Investments in AI and big data within the energy sector are up tenfold over last year, according to a new study from accountancy firm BDO assessing technology’s impact on the industry.
Eight new mergers and acquisitions between energy firms and tech-focused deals were made in the second quarter of 2017, up from six last year.
In the first quarter, 14 deals were made with an average value of $500 million. By the second quarter, this ballooned to $3.5 billion.
The main area of interest? Data and AI.
Generating data insight
BDO believes the data trend is driven by the need to harvest more insights in increasingly uncertain times.
Political instability — emerging forms of energy production and Industry 4.0 — are all steering energy firms towards streamlining their operations.
AI can help to make sense of the scale and complexity of businesses within the sector and identifying inefficiencies to address.
Analytical technologies can also help operators boost their revenue from existing resources.
An AI could determine the best way to send power through the grid at peak times or predict when output from wind turbines is likely to reach optimum levels. The business could use these insights to react in real-time to changes in consumption and production.
“To operate the grid more efficiently and keep fossil reserves at a minimum, operators need to have a better idea of how much wind and solar power to expect at any given time,” the report explains. “The way to generate such insights is through using big data analytics and AI to radically improve prediction models.”
While the pace of deals is rapidly increasing, the energy industry as a whole is still a long way off achieving complete digital transformation. Energy businesses operate at massive scale and rely on business processes established over decades. Moving them to technology-based alternatives will take time.
It’s clear that industry participants are increasingly aware of the potential benefits though, making it probable that tech like AI, IoT and blockchain will noticeably affect the sector over the next few years.
The study said many operators are now evaluating new technologies with a view to integrating them into their business, ensuring they stay aligned with the industry’s digitization.
Here’s the thing about how digital transformation will impact your business
Here’s the thing about digital transformation: Everyone knows it’s happening.
But it’s hard to know which new technology or innovation is going to be the one that upends your industry, opens up massive opportunity, threatens your company, or forever alters your role.
Today we’re introducing a new, custom-tailored service to help you figure that out. The service combines journalism, research and market analysis to help you and your team understand the state of digital transformation (DX) and explore the key developments that will impact your employees and industry.
We call this our “Here’s the thing about…” service. Teaming up with the DX Journal, we leverage journalists, analysts, researchers and strategists to help your company get a full picture of:
- What is likely to impact your industry
- Your team’s readiness to deal with it
- An in-depth look at major developments you need to pay attention to
Here’s how it works:
This service is designed to give perspective on how digital transformation will impact your company. We present our findings in an easy-to-understand format breaking down trends for multiple departments and for every skill set with documented takeaways and action items.
We uncover and share those findings in a simple, two-step process:
Step 1: Research & interview process
- Custom research on digital transformation trends impacting your industry, customers, and competitors.
- One-on-one interviews with your company’s executives, department heads or managers, employees and/or customers.
Step 2: Research presentation
- A presentation to your company in an internal keynote-style presentation to any size group — be it a small strategy team or an all-hands employee seminar.
- Our team of researchers, journalists and analysts will share the research findings, key trends in your industry and provide an overview of how well you’re set up to address challenges or embrace opportunities based on the employee interviews.
Who this service is for:
Let’s start by clarifying that digital transformation is not just an IT problem. Our clients are often leaders who are not technologists. In fact, many companies we speak with are surprised to learn how many areas of the business are impacted by DX, including marketing, HR, IT, sales, operations, legal, and others.
There’s no escaping that every area of a business is going to have to manage change that digital transformation brings. Digital transformation should not be left for the IT department alone to figure out.
With that in mind, we’ve designed this report and presentation service most commonly for executives and managers in:
- Operations, finance & strategy
- Human resource departments
- Marketing and sales departments
- IT departments
Sure, you might not have to deal with artificial intelligence in your accounting department tomorrow. Or chatbots in your HR department. Or big data solutions for your manufacturing warehouse. But how can you be sure if you don’t understand these emerging technologies? What if your competitors are? And what if they’re getting a 6-month head start?
To get started, please contact the DX Institute.
DX Journal covers the impact of digital transformation (DX) initiatives worldwide across multiple industries.
Chevron and Microsoft create ‘digital core’ for fuel business
Chevron has announced a partnership with Microsoft that will see the company use cloud tech and the Internet of Things to streamline its business. The company intends to digitize oilfields around a cloud-based core, giving it more data insights.
The seven-year partnership brings Microsoft’s technology into Chevron’s existing digital transformation strategy. The company will use Microsoft’s Azure cloud platform as the bedrock for its digital services, data analytics and automated operations centres.
The relationship is intended to be a two-way affair that will encourage “joint innovation.” This includes employee cross-training between the firms and collaboration on technical projects. Chevron will use Microsoft’s existing services to make the most of its data lakes. In return, Microsoft will be able to develop new products that solve Chevron’s specific business challenges.
Chevron embraces DX
Chevron’s already operating as an increasingly digital business. It has connected its oil wells, ships and cables to the web, allowing real-time monitoring of the company’s worldwide operations.
An individual fiber optic cable inside an oil well can generate up to 1 terabyte of data a day, providing a continual stream of readouts on temperature and pressure. The adoption of Azure will allow Chevron to more efficiently process this data, ensuring the insights within don’t go unnoticed.
The strategic partnership will give Chevron the headroom to deploy new technologies and generate yet more data. The company said it’s pursuing improved operating agility, increased safety and greater revenue as the long-term aims of its digital strategy.
“We embrace every opportunity that streamlines our workflows, gives us insights into more efficient operations and helps us compete,” said Joe Geagea, Chevron’s executive vice president of Technology, Projects and Services. “We already have a head start in digitizing our oilfields, but we want to accelerate our deployment of new technologies that position us to increase our revenues, lower our costs and improve the safety and reliability of our operations.”
Another big DX move for Microsoft
The multi-year collaboration is another digital transformation win for Microsoft. The company’s increasingly focused on its enterprise customers and is rapidly expanding its cloud services around IoT and automation. Microsoft said Azure will let Chevron “become a truly digital business,” noting that its cloud network has server nodes in more regions than any other provider.
Advances in AI will aid in autonomous industrial inspections
A new solution that combines robotics, artificial intelligence (AI) and advanced data analytics is now available to the energy and transportation industries to automate safety inspections.
Provided by Avitas Systems (a GE Venture startup), the offering will use drones, wheeled robots and autonomous underwater vehicles to collect images required for inspections in the oil, gas, energy and transportation industries.
Underpinning the offering are Nvidia’s purpose-built AI supercomputers that will design 3D models of equipment that needs to be inspected; it will build flight plans for drones; and create algorithms that will analyze data to look for defects said Alex Tepper, founder and head of corporate and business development at Avitas.
We are using artificial intelligence to do what we call automated defect recognition, which interprets the sensor information from the robots to detect defects of various kinds
Rapid advances being made in machine learning, coupled with low-cost drones and robotic systems is making it possible to automate whole sectors of low-skill work.
“It’s too expensive to do processing of data and moving it back and forth, so by having the equivalent of half a row of servers out in the field is the advantage of it, said Jim McHugh, general manager of DGX Systems for Nvidia. “Using our latest DGX systems to help train robots and better predict industrial defects increases worker safety, protects the environment, and leads to substantial cost savings for companies.”
Automation and machine learning are expected to lower inspection costs by as much as 25 percent. As an example, a mid-sized refinery that has been spending $4 million on annual inspections can save $1 million per year using this service.
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