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Editorial comment

Digitalisation has changed the face of the oil and gas industry over the past few decades. We now stand on the brink of a second digital age, which will create a range of new opportunities for companies in the oil and gas sector. Recent technological advancements have introduced techniques such as Big Data, advanced analytics and the Internet of Things (IoT), all of which offer companies the opportunity to significantly cut costs and improve productivity, if used effectively.


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Recent research from McKinsey & Company suggests that digital technologies have the potential to reduce capital expenditures in the oil and gas sector by up to 20%. While the upstream sector stands to benefit the most from digital advancements (with an estimated reduction of up to 3 – 5% in operating costs), McKinsey & Company predicts that the downstream sector could cut its costs by approximately 1.5 – 3%.1

It is easy to see why digital intelligence is a hot topic in this issue of Hydrocarbon Engineering. Our cover feature from Honeywell Process Solutions (p. 34) examines the latest digital developments, and explains how the Industrial Internet of Things (IIoT) can help to increase plant availability, safety and reliability.

However, despite the obvious benefits, a recent study from Ponemon Institute (sponsored by Siemens) warns of the potential dangers of rapid digital advancements.2 According to its research, the deployment of cyber security measures in the oil and gas industry is failing to keep pace with the growth of digitalisation in the sector’s operations. Ponemon Institute surveyed 377 individuals in the US that are responsible for securing or overseeing cyber risk in the operational technology (OT) environment, the majority of whom work in the downstream sector (30%). Just 35% of respondents rated their organisation’s OT cyber security readiness as high, while 61% claim that their company’s industrial control systems protection and security is inadequate. The study found that cyber risks across the oil and gas value chain are difficult to address, and only 45% of respondents believe that their organisation has the internal expertise to manage cyber threats in the OT environment.

Worryingly, the study also discovered that 68% of organisations have suffered a security compromise that resulted in disruption to operations or a loss of confidential information over the past 12 months. Furthermore, 46% of cyber attacks were believed to go undetected.

While the oil and gas industry undoubtedly stands to benefit from advancements in digitalisation, it is essential that the potential risks are both understood and addressed. Ponemon Institute’s research suggests that the sharing of threat intelligence is one effective method to help combat cyber risks in the OT environment.

The rewards of knowledge sharing are also promoted in an article from Allan Ralston, Safehouse, UK, starting on p. 106 of this issue. Ralston contends that cross-industry knowledge sharing is essential to ensure that technological innovations improve safety in the oil and gas industry, as well as operational efficiency and profits.

Hydrocarbon Engineering aims to provide a platform for the industry to share its success stories and technical knowledge. If you have an innovation that can help benefit the downstream oil and gas industry, please get in touch.

  1. CHOUDHRY, H., MOHAMMAD, A., TEE TAN, K. and WARD, R., ‘The next frontier for digital technologies in oil and gas’, McKinsey & Company, (August 2016).
  2. ‘The State of Cybersecurity in the Oil & Gas Industry: United States’, Ponemon Institute LLC, (February 2017).

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