Understanding Digital Transformation in the Oil & Gas Industry

The provided content consists of research papers and articles related to the oil and gas industry. The topics include digital transformation, environmental health, open innovation, robotics, stress management, and supply chain management. The sources are from various disciplines such as engineering, business, psychology, and sociology. The articles were published between 2012 and 2017 in academic journals, conferences, and reports.

Running head: DISSERTATION
Critical Evaluation of the Impact of Digital Drilling to Minimize Inefficiencies of Offshore
Activities in the Oil and Gas Industry
Name of the Student:
Name of the University:
Author note:

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Executive Summary
Digital drilling has become one of the major technological improvements in the oil and gas
industry of the world. This technology has been very helpful in reducing the cost of offshore
activities, and also the inefficiencies. It is a time saving and efficient technology, which is
adopted by almost all the major oil and gas companies of the world. This research paper
evaluates the impact of digital drilling on reducing the inefficiencies of offshore drilling. The
researcher has designed the research aims and objectives and framed the research questions.
Based on that, he has done literature review. With the knowledge gained, the researcher has
performed secondary data analysis. He has used the thematic analysis under qualitative data
analysis approach. Finally, he has linked the objectives of the study with the findings,
highlighted the limitation of the study and made recommendations in the final chapter.

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Table of Contents
Chapter 1: Introduction....................................................................................................................5
1.0 Introduction............................................................................................................................6
1.1 Background of the study........................................................................................................6
1.2 Research aim..........................................................................................................................8
1.3 Research objectives...............................................................................................................8
1.4 Research questions.................................................................................................................8
1.5 Problem statement.................................................................................................................9
1.6 Research Motivation..............................................................................................................9
1.7 Structure of the research......................................................................................................10
Chapter 2: Literature Review.........................................................................................................11
2.0 Digital Drilling: Introduction...............................................................................................12
2.1 Benefits of digital drilling in offshore activities of oil and gas industry.............................13
2.2 Digital drilling in removing inefficiency in oil industry.....................................................16
Chapter 3: Research Methodology................................................................................................19
3.0 Introduction..........................................................................................................................20
3.1 Research Method Outline....................................................................................................20
3.2 Research Philosophy............................................................................................................20
3.3 Research Approach..............................................................................................................21
3.4 Research Design..................................................................................................................21

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3.5 Data collection process........................................................................................................21
3.6 Data analysis process...........................................................................................................22
Chapter 4: Data analysis, Results and Discussion.........................................................................24
4.0 Introduction..........................................................................................................................25
4.1 Qualitative Research............................................................................................................25
4.2 Thematic analysis................................................................................................................26
4.2.1 Advantages of Digital drilling......................................................................................27
4.2.2 Challenges face by digitalization in the oil and gas industry.......................................29
4.2.3 Scope of digital drilling in oil and gas industry............................................................31
4.2.4 Company statistics........................................................................................................32
4.2.5 Trends of digitalization in the oil and gas industry......................................................36
Chapter 5: Conclusion and Recommendations..............................................................................39
5.0 Introduction..........................................................................................................................40
5.1 Linking with objectives.......................................................................................................42
5.1.1 To critically evaluate the impacts of digital drilling on the operations of the oil and gas
companies..............................................................................................................................42
5.1.2 To examine the types of inefficiencies that can occur in offshore drilling activities of
the oil and gas industry..........................................................................................................42
5.1.3 To find out the advancement of technology in this sector and its pros and cons.........43

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5.1.4 To find out the implementation of digital drilling on the offshore drilling operations of
the oil and gas companies......................................................................................................43
5.2 Recommendations................................................................................................................44
5.3 Research Limitations...........................................................................................................45
5.4 Future Scope of the Study....................................................................................................46
References.....................................................................................................................................47

