The oil industry comprises the midstream, upstream, and downstream sectors. In particular, the midstream sector involves the processing, storage, and transportation of petroleum products to refineries. Midstream operations are predominant in Canada and the United States, as many pipelines are owned by private companies such as TransCanada Corporation, Hess Midstream, and Oasis Midstream Partners. In light of supply and demand fluctuations, many industry experts say that the midstream oil industry is ripe for digital transformation.
Not since Edwin Drake struck “black gold” in Titusville, Pennsylvania, on August 28, 1859, has the oil industry been in such upheaval. Crazy Drake (as he was called) drilled almost 70 feet down before he made his earth-shaking find. He never patented his drilling method, but his discovery fueled the rise of the American oil industry. In 2019, the United States became the world’s top oil-producing country.
However, in light of COVID-fueled market volatility, America’s oil industry faces new challenges. In April 2020, Whiting Petroleum, a major oil and gas producer in the Bakken Shale and Denver-Julesburg Basin, filed the industry’s first Chapter 11 bankruptcy.
To thrive, the midstream sector must retrieve actionable insights from data to achieve operational efficiency and gain a competitive edge.
What Are the Prospects for the Midstream Oil Industry?
The oil industry isn’t going away anytime soon, which means the prospects for the midstream oil industry are still solid. That said, if the industry can adapt to digital transformation, it will become more efficient and progressively more profitable.
Despite the advent of electric cars, oil will remain a relevant part of the global economy. With the right innovations and adaptations, companies in the midstream oil industry can remain viable in uncertain times.
The Projected Market Value
The midstream oil industry is taking cues from companies like Tesla and Peloton that have continued to reap the benefits of digital transformation. Using hardware and software innovation, Peloton can live stream 12 cycling classes daily at its indoor cycling studio in the Big Apple.
So, by taking the right steps to embrace disruptive technology, your mid-stream operation can become even more profitable. As production rates rise in response to digital transformation, you will generate more income and profits.
The Investment Strategy for Digital Transformation in the Midstream Sector
Digital transformation in the oil industry involves utilizing digital technologies to realize operational efficiencies. It’s true that much of the midstream oil industry (82%) still rely on legacy workflows to optimize agility.
According to Deloitte, companies in this industry have been slow to engage in digital transformation. Digitization has been embraced slowly precisely because the midstream sector is primarily a capital-intensive business — digital adoption can be costly. It can’t afford to deploy the trial-and-error strategy utilized by other industries.
To embrace digital transformation, midstream oil companies must invest in software with optimized analytics capabilities and adopt creative approaches to decision-making. In particular, they should sensorize physical assets in order to retrieve real-time insights remotely. In turn, this will facilitate proactive actions to optimize responses to field conditions.
Benefits of Midstream Oil Digital Transformation
Here are just some ways the midstream oil industry can benefit from embracing digitization:
- Improved decision-making: Technology can streamline decision-making, freeing your employees to work on more critical business tasks.
- Reduced costs: Increasing profits is the goal of any business. Technology can streamline daily processes and reduce operational costs, which will in turn improve profit margins.
- Increased productivity: Eliminate gaps in the supply chain by helping employees become more productive. The right technology will streamline daily operations and transform supply chain efficiency.
Across the world, predictive analytics has helped various industries identify stockouts and strengthen supply chain resiliency. There’s no reason the same tools can’t be used in the midstream sector to produce similar results.
Entrance Consulting Can Aid Your Company’s Digital Transformation Efforts
Our team at Entrance Consulting is well-versed in analytics and data visualization and can help you come up with a software solution that works for your oil business. If you’re concerned that your midstream oil company has fallen behind the times digitally, reach out and contact us today to explore your options!