3 Niches Where Startups Are Supporting Digital Transformation in Oil and Gas
Even before COVID-19, oil and gas companies had been struggling with efficiency, sustainability and profitability. The collapse of crude oil prices radically increased the urgency to address these issues.
Oil and gas executives believe that accelerating digitalization in oil fields , onshore facilities and day-to-day operations would help improve the industry’s resilience and attractiveness to investors. In a 2020 survey of more than 200 oil and gas companies, only 7% identified themselves as digital champions, while more than 70% considered themselves to be in the early stages of digital maturity.
Startups Are Finding Opportunities by Focusing on Niche Areas
Digitalization in oil and gas is being supported by range of companies, from key oilfield services and equipment (OFSE) providers to startups. While OFSE providers are part of larger digitalization programs, startups are focused on niche areas.
More than a hundred startups have entered this market in the last 10 years and have been receiving attention from oil and gas companies. Most of these startups are based out of North America and western Europe.
Niche 1: Operations
Tachyus, a production optimization software developer, offers tailored solutions for oil and gas fields operating under secondary and tertiary recovery, including waterflood and steamflood. The software is used by reservoir and production engineers to analyze historical data and build predictive models that help reveal the best ways to maximize output. The software has been used by oil and gas operators in Argentina, Europe and Asia across 25,000 wells to achieve up to a 20% increase in production and up to a 40% decrease in injection cost.
Distran AG, a Swiss startup, developed an ultrasonic imaging solution which allows oil and gas operators to find gas leaks. The technology is used by Shell, Total, GE and other major oil companies.
Niche 2: Sustainability
Iconic Air, an Ohio-based startup, created a data analytics platform for working with methane and environmental-monitoring drones that are equipped with sensors. By specifying the type field of the components’ properties, the system can collect real-time data, allowing oil and gas companies to automate their processes. Additionally, it continuously writes a comprehensive report that companies can use to monitor their processes and emissions.
Niche 3: Workforce Hire and Vendor Management Tool
RigUp, an Austin-based startup, provides a digital workforce marketplace and vendor management tools to oil and gas companies. This eliminates the burden of fragmented resources and reduces the mountain of paperwork that comes with a contingent workforce into a more manageable geological formation. Besides, the company’s vendor management tool offers access to a large network of vendors, while the invoicing portal make it easier to work with any vendor without operational overheads.
Agile and Innovative Startups Are Accelerating Digital Transformation
Projects in the oil and gas sector usually take many years to implement and have minimal design changes once the project is confirmed. This creates a gap between industry internal processes and fast-paced digital technological development.
Big oil and gas operators, knowing they cannot execute digital transformation projects quickly in-house, are working with startups to accelerate digital innovation and radical change initiatives. Startups, with their agility and innovative thinking, can deliver a unique solution tailored to a company’s needs and business processes at a lower cost.