The digital energy transition

Oil and gas companies face mounting pressure from the public and regulators to shift to renewable energy sources and clean up production, transport, and processing operations. As significant contributors to greenhouse gas emissions, they find themselves at a critical inflection point. They must evolve into digital energy companies of the future—organizations that embrace the energy transition and leverage data and digital technologies to operate their assets more cleanly, safely, securely, and reliably.

This transformative journey is no easy feat. Executives must fulfill current energy demands while simultaneously envisioning and progressing toward a low-carbon future in both their product portfolio and operations.

Most oil and gas companies are making strides in this direction. But extensive new research from the IBM Institute for Business Value (IBM IBV) and SAP shows there is still work to be done. Our survey of 2,000 global oil and gas executives reveals that only two in five of the organizations have even set a net-zero emissions target, and only 39% say they are effective at executing digital transformation.

Visionary Vanguards do not choose between digital transformation and sustainability—they pursue both.

Based on our analysis, we defined four distinct cohorts—including a segment of front-runners who offer a model for others to emulate: the “Visionary Vanguards.” These leaders approach sustainability as a transformation opportunity, aligning their sustainability and digital strategies more than their peers to steer change and drive innovation. They also report superior business performance in revenue growth and profitability compared to the other cohorts.

Digital energy company of the future: Orchestrating strategies across eight domains

Visionary Vanguards illustrate how digital energy companies of the future will focus initiatives across eight strategic domains.
 

• Next-gen energy: They are transitioning to cleaner fuels and power sources—such as nuclear, solar, hydrogen, and biofuels—and using these to supply processing plants, refineries, and multiple modes of transport.
   
• Zero greenhouse gases and zero waste: They are divesting in hydrocarbons and pursuing negative emissions technologies.
   
• Trusted and secure technology and data: With an open cloud computing infrastructure, they are capitalizing on the oil and gas industry’s wealth of big data, using it to fuel advanced analytics and AI for real-time decision-making and deeper insights.
   
• Automated, safe, secure operations: They are leveraging automation tools to gain operational efficiencies. For example, digital twins are used for production optimization, and robots support inspections and maintenance. Automation use cases also include predictive maintenance, asset management, and cybersecurity.
   
• Next-wave mobility: To support remote operations and optimized production, they are using advanced new technologies such as 5G connectivity in combination with the Internet of Things (IoT), industrial internet of things (iIoT), and augmented reality/virtual reality.
   
• Trained human capital: They are investing in new workforce skills including machine learning, operational technology (OT) security, visualization, data science, and climate science.
   
• New business models: They are pursuing new green business models across the value chain with a supportive organizational structure.
   
• Ecosystem partnerships: To advance sustainability goals within operations and across the supply chain, they are building an ecosystem of green partners.

Download the report to explore each domain, including case studies that illustrate specific digital solutions, as well as lessons from the Visionary Vanguards that are blazing the trail with initiatives that create industry-differentiating value. An in-depth action guide lays out a three-part plan and specific steps to help oil and gas industry executives accelerate their journey to becoming digital energy companies of the future.