Digital Transformation in the Oil & Gas Industry

This assignment examines the impact of digital transformation on the oil and gas industry. It analyzes various technological advancements such as big data, robotics, 3D printing, and the Industrial Internet of Things (IIoT) and their influence on operational efficiency, cost reduction, and sustainability. The readings delve into case studies and theoretical frameworks to illustrate how these technologies are disrupting traditional practices and creating new opportunities within the sector.

Running Head: LOGISTICS AND OPERATIONS IN OIL AND GAS INDUSTRY
Digital Transformation in Oil and Gas Industry
Name of the Student
Name of the University

1LOGISTICS AND OPERATIONS IN OIL AND GAS INDUSTRY
Executive Summary
Oil and gas industry is the technical field that has been entirely based on field work and technical
setup. As a result, the performance of this industry mainly depends upon the efficiency of human
work force as well as the mechanical instruments involved in production and logistics. However,
with the intervention of digital technology, it has been seen that the industry has gained massive
improvements in the operations and market performances. The effects of the digitalization and its
effects on the oil and gas industry have been analyzed and discussed in this report.

2LOGISTICS AND OPERATIONS IN OIL AND GAS INDUSTRY
Table of Contents
1.0 Introduction................................................................................................................................3
2.0 Digital Transformation in Royal Dutch Shell Company...........................................................3
2.1 Three Digital Technologies and Organization’s Profitability...............................................4
2.2 Cloud Based ERP System......................................................................................................6
2.3 Logistical and Operational Challenges..................................................................................7
2.4 Key Human Behavioral Issues in the Chosen Organization..................................................8
3.0 Conclusion.................................................................................................................................9
4.0 Recommendations....................................................................................................................10
References......................................................................................................................................12

3LOGISTICS AND OPERATIONS IN OIL AND GAS INDUSTRY
1.0 Introduction
Digitalization is a trend that is taking each and every industry by storm and has created a
revolution in the field of commerce. All commercial organizations are using the aid of digital
technology to enhance their business processes as well as take maximum technological benefit
that helps to boost their revenues and operations. Oil and gas industry is generally based on
technical and field work and all its operations are based on the field performance. However, it
has recently taken the help of digitalization to enhance its business process and operations
(Perrons and Jensen 2015). Royal Dutch Shell Company is one of the leading oil and gas
companies headquartered in Hague, Netherlands. This organization is one of the leading oil and
gas companies that have included digitalization in their regular business and commerce set up.
As a result, with time, the company has gained massive benefits from the use of digital
technology and the annual revenues have since been boosted by a large margin.
In this report, the digital transformation in Royal Dutch Shell Company has been
analyzed in order to understand its effects on its current business strategy and market
performance. In addition, the types of digital trends used by the company have also been
analyzed and documented. Furthermore, suitable recommendations have also been provided that
would help Royal Dutch Shell Company reap more benefits from the digitalization process.
2.0 Digital Transformation in Royal Dutch Shell Company
Digital transformation has significantly affected the business operations and market
performances at Royal Dutch Shell Company as the company has been performing significantly
better since the implementation of the digital technology in its business operations (Sharma et al.

4LOGISTICS AND OPERATIONS IN OIL AND GAS INDUSTRY
2017). The digital technology has been applied to several fields of business including
accounting, storage database and analytics where the manual, error-prone and time consuming
processes have been replaced by highly efficient, accurate and extremely fast automated
processes. Some of these technologies and their benefits on the system have been discussed
further as follows.
2.1 Three Digital Technologies and Organization’s Profitability
Three key digital technologies that have created a revolution in the oil and gas industry
are listed as follows.
Analytics – Data analytics is defined by the process by which a set of numerical and
statistical data is analyzed for making future predictions regarding various aspects like market
condition, share market prices and others. Few years ago, the analytics process needed to be done
manually and specific experts were appointed to analyze the data and make suitable
recommendations to the organization regarding the future conditions of the market, bank,
customer base and others. However, with digital revolution, this process has since been
automated and can be performed by the computer without any human intervention (Hartmann,
King and Narayanan 2015). Several analytics are available in the market, one of the most
popular of which is IBM Watson. Previously, the analytics process was extremely slow and
error-prone. In addition, the analytics process was also unreliable and inaccurate as it was based
on one specific person’s perception only. However, the data analytics tools like IBM Watson can
perform such process in matter of seconds and provide much accurate and reliable data as it only
takes insight from the data trends instead of personal perception.

