Operators say their companies moving forward with digital connection of everything

(WO) – The process by which industrial companies are digitally connecting almost everything is unstoppable, said leading participants of a panel discussion on Tuesday morning at the Schlumberger Digital Forum in Lucerne, Switzerland. Meg O’Neill, CEO of Woodside Energy, Felipe Bayón, CEO of Ecopetrol Group, and Arvind Krishna, Chairman and CEO of IBM, spoke on the topic “Everything connected”.

Overview of the digital effort. When asked how Woodside is approaching a broader digital transformation, O’Neill said the recently completed merger (June 1, 2022) with BHP Petroleum actually supports the effort. “The merger with BHP doubles the size of our company,” said O’Neil. So it gives us a very significant change in our geographic footprint, a very significant footprint in North America, and a stronger balance sheet. And what it really means for us in the context of connecting for a new future is that it positions us very well to invest in the technologies that we need to develop energy today, and in some of the energy sources that are increasingly being used will be needed in the future.”

Woodside Energy CEO Meg O’Neill

Meanwhile, Colombian state-owned Ecopetrol has come up with a bold strategy for 2040 in terms of digital transformation. Accordingly, the moderator Bayón from Ecopetrol asked how the implementation of the digital transformation in his company affects the relationship with customers, suppliers and partners. “When we laid out the strategy, the 2040 strategy, it was important for us to be in the middle of very difficult and difficult times with COVID – with very difficult economic conditions for many people, not only in Colombia but in the countries where we are where we are – to try and establish a connection,” Bayón said. “And we’ve been part of the conversation to lay the foundations for recovery and to make sure that as we energize people, we can be part of that conversation with people. The strategy basically provides that we want to continue to grow in the midst of the energy transition. We want to be very strong on key ESG. So it puts technology at the heart of the discussion about how we actually view our connections to society, the environment and good governance. Finally, through knowledge, we can transform not only our people, but the way we connect with our communities.”

IBM’s Krishna was asked about his efforts to persuade operators to harness the power of digital technology and what are the factors preventing them from fully embracing it. He said it is rooted in the process of the industry trying to break away from its history and traditional ways of working. “Look, we’re in a transition from traditional operations that date back to 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 across processes. You can take any data from any of these processes across any industry, and the value of what AI is unleashing is $16 billion in global productivity this decade. That is not in the future – in this decade. But in that amount, $1 billion is associated with the oil and gas industry. So the oil and gas industry wants an extra $1 billion, I call it profit. About half of this is due to sustainability and reduced emissions. I think this is the opportunity and we want to open it up with our partners.”

Implementation and the Human Angle. When asked if her company’s digital efforts were connecting across silos, and how important that might be, Woodside’s O’Neill had a emphatic response. “Oh, absolutely,” she exclaimed. “And I’d like to build on Arvind’s argument about value capture in the context of digital. If you think about it, technology is enabling things like remote operations, autonomous operations, and enhanced recovery. As stewards of natural resources, one of the most important imperatives for us is to get as much oil and gas out of these deposits as possible. Digitalization is absolutely essential for this, and it extends, as you requested, throughout the company, from the geoscientists to the engineers to the production worker on the platform and the engineers supporting the plant design. It is absolutely necessary. And you know, hopefully we get our share of that billion dollars that Arvind mentioned.”

The moderator referred to a keynote address delivered earlier in the morning by Saudi Aramco President and CEO Amin Nasser. In this speech, he referred to the internal view of one’s own employees, the employees of a company and the available talent pool. The conclusion is that industrial companies may no longer focus on their partners and customers, but instead focus internally on seeing what they are doing digitally with their own employees. The point is that digital skills are essential for working in industry today. And that not only seems to have short-term help for workers to adapt their skills, but there is also a long-term goal in terms of talent training and digital investments.

Accordingly, IBM asked Krishna if there is a discrepancy between today’s real-time requirements and the digital requirements of the future. “My short answer is actually no,” said Krishna. “But people don’t like change. It’s just a fact of life. It’s not about one of you or one of us. Our own people don’t like change. I think you need to be aware of this as leaders and understand how to help your people through the transition. Just berating them or hoping to hire new skills won’t work; there is not enough. That’s just the first very, very quick observation.

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“The half-life of abilities is shortened,” he continued, “and everyone needs to wake up to it. Fifty years ago, 30 years ago, people could stay the same [portion of their] Profession. Now there are six different areas. That means the average person will transition seven times in their career. What are we doing as leaders to improve these conditions in terms of education, health support, etc.? It’s a big part of what we have to do.”

Bayón was asked what a company should do to close the gap when there may be a skills gap but workers are looking to the digital future.

“As part of this strategy that we have put in place, the third element ensures that we can retrain, retool and retrain employees,” responded the Ecopetrol CEO. “So at least 70% of our employees have to go through this by 2030,” says Arvind. And we’ve found that we can create something like $20-$30 million in value by doing that. I think what’s more important is giving people the opportunity or the tools to make sure they have an even better work-life balance, to make sure they can connect with what they’re doing. And it’s interesting that we’re seeing people who used to flee the industry come back now. And they say, “That’s because we see you’re leaders. We want to be part of this change.”

“I think technology is at the heart of it. In the last year alone, we’ve booked $350 million in technology and digital benefits. That empowers people. So even though we look inward, not only thinking about emissions but also things like water stewardship can connect us to people outside of communities. So there are other things we can do to connect our employees with the people on the community side.”

Arvind Krishna, Chairman and CEO of IBM

Climate, emissions and ESG. Another aspect discussed was the relationship between digital transformation and ESG issues. The moderator asked Woodsides O’Neill how important it is to explain and communicate effectively a company’s climate policy to employees in order to move them forward. “It’s absolutely necessary,” O’Neill confirmed. “We want our employees to be ambassadors for the company and they need to understand how to articulate our work [is solving ESG issues]. And that means providing reliable power, providing affordable power, and providing power with lower carbon intensity. We produce about 70% gas, which is lower carbon intensity than many alternatives when used to generate electricity. It’s good. But we are also very keen to invest in some of the new technologies and energy sources that are even less carbon intensive. And we believe that our investments in oil and gas today will prosper the world and help fund the transition to these lower-carbon energy sources that are really just emerging today. And it will take a bit of time to scale up.”

When asked for examples of different business areas where things work better and the industry can present a united front, Krishna replied: “Let’s just acknowledge that we all live in what the industry produces first. And the other sector also says, I think oil and gas is important for safety, industry, building materials and many other things, not just internal combustion engines. So let’s just start with that. I think one area I’ve been very involved with and am pleased to see progress is cybersecurity. Let’s acknowledge, cyber will be the problem of this century. And all of my vendors that I’ve spoken to in their office about these issues are all worried about going out of business. They (cyber hacks) cause damage, they cause a lot of business disruption. And I was pleased to see that I think 18 companies are coming together in Davos to see if the oil and gas industry can come together and share cyber best practices.”

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Ecopetrol’s Bayón was asked how important defending cybersecurity is to him and his company. “It is,” said Bayón. “And I once heard doubters, someone said there are two types of companies in the world, those who are being hacked and those who don’t know they are being hacked. It means this is something that has to be very, very, very relevant. The other thing is that hackers don’t break in. You log in. So back to the point of culture, how do we create a sense of it? And I’m with you, Arvind. It’s our employees. But I also think that technology can help us.

“I think this is one of the areas where we need to come together and work together. And it’s a big threat. I mean, we’re not managing the infrastructure that’s critical to our countries, to our regions, and also to national security. So we just have to make sure it (cybersecurity measures) is always out there.”

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