Investment in technology: Make or break for Nigeria’s oil, gas industry



As the day goes by, new technologies have made it imperative for the Nigerian oil and gas sector to keep pace with the rest of the world or be left behind; BENJAMIN UMUTEME reports.

Technology has not only become the ‘go to’ for every human endeavour, it has now something that every sector of the economy cannot do without.

From security to health to agriculture and the financial sector of the economy, the story is the state-there is need for urgent investment in technology.

And in the Nigerian oil and gas industry, the need for technology has become all the more important considering the huge cost of production that is incurred by operators in the sector.

Official data say Nigeria is one of the oil producing countries that has the highest cost of oil production.

For instance, while it costs an average of $8.38 to produce a barrel of crude oil in Saudi Arabia, it costs Iran and Iraq about $9.08 and $10.57 respectively. However, in Nigeria, it cost about $17 to produce a barrel of crude oil.

Changing the narrative

Experts have argued that the high cost of production in Nigeria boils down to the large use of manual process in the production process unlike what is obtained in other oil producing countries who have taken their time to invest in technology.

With an already challenged environment in the past few years, the Coronavirus pandemic only came to further exacerbated the volatility in the industry.

And the Manager, Production Technology, First E&P, Sophia Weaver, did allude to that when she said that the  conventional model of operation would not yield the desired growth in the sector insisting that there was need to exert control over the rather high cost of operation to ensure process efficiency.

She said, “Achieving operational excellence involves transforming the way we work and digitalize our processes in areas such as oil well and reservoirs management, drilling, logistics and supply chain management.

“Process digitalization involves the use of digital data and technologies to transform existing business processes into more efficient, optimised, more profitable and value adding operations.

“There is a need for us to begin to see data as the new oil, data is critical to the development of the sector.”

Also, the Managing Director, Integrated Data Services Limited, Ayebateke Bariwei, emphasized the need to adopt digitalised process in order to enhance productivity and improve system efficiency.

“Process digitalization is about unlocking new value by using digitalised data to change the way things are done.

“Our objective is to ensure that we operate in the industry bringing the unit operating cost to $10/ barrel by 2021,” he said.

Investing in technology

Speaking at the graduation lecture of Course 29, at the National Defence College Abuja on the “Enhancing Digital Technology in the Oil and Gas Sector of Nigeria for National Development,” Minister of State for Petroleum Resources, Timipre Sylva, insisted that investment in digital technology in the petroleum industry is critical for Nigeria’s economic growth.

As Sylva rightly noted, with COVID-19 disrupting economic activities especially the oil industry, leading to a near shutdown of production causing oil prices to fall drastically. It accentuated the need for digitalisation, as oil producing countries sought more efficient production techniques.

In this way, technology is helping countries and companies to crack the issues of efficiency through multi-functional tools, such as Artificial Intelligence (AI) and Automation; Big Data and Data Analytics; Internet of Things and Electronic Monitoring; and 3D Virtual Modelling and Drone Technology.

With proven natural gas reserves of 206.53 trillion cubic feet; and average production of about 7, 575 million standard cubic feet per day (MMSCFD), which reflects in the sectors contribution of about 10 per cent to Nigeria’s Gross Domestic Product (GDP), just as crude oil exports represent about 86 per cent of total export earnings; and about 40 per cent of government revenue.

In Nigeria’s oil and gas industry, digital technology is gradually converting the traditional processes of exploration, exploitation, and production by delivering the most significant openings in invention. Being tech-savvy is making many oil companies more flexible, adaptive and competent in an increasingly competitive world.

This has led to increased investment in technology as oil companies seek to be more efficient while trying to drastically cut down on manual processes which is the major cause of high production costs. 

Through the deployment of Artificial Intelligence and automation, the Nigerian oil and gas industry have enjoyed huge application in a variety of areas, covering surveying, monitoring, planning, forecasting, and safety, in the exploration and production of hydrocarbons. 

“Autonomous system monitoring devices are being used to replace human presence in high-risk locations, such as offshore rigs and production facilities. Such systems help to detect abnormal equipment activity and intervene in cases of emergency.

“Through AI and automation, the results of physical asset inspections can now be entered in real-time into a digital system using devices, which can include information, such as photos, measurements, and location. The information can be mechanically harmonised with an active database linked to maintenance scopes and schedules accessed through a 3D representation of the platform or a production facility, which can be freely retrieved remotely by operators. 

“The system increases safety by reducing offshore time for personnel and automatically flagging potential safety concerns and recommending action. It also reduces operational costs.” 

Big data

Sylva noted that as majority of the IOCs adopt Big Data Analytics to optimise utilisation of data, it will lead to increased capacity to generate, collect, store, and utilise this data.

He said: “The oil and gas industry deals with large amounts of data generated through a wide range of processes, including 3D seismic surveys, drilling, and monitoring of production facilities. 

“The use of analytical and data-driven processes for production has enabled greater cost-efficiency and helped to reduce Mean Time To Repair (MTTR), and increase Mean Time Before Failure (MTBF) in the industry. 

“In the area of drilling, technology is facilitating the development of more Enhanced Oil Recovery (EOR) techniques and offering real time data through Logging While Drilling (LWD) and Measurement While Drilling (MWD). 

“Sensors attached to exploration oil and gas equipment have availed big data being utilised in formation evaluations. This has helped performance in terms of enhancing the reliability of subsurface mapping and new well discoveries,” he further said. 

‘Digitalisation still low’

The former Bayelsa State governor said that despite the crucial role it plays in the economy, oil and gas industry’s digital maturity is still low compared to transportation, telecommunications, banking, and industrial manufacturing, which ultimately results in low availability of data. According to him, while digital technology has enabled the generation of huge data from oil and gas activities, only a small amount of available data is invested into the decision-making process.

Deployment of digital solutions to support remote operations is becoming the standard against which future successes are measured in the oil and gas industry.    

However, the minister says promoting digital transformation in the oil and gas industry would boost profitability and efficiency, as the data-centric tools enable real-time view of operations across the value chain and allow predictive operations and maintenance. Closing the digital gap would help lessen hindrances to efficient production and improve process optimisation in the country’s oil and gas industry. 

Enhancing digitalization 

Tye question analysts continue to ask is how can digital technology be enhanced in the sector?

Sylva quipped that there should be a deliberate effort to build resilience and sustainability in the oil and gas infrastructure to protect the country’s key economic assets from cyber-attacks and other web-based criminalities.  

Also, he advocated for increased government and organisational funding for the sector to ensure effective development, promotion, and implementation of petroleum technology and manpower expansion policies through research and training of Nigerians.

“Effective integration of digital technologies, which experts say can reduce capital expenditure in the oil and gas sector by up to 20 per cent, cut upstream operating costs by about five per cent, and downstream costs by up to 2.5 per cent.

“Rapid deployment of digital technology to enhance utilisation of the abundant gas resources in Nigeria using the various initiatives rolled out under the Decade of Gas. With gas as our transition energy, we must deploy digital technology in the development of gas for Liquefied Petroleum Gas (LPG), Autogas, power, agriculture, manufacturing, and others.

Experts say with rapid changes in technology and the need for cost cutting measures, it has become imperative to improve the digital maturity of the oil and gas industry in Nigeria. 

And as Sylva noted, “Government and organisations in the oil and gas industry must continue to invest in digital technology development. This is critical for survival in today’s competitive environment.

“Ultimately, for the oil and gas industry – like all other sectors of society in this day and age – the choice is no longer between embracing or investing in digital technology and not doing so, but actually between investing in digital technology and sinking into oblivion.”

The digital technology train has since left the station, it is  either Nigeria is on board or it is left behind.