Digitalization Done Right for the Hydrocarbons Industry

By Ashwin Raikar

Industry 4.0 revolution is making a very significant impact on the way companies across the globe carryout their day to day functions. Data analytics, machine learning and artificial intelligence are being employed across a whole spectrum of industries. The expectation of the leadership at companies adopting digitalization is to gain a level-up in efficiency, productivity and safety of their operations. And yet, according to an article published in HBR [1], companies adopting digital transformation have managed to capture only 31% of the expected revenue lift and only 25% of the expected cost savings. It remains a fact that data silos continue to exist among the various business verticals or divisions of companies. This prevents the company leadership from having a global view of their entire organization and thus limits their ability to improve performance efficiency at the overall organization level.

There are indeed organizational and cultural challenges to adopting digitalization. A good part of the problem is the inherent incompatibility or incoherence of various technologies adopted for this transformation. On the one hand, operational data is being generated by physical systems such as sensors of IoT devices or DCS/SCADA of industrial facilities i.e. by operation technology (OT). On the other, data on finance, customer relationship management, inventory, etc. live inside the information technology (IT) infrastructure.

This divide features more prominently in the hydrocarbon industry that have large industrial plants churning real-time operational data that needs to keep in step with all the financial, human resource, inventory and procurement data which are resident in the ERP systems. As the design life of assets employed by the industry runs into decades, there is a large proportion of legacy systems at various facilities that are not even compatible with modern data platforms. Bridging this divide or bringing about this IT-OT integration at all levels of an enterprise is key to attaining the digital nirvana for companies in the oil and gas sector.

Consider the case of a Fortune 100 company in India that planned to set up a command centre for monitoring operations across its assets. The objective was to gain data-driven visibility and improve decision-making capability using analytics across various functions (such as safety, reliability, production, operation and maintenance). They achieved this by integrating over twenty IT and OT data sources. The sources were indeed diverse – a process historian, SAP, the asset performance management system, document management system, laboratory information management system, engineering data management system, GIS and others. They employed a no-code any-to-any data platform to integrate the data sources and go live in four months’ time. The resulting analytics dashboard had over three hundred KPIs to track real-time performance of assets and functions across the organization.

Another Fortune 500 Petrochemical Major in East Asia envisaged creation of an operations digital twin (ODT) or a cyber replica of the operations of a major naphtha-cracking petrochemical complex. With 141,000 time-series tags coming from over twenty-five IT/OT sources, the task of data engineering was complex. Yet it was achieved within a matter of fourteen weeks thanks to a very efficient no-code any-to-any data platform that enabled a fast implementation of the ODT. With direct cost reduction to the tune of USD 25million and total estimated impact of USD 62 million, the project achieved ROI within three months of going live.

The two cases above from the hydrocarbon industry demonstrate that overcoming the IT/OT divide by employing the right technology is possible. Not just that; it can be achieved within a realistic time-frame and with return on investment matching or exceeding the Company’s hurdle rates for investments in new projects.

The leadership at companies who are looking at various technologies to transform their own operations must, therefore, consider the following aspect to zero-in on the right one for the job:

  • Whether the proposed technology is able to integrate a multitude of real-time data sources without the need for complex coding in a visual or graphical way?
  • Whether the resulting solution has dashboards that combine process graphics with streaming real-time data to provide actionable inferences to improve operations?
  • Whether the adopted stack of tools has at its foundation a dynamic asset model that can be quickly configured to match the changes at the plants or assets?
  • Whether the proposed technology allows for cross functional integration of information into operations objects such as compressor, tanks, terminals, etc.?
  • And finally, whether the proposed technology allows a bolt on applications, algorithms or software’s which might be needed to create the ability to deliver on any unique requirement?

A technology that has a tick on all the above boxes would be the right choice for digitalization. It can help companies in the hydrocarbon industry avoid the fate of those discussed in the cited HBR article [1] to a good extent.


(The author is the Managing Director Nauvata Energy Transition (NET) Enterprise Pvt. Ltd.  NET Enterprise is an EPCM, PMC and engineering services provider in oil & gas and energy transition areas such as biofuels, carbon capture, plastic circularity and green hydrogen, and the views expressed in this article are his own. The author can be reached at [email protected])