There will come a time of peak oil demand, then somewhere down the line, demand for hydrocarbon fuel will level off and potentially decrease. And while we do not know exactly when that turn will come, we can already see the industry changing in order to prepare for it.

These changes are signalling fundamental shifts in the way oil and gas companies do business and the way they provide energy to the world. But these changes are also providing opportunities for strategic growth and cooperation to meet peak oil demand head-on and help diversified energy companies to thrive in the years to come.

The adoption of digital technologies that leverage the Industrial Internet of Things can drive lower production costs

Many of the larger oil and gas producers — the national and international oil companies — are already transforming their business models and diversifying their portfolios to incorporate other offerings, such as renewables. This movement — the transformation into diversified energy companies — is a clear indication that hydrocarbon-based businesses are accepting the reality of peak oil demand and are becoming more proactive to guarantee continued growth and success. But it also signifies a willingness to become more flexible in order to achieve operational efficiency, and that is where the need for digital automation comes into play.

Digital transformation

Many companies are realising that, as demand flattens, those that are able to deliver energy more efficiently will thrive in the face of changing market conditions. As Emerson has discussed with many of its customers, the adoption of digital technologies that leverage the Industrial Internet of Things (IIoT) can drive lower production costs for these companies by enhancing their operational efficiency in production, reliability, safety and energy management.

Emerson works with its oil and gas clients to provide solutions for digitally transforming their operations, not only to prepare for peak oil demand, but also to help them achieve performance metrics within the top 25 per cent of peer companies. Through its Plantweb digital ecosystem, Emerson has deployed more than 1,700 digital twins and has more than 250 ongoing digital transformation pilot programmes with operations around the world. Such programmes provide a platform for companies to realise the benefits of IIoT, regardless of how far they have progressed with digital transformation.

Increasingly, companies are realising that they need the support of industrial automation experts

But the transformation is not just about technology; it is also about people. With the processes of recruiting and upskilling becoming more complex and more difficult for companies to manage, businesses are having to outsource more of their routine operations, or those that are outside their core domain. With the incorporation of IIoT-based solutions, these companies can better manage the dynamics of the tight labour market and put expertise where it is needed, when it is needed.

Collaborative approach

As many in the oil and gas industry prepare for a changing energy mix, technology providers must forge strategic partnerships with clients to help expand their portfolio to take advantage of the changing landscape. With renewables on the rise, there needs to be more focus on investment in new energy markets and the operators exploring them.

Also critical is the need to advance local research and development capabilities while also supporting small and medium-sized enterprises, industrial customers, and universities, such as at Dhahran Techno Valley, where Emerson recently inaugurated its local facility with a technology conference and exhibition.

The process of digital transformation will require all oilfield services providers to help drive overall business improvement

This movement does not necessarily represent a change in business relationships, but a change in the nature of customer engagement through collaborative partnership. These companies are seeking partners that can help them navigate digital transformation and help them adjust to the changing market dynamics simultaneously. Increasingly, companies are realising that they cannot do this alone, and that they need the support of industrial automation experts.

Past the peak

These trends have spurred Emerson to engage in additional partnerships and strategic acquisitions to expand and diversify its portfolio to better serve the entire industry. Recent partnerships with AspenTech, and the acquisition of the Pentair valves and control business, have broadened Emerson’s product offering, while the acquisitions of Energy Solutions International and Geofields have expanded the company’s capabilities in pipeline integrity.

Moving forward, however, the process of digital transformation will require all oil field services providers to help drive overall business improvement if their customers in the oil and gas industry are to see beyond peak oil and create a better future for themselves and the people they serve.

Christopher Amstutz is vice-president of oil and gas industry programmes at Emerson Automation Solutions

This month's Agenda in features

• Surviving life after peak oil: While the debate about the timing of peak oil demand continues, energy producers are gearing up to embrace the life that lies beyond

• Equipping the oil industry for change: Global technology taskforce director at SNC-Lavalin, Sachi Maiti, examines the ramifications of peak oil and how producers can plan for it
• Infographic: Diverging trajectories