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Chapter 1: Introduction

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1.0 Introduction
The purpose of the following research paper is to critically evaluate the impacts of digital
drilling in minimizing the inefficiencies of offshore drilling activities in the oil and gas industry.
The oil and gas industry is one of the major industries of the world. It explores the oil and gas
resources and supplies the energy to the world. The resources are located majorly in the Middle
East. 80% of the oil reserves are mainly controlled by the national oil companies (Kelland 2014).
The developed countries are the major consumers of the oil and gas reserves. To control the
reserves and unify the oil polices, OPEC, that is, Organization of the Petroleum Exporting
Countries was founded in Baghdad, Iran in 1960 and the headquarters was set up in Vienna,
Austria in 1965. Since then, all the major decisions regarding oil and gas activities are designed
and controlled by OPEC (Finšgar and Jackson 2014). The oil and gas industry is comprised of
many big companies across the world and among them, the major companies are, Big Oil, Saudi
Aramco, NIOC, Qatar Petroleum, ExxonMobil, BP, Shell, Petro China etc. The oil and gas
industry of the world faces any problems, including, political risk, geological risk, price risk,
supply and demand risks, and cost risks. This industry also faces technological issues. The
activities are classified into onshore and offshore activities. The digital drilling is a type of
technology used in offshore activities (Yusufet al. 2014). The research paper focuses on the
inefficiencies of the offshore activities and how the digital drilling helps to minimize the
inefficiencies in the oil and gas industry.

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1.1 Background of the study
The oil drilling is categorized in two types, onshore and offshore. This is done mainly on
the basis of location of the drilling. There are other differences also, such as, cost, equipment,
profits, timelines etc. The offshore drilling takes place near the shores of the land in the ocean
water. More than 30% of the world’s oil production comes from offshore drilling (Ward et al.
2014). The drilling activities take place in various depths of the ocean water, which enables the
companies to access oil reservoirs at various depths. As the advancement of methods and
technologies is happening, the drilling is going further deeper. With the help of the technology,
the range of offshore drilling has reached 3000 meters underwater from 400 to 1500 meters.
Offshore drilling needs stability, due to the depth of water (Khakzad, Khan and Amyotte 2013).
There are various techniques used for this drilling, and there are some inefficiency in these
activities. Productivity, planning, permit issue, material management are the areas, which get
affected by inefficiencies. The inefficiencies in the drilling activities also affect the production
volume and productivity of the companies (Sneddon, Mearns and Flin 2013).
The digital drilling is a new technological approach for automation of data in the oil and
gas industry. It helps in cost efficient realization of the resources. It involves a software based
decision making model with automation system, including benefits for cost-efficient drilling
process. There is an uptake of this digitalization, leading to smoother integration, and application
of real-time model-based systems in the field, accounting for the inherent uncertainty and
coupled risk that lies in drilling process control. Digital drilling helps in process planning,
automation of drilling control and decision support. Hence, this is more of a data management

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system in the oil and gas industry to manage the operation process smoothly and cost efficiently
(Abimbola, Khan and Khakzad 2014).
As the technology is progressing rapidly, the operations of the oil and gas companies are
changing rapidly. The drilling is going deeper due to increasing demand, at the same time
inefficiencies and issues are increasing too (Jones, Sugiura and Downhole 2017). It should be
assessed that if there is any relation between the digital drilling and efficiency of offshore
activities.
1.2 Research aim
The aim of this research study is to critically evaluate the impact of the digital drilling on
the offshore activities of the oil and gas industries and if that helps in minimizing the
inefficiencies in the offshore activities. The researcher would review previous literatures on the
oil and gas industry to gather knowledge on the oil industry in details and about the digital
drilling. The researcher also would like to know more about the advantages and disadvantages of
digital drilling. The impact of this type of drilling can be understood from the performance of the
companies, who use it and from the production level. Hence, it is essential to critically analyze
the impacts of digital drilling to know if the inefficiencies of the companies.
1.3 Research objectives
The objectives of the research paper are:
 To identify various challenges encountered by oil and gas companies facing increasing
cost of production in a low oil priced environment,
 Identify technological solutions to resolve the problems of escalating production costs,

