JAKARTA (RambuEnergy.com) – Oil and gas companies, as well as refiners, are reaping tangible benefits from investing in digital technologies, therefore they are likely to invest more in the next five years. However, some players are missing out on the additional value that the most cutting-edge technologies could provide, according to new Accenture (NYSE: ACN) research.
“The Intelligent Refinery,” Accenture’s second annual study on digital technology in the refining industry, is based on a survey of approximately 170 executives, functional leaders and engineers at refiners globally.
The survey result was presented to Indonesian media on July 31 by Neneng Goenadi as Country Managing Director, Accenture Indonesia as well as Mark Teoh, Managing Director – Resources Operating Group of Accenture.
In addition to addressing the financial benefits that digital technologies can provide, the research also suggests that refiners are not investing sufficiently to address the increasing number of cyber attacks resulting from the proliferation of digital technologies.
Forty-one percent of respondents reported that their company can now determine the financial value of
using digital technologies, including 30 percent who reported that the technologies increased their refining margins by more than 7 percent in the last 12 months.
One-fifth (20 percent) of respondents said digital technologies are adding US$50 million to US$100 million or more in value to their business, with another one-third (33 percent) of respondents citing between US$5 million and US$50 million.
This tangible financial benefit may explain why more than half (59 percent) of companies surveyed —approximately the same proportion as in last year’s survey — are spending more or significantly more on digital technologies than they were 12 months ago.
Additionally, three-quarters (75 percent) intend to increase spending in the next three to five years, up from just over 60 percent in last year’s survey, indicating that demand for digital technologies remains strong.
Likewise, almost half (48 percent) of refiners now rate the use of digital technologies within their company as mature or semi-mature (up from 44 percent in last year’s survey). At the same time, however, most refineries have yet to move beyond deploying well-established digital technologies, such as analytics.
Indeed, when asked to identify the digital technologies driving the greatest margin improvement in refining operations, respondents most often identified advanced process control and advanced data analytics, cited by 61 percent and 50 percent of respondents, respectively.
These are also the technologies to which refiners expect to allocate the largest proportion of their digital budget over the next 12 months.
Cutting-edge technologies that could unlock additional value — including internet of things sensors and edge computing, mixed reality, mobility and blockchain/smart contracts — are only seeing partial adoption or pilot programs and are likely to receive less investment than the other well-established technologies over the next year.
In light of this, there is a need for more effective management of refiners’ digital strategies, with one-quarter (24 percent) of executives saying there is currently no clear role within the organization driving the digital strategy. In fact, 43 percent reported that this lack of a clear digital strategy is a barrier preventing further adoption of digital technologies in their refineries.
However, change is afoot. While only 11 percent of respondents said their company currently has a chief digital officer driving the digital agenda, many refiners are making governance changes to drive greater digital transformation and address the convergence of information technology and operational systems.
Specifically, one-third (34 percent) are creating new organizational structures, more than one quarter (28 percent) are launching a steering committee, and 15 percent are creating new C-level positions.
“Refiners are currently reaping just a fraction of the value that digital can yield,” said Mark Teoh, Managing Director – Resources Operating Group Accenture. “The next step will be to combine and deploy multiple technologies at scale to totally reinvent business processes and drive plant-wide transformational change.
The online survey was conducted in March 2018 by PennEnergy Research in partnership with the Oil and Gas Journal. The survey was developed with HSB Solomon Associates LLC, a benchmarking and global advisory services company for the global energy industry. Unlike last year, this year, Indonesian refiners executives were participating in the survey.
Respondents are subscribers to PennWell publications and comprised 169 refining industry professionals across 48 countries, including executive and
mid-level management, business unit heads, engineers and project managers from a cross-segment of the industry.
Reported by Roffie Kurniawan