5LOGISTICS AND OPERATIONS IN OIL AND GAS INDUSTRY
Accounting – Accounting is another field that has been revolutionized by digital
revolution. As with the problem with analytics, accounting also needed to be done manually
before digitalization. Several accountants were appointed to perform the accounting processes by
analyzing accounting data like sales data, profit margin, revenue trend and others. This process
was also slow and error-prone and although not unreliable (as it depended on the efficiency of
the accountant), there were many errors due to tiredness and fatigue of the accountants (Saniee et
al. 2017). After digitalization, similar to analytics, several accounting softwares have been
developed that perform the accounting process automatically within a few minutes or seconds.
The only human intervention it requires is during the entry of the data sets and it performs the
rest of the accounting process automatically. The digitally accounted data are accurate and error-
free and are also processed quick time without any difficulty.
Cloud Computing – Cloud computing is another digital technology that has taken
commercial sector by storm and has since provided massive benefits to the business
organizations. Cloud computing is a technology by which huge amounts of data can be stored in
a virtual interface without the requirement for any physical storage and can be accessed by an
internet connection only. Several software companies have been providing cloud support to the
business organizations where they can store terabytes of business data in the virtual interface
easily (Crompton 2016). Not only cloud computing has solved the problem of using numerous
physical storage devices; it has also reduced the requirement for manual data management
process. When some different sets of data are entered in the cloud interface, it automatically
classifies the data in different categories and store them in respective storage slots. Furthermore,
cloud computing provides almost unlimited storage space whereas the physical storage drives
only provide limited storage spaces.

6LOGISTICS AND OPERATIONS IN OIL AND GAS INDUSTRY
However, apart from these common technologies, Royal Shell has also implemented its
own digital technologies that are currently aiding their upstream and downstream business.
These digital technologies are as follows.
Maana – Maana is a digital knowledge platform that is utilized by Royal Shell for better
decision making in upstream and downstream business (Shukla and Karki 2016). Maana works
similar to data analytics tools and provide suitable business insight by analyzing the data related
to the upstream and downstream business of the company.
Smart Robot – Royal Shell has recently deployed smart robot technology to aid their
upstream business where they deploy the digitally controlled robots at the extraction sites where
they assist and control the extraction process of the raw materials.
Sense – Sense is a digital measurement device deployed by Royal Shell that helps to
measure daily power consumption domestically as well as industrially. This device helps Royal
Shell to monitor usage data and prepare downstream business strategy accordingly.
2.2 Cloud Based ERP System
Cloud based ERP system is one of the best solutions for the organizations who run supply
chain business through multiple channels at different locations. Without the ERP system,
maintenance of business continuity and keeping balance between all the chains becomes
extremely hard as there is limited scope for data management and accounting. However, with the
cloud based ERP system, all these problems can easily be addressed without any difficulty
(Doral, Patrono and Salisbury 2015). The cloud based data management system means it can
store a huge amount of operational data and connectivity between the various supply chain
channels becomes much more easier since the cloud interface itself can act as the central server

7LOGISTICS AND OPERATIONS IN OIL AND GAS INDUSTRY
and can perform very efficient data management operations even when there is a huge number
and variety of datasets. ERP system gives the organization with a suitable business model that
they can use for management of the entire supply chain efficiently. Furthermore, a business
model using ERP also provides the organization with business continuity that will aid the growth
of the company in the international market as well as in terms of overall profits (Dale,
Osegowitsch and Collinson 2014). This cloud based ERP system will be able to establish a direct
link between several production lines (as in the case of Royal Dutch Shell Company that drills
petroleum in various parts of the world) and will provide them with a business solution to ensure
all the production lines are operating under the same model and principles.
2.3 Logistical and Operational Challenges
Since the last few decades, the oil and gas industry is facing a number of logistical and
operational challenges that are threatening to have negative impacts on their business in the
global market. The negative impacts are evident on the recent growing issue of increase of price
rise for petroleum oil, lack of sufficient supply instead of high production in various parts of the
world and others. These issues are mainly created by a number of challenges related to the
production, operation, transportation of the oil and gas products between the various supply
points in the supply chain lines of the companies (Zhu et al. 2015). Some of the reputed and most
successful oil and gas companies including Royal Dutch Shell Company are facing this serious
problem. However, with the digital revolution taking over the industry, the industry professionals
are hoping that these problems can be solved by digital techniques. Some of the common
challenges currently faced by the oil and gas organizations are as follows.
Lack of Data and Statistics Management
Poor Production Analytics (Resulting in Low Production)

8LOGISTICS AND OPERATIONS IN OIL AND GAS INDUSTRY
Operational Challenges (Due to Manual Processes or Lack of Technical Support)
Poor Analytics of Supply and Demand
Lack of Price Monitoring
Poor Marketing Strategies
Lack of Efficient Manpower
Most of these problems have arisen due to the lack of sufficient technical support and
efficient manpower. Many large scale organizations have been negatively affected by these
processes and as a result, the current oil and gas market has been worse. Digital revolution can
address these issues given that the organizations are willing to apply digitalization in their
existing business processes. The lack of efficient manpower has been significantly addressed by
the currently available digital technologies including various softwares that have made data
management processes easier and faster (Bugden et al. 2016). Digitalization has also been able to
solve the operational challenges by establishing business continuity and providing the
organizations with suitable business models that can boost their existing business efficiency and
presence in the global market.
2.4 Key Human Behavioral Issues in the Chosen Organization
As discussed in the first point, the three digital technologies can bring revolution in the
business and operations of Royal Dutch Shell Company. However, at the same time, the
company can face several human behavioral issues and challenges during the implementation of
these technologies. Some of these are discussed as follows.
Loss of Jobs and Protests – From the analysis of the working of the digital technologies
like data analytics and accounting softwares, it is very clear that a huge number of employees of

9LOGISTICS AND OPERATIONS IN OIL AND GAS INDUSTRY
the company are likely to lose their jobs as one computer will perform the work of 100
employees of the company (Kerzner and Daniel 2018). This will cause massive unrest among the
employees and they may set up massive protests that will also disrupt the daily operations of the
company.
Unskilled Employees – From the analysis of the existing organizational structure and
skill sets, it is evident that the existing employees are not equipped with sufficient skills required
to manage and maintain the digital processes (Helbing 2015). As a result, either they will need to
be trained or replaced by new employees with better skill sets. Both options can cause unrest
among the employees.
Cultural Mix and Racism – Another possible issue that may arise will be due to the
centralization of business processes. With the new cloud based centralized system, employees
from various branches of the company (spread over various countries) will need to interact with
each other (Bolden and O’Regan 2016). Due to this cultural mix, acts of racism can cause serious
behavioral challenges from the employees of the company.
Unethical Activities – Some of the employees of the company can produce protests and
unrest as it will be difficult for them to do unethical activities inside the offices. With the
replacement of manual processes with automated systems, unethical activities like stealing,
commissioning, bribing and others will become extremely difficult. Some employees may get
dissatisfied due to this protest against the digitalization process.

10LOGISTICS AND OPERATIONS IN OIL AND GAS INDUSTRY
3.0 Conclusion
In this report, the effects of digitalization on the oil and gas industry have been analyzed
keeping focus on the Royal Dutch Shell Company. From the analysis, it has been proved that the
digitalization process has significantly enhanced the overall business efficiency and operations of
the multinational oil and gas organizations that have also provided them with a suitable platform
to reach a global powerhouse status by competing with other oil and gas organizations. Without
the digitalization, the oil and gas industry is to be run manually that slows down the overall
operational processes and the processed data are also significantly inaccurate. Digitally enhanced
analytics and accounting processes are much more faster, efficient and accurate. As a result,
most of the oil and gas organizations have been able to establish business continuity in the
market. Furthermore, the cloud based ERP system are also providing the organizations will the
flexibility of a fixed business model that also helps them create efficient data management
processes. Analyzing these factors, the current situation at Royal Dutch Shell Company has also
been analyzed and suitable recommendations have been suggested accordingly. Further, the
possible human behavioral challenges have also been analyzed that the company might face
during the digital implementation and hence, it has been recommended that the company should
proceed with care during the implementation of digital technology.
4.0 Recommendations
Based on the overall analysis of digitalization, the following recommendations can be
suggested.

11LOGISTICS AND OPERATIONS IN OIL AND GAS INDUSTRY
Train the Employees – From the analysis of the possible behavioral challenges, it is
suggested that the company should train the employees instead of firing them for not having
sufficient skill set.
Controlled Implementation – It is suggested that the digital implementation should be
done in a controlled way or else, there will be several problems including massive losses and
waste of funds, unnecessary loss of manpower and resources and others.
Controlled Operation – Similar to the implementation, the overall digital operations
should also be controlled to some extent so that only the required activities are performed and
avoid too much reliability on digital technology.

12LOGISTICS AND OPERATIONS IN OIL AND GAS INDUSTRY
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