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 Evaluate the criteria for justifying digital drilling investment by reviewing the efficiency
performance of companies with and without the application of digital drilling.
 Justify cost savings through improved efficiency, Real-time decisions, Maintenance and
overhead costs savings.
1.4 Research questions
1. How can costs be managed and identify savings without sacrificing efficiency?
2. Can digital drilling enhance safety and optimize performance in a dangerously remote
Oand complex oilfield?
3. Is there any potential for digital drilling to resolve the problems of declining production?
4. Can digital drilling improve operational efficiencies and cost savings?
1.5 Problem statement
The prolonged low oil price period has significantly depleted the revenue of oil and gas
industry, threatening the financial stability of many oil and gas companies. Huge amount of
capital is spent on this industry. The economic downturn crisis has disrupted capital expenditure
projects, compelling companies to cancel offshore projects or defer important investments to
minimize costs at the expense of long term asset performance. The problem statement of this
research is to critically analyze the impact of digital drilling on reducing the inefficiencies in the
offshore activities of the oil and gas companies.

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1.6 Research Motivation
As the technology is becoming advanced on a regular basis, it is important to adapt the
new techniques in every field to sustain in the industry or market. Oil and gas industry is no
exception. This is a major energy sector. The demand for oil and gas is continuously increasing
and the onshore and offshore productions are increasing too. As the production activities are
increasing, the inefficiencies and problems are also rising. This leads to increasing cost of
production and thus, a hike in price (Millett et al. 2016). Digital drilling incorporates the
automation technology with the oil drilling. The application of software for production and
business management contributes in efficiency. The rationale of the research is to find out that if
the digital drilling leads to a smooth integration of cost effective techniques with oil and gas
production activities in offshore (Crompton 2015).
1.7 Structure of the research
Chapter 1 consists of introduction, research background, aim, objectives, questions and
motivation for the research topic.
Chapter 2 includes the literature review, focusing on various literatures on the related topic.
Chapter 3 describes the research methodology for this paper. This includes research approach,
research design and conceptual framework.
Chapter 4 is the data analysis and research findings, where the results of the data analysis will be
presented.
Chapter 5 is the conclusion chapter, where the researcher would summarize all the findings and
make recommendations based on that. He would also highlight the limitation and future scope of
the study.

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Chapter 2: Literature Review

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2.0 Digital Drilling: Introduction
According to Penning et al. (2014) digital drilling involves the strategic use of digital
technology and helps in improving the business. A well modeled platform in real time analysis is
essential in drilling automation. There are some proactive decisions on real time models and it
helps in early decision making. There are some traditional ways to monitor the changes in the
model. Digital drilling is associated with controlling the drilling equipments which are based on
changing the downhole conditions such as cuttings, pressure, temperature and mud rheology.
There must be automatic friction test for this drilling process. Moreover, digital drilling also
allows various third party technologies. Riley and Cath (2016) opine that digital drilling is
suitable for high temperature applications and larger well diameters. It is primarily used in oil
and gas industries and is more costlier than onshore oil and gas drilling. There are some specific
tools and techniques which are required for harsh downhole conditions. As drilling has become
very complicated, there are some techniques that have to be adapted such as measurement-while-
drilling (MWD). This process involves various measurement tools and it helps in transmitting
real time information of azimuth and inclination through steering. Jahankhani, Altawell and
Hessami (2015) suggested that digital drilling helps in eliminating the problems related to labor,
material, time and labor and this element increases the cost of drilling. The drilling techniques
are continuously improving and this helps in obtaining the continuous and solid core from the
ground. The logging systems which were largely unutilized with various manual processes were
now utilized with the help of various digital drilling processes. Digital drilling is also easier to
detect. There are certain core recoveries that have often exceeded the core barrel inner tube
capacity and it also results in succession with the core gains and tapered core segments.

