancements to the underlying systems utilized by the automated processes will be less costly as a result of more straightforward integration and more compact regression testing requirements.
Business continuity crises like the COVID-19 pandemic have emphasized the need to efficiently operate despite significantly impaired IT capability. By automating key processes, it will be much easier for companies to continue their operations in an uninterrupted, cost-efficient, and effective manner.
Making mistakes is a common occurrence for human beings. An employee can easily paste copied information into the wrong field or misspell a particular word. However, RPA bots do not make any mistakes. They are extremely accurate and businesses do not need to worry about any errors that might be made during the execution of a task.
“Emerging technologies like RPA are providing an opportunity to give stakeholders what they need while capitalizing on what the companies already have at the same time,”
says Pramod Agrawal, VP, and regional CTO, Automation Anywhere.
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RPA is the perfect addition to any oil and gas company’s digital transformation strategy. Its ability to capitalize on the base investment to maximize return by controlling costs, increasing resiliency, and delivering new value-creating capabilities is unrivaled, which gives it an edge over other solutions that are available in the market today.