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2.1 Benefits of digital drilling in offshore activities of oil and gas industry
Balaban, Vidal and Borges (2015) stated that the oil and gas industry is adapting to new
technologies quickly. There are certain factors which are influencing the conservative attitude
and this includes various safety challenges and complex systems. It also requires a huge amount
of investment. Digital drilling not only enhances efficiency but it also helps in transforming the
work. The oil and gas sector has focused on production and exploration which includes searching
the underwater crude oil and natural gas, drilling and operating wells and drilling exploratory
wells that has helped to recover the natural gas or oil from surface. Cost reduction was the main
motive of oil and gas industry and digital drilling has helped in doing that with and also saving
the time. Digital drilling has improved the productivity by enabling preventative maintenance
and predictive maintenance. It has also improved the flow process and this has been achieved by
implementing the changes in operating conditions. Digital drilling has increased the productivity
and reduced accident frequency and this is possible through real time monitoring of the assets.
According to Shukla and Karki (2016), digital drilling has helped to saved millions of dollars by
using robots and sensors to analyze the subterranean and surface environment. The sensors are
used to collect different data from surface materials and also to keep a track of the performance
of equipments in different environment. It also helps the oil producers to find out the
hydrocarbon deposits and determine the new spots to optimize the operational process. The oil
and gas companies are also using various data to improve the drilling practices. The use of rigs
helps in collecting massive amount of data and thus it is helping the engineers in optimizing their
performance by reducing the downtime and associated cost. The design of these preventative
maintenance schedules is trying to reduce the operational cost. Ronconi, Allard and Taylor
(2015), opine that scientific intensity and digital drilling are the need of hour of oil and gas

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industry. The companies are adopting intentional fit for approach purposes to respond to the
information sensors. There are certain issues which are associated with environment and safety
protection and it requires due attention of the experts. There are certain challenges which are
associated with digitalization of the various processes and technologies and it is important to
improve the work processes and culture in order to cope up with these changes. Digital drilling is
not only reducing the cost in the current market but it is also a drive for optimization.
Albert et al. (2015), predicted that an increasing portion of oil and gas production comes
from various offshore resources and advancing technologies which permits production from
marginal fields and deepwater. The offshore production platforms are bringing various
hydrocarbons to the surface through risers and lines. These are then moved to onshore facilities
and it enhances the production processes. The most important way to conform the presence of
hydrocarbon is the internal pressure and thickness of the reservoir which is essential to drill the
boreholes. Gates et al. (2017) have opined that the location of a drill site depends on the different
characteristics of geological formation. Though it is possible to balance the environmental
protection with the logistic needs, however there is a need for efficient drilling process. The land
based drilling rigs and various kinds of support equipments can help to split the entire process
into different modules and thus makes it easier to move. These drilling rigs may also be moved
into water, air or land depending on the module weight, size, land, access location, cementing
equipments, generators and moderators. When various kinds of exploratory drills are successful,
there is a necessity to dig more wells which will help in determining the size and extent of the oil
fields. These wells are drilled to quantify the hydrocarbon reserves in the oil fields. Digital
drilling may also be used at different angles for the discovery of original boreholes and this may
be used to appraise various other parts of the reservoir. It also helps in reducing the footprint or

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the land used. Large oilfields may require more wells to be drilled in comparison to the small
fields. The process of digital drilling involves similar techniques which are used to identify
different kinds of exploration processes. These sites are occupied with for various support
services and other activities, waste management and other services.
Tan et al. (2017), suggested that the production facility processes includes various kinds
of hydrocarbon fluids which helps in separation of water, oil and gas. Various kinds of routine
operations on the production well involve the processes which are associated with monitoring,
maintenance task, security and safety programs and many more. The infrastructure processes
which are required for development drilling in offshore operation processes are associated with
exploration. There are some permanent structures which are necessary to support the various
facilities and it is associated with exploration units. These are designed for full scale operational
processes. The recent technological developments aim at optimizing the different operational
processes and it includes the remote operation of subsea systems which are essential for satellite
platforms. The recent advancement in the drilling processes has helped in enhancement of
directional drilling and thus it is a means of concentrating the different operational processes and
reducing the footprints in the production. Digital drilling technologies are also trying to minimize
the footprints and thus reducing the need of satellites. It is also trying to build flexibility in
selection of the drilling site and thus there are certain environmental concerns which are
associated with these processes.
Priest (2016) has opined that the advent of digital oilfields has helped in producing cost
effective energy and this has helped in addressing the environmental and safety concerns. There
are certain processes and decisions which are related to oil and gas industry and it is associated
with exploration, production, development in the generation of large amount of data. The

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solutions which are associated with acquisition, storage solution and processing has also become
easier and cheaper with the advent of digital drilling processes. The oil and gas industry are also
recognizing the breakthroughs and great power of digital drilling. Though the oil and the gas
industry focuses on data integration, it has become easier for engineers and data scientists to
produce and find out the hydrocarbons through the help of digital drilling. The scientists and the
engineers are trying to find out new and innovative ways that will ease the digital drilling process
easier and cost effective. Certain kinds of analytical approaches are also taken to find out the
impact of digital drilling in the production of oil and gas.
2.2 Digital drilling in removing inefficiency in oil industry
According to Sharma et al. (2017), drilling method was introduced in the offshore
industries to improve their efficiency and increase productivity in the near future. Digitalization
of the drilling process is expected to be a next great change in the oil and gas industry and a
breakdown form the traditional and old method that causes various kinds of harm to life and
property. The digital drilling process will improve the efficiency of the process by reducing the
wastage in the supply chain. It also helps n offering new types of services to the customers that
reduce the inefficiency in customer service process. This process altogether causes a
multibillion-dollar effect on the oil and gas industry by improving the digital capability of the oil
business. The digital drilling that is being innovated in the oil industry will also help in reducing
the maintenance cost of the industry. This is because all its activity will become digital without
any maintenance of heavy traditional machinery (Pawlus, Choux and Hansen 2016). It has also
been observed by Shukla and Karki (2016) that even after the recovery of the oil industry and its
price the industry remain fixed in using modern digital technologies is its activity due to its
power of reducing inefficiency and saving them from the unsafe assets of the industry. The

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digital drilling technologies are also enabling the companies to make more productivity by
devoting less time compared to the old techniques. This is due to the increasing use of internet
technologies. The new digital technology in the oil and gas industry will also reduce the
inefficiency of data maintenance and thus save them from loss of production. However, such
failure can be avoided by the modern technology by being a little focused on the operation
process. The adoption of digital technology by the oil industry was mainly due to the breakeven
in the prices of oil in the past and the costly production process (Crompton 2016). It has also
been supported that the introduction of Drone method in the offshore industry has reduced the
need of placing the control point and helped the firm to cover huge region effectively and safely.
The new digital drilling technology has also increased the chance of detecting the leakage of
methane in the environment.
According to Minier-Matar et al. (2015), digitalization has also allowed the companies to
adopt better sustainability process compared to the past. This has allowed the company to
perform profitably and reduce the prices of the products. The next benefit and the capability of
reducing inefficiency by the digital drilling process is due to its predictive monitoring which
allows them to risk of equipment failure in the drilling process. It also helps to reduce the
downtime by smoothing the process of processing the oil drilled from the ground. However, it
has been argued by Jenkins (2016), that the oil industry may fail to take the advantage of digital
drilling and reduce inefficiency due to its inability of using the digital innovation in its digital
process. On the other hand, it has been viewed that the reduction of inefficiency in the process of
the oil industry will also help them be competitive and exploit resources as much as possible.
The other way the industry can reduce inefficiency by becoming digital in their process is by
winning maximum reserve of the region and in a much cheap and safe manner (Marron et al.

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2015). The process also helps in rebalancing the methods used in the offshore industries for
extending their drilling activities. Digitalization of the drilling activity has allowed the industry
to adopt a much cost reduction processes, which has helped them to reduce cost, and in turn
increased their productivity. It has helped the company to take other processes such as use of rig
for short time, standardizing the design of the rigs, reduction in the uncertainty of the operation
and accelerating the chances of new technology adoption (Pickering and Sengupta 2015).
According to the report of Liang et al. (2015), digital drilling has also helped n increasing the
productivity of the firm and it has been viewed that in 2016 the total productivity of the industry
has increased by 80 percent. Efficiency of production also improves due to digital drilling
because it leads to reduction in staff requirement in the production process. As machines and
modern technology do most of the work, it helps in reducing mistakes and carelessness in the
process (Zhai, Ren and Tan 2016). Thus, it can be seen that the process of digital drilling has an
all round positive effect on the method of drilling activities, helping them to grow in a much
faster way.

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Chapter 3: Research Methodology

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3.0 Introduction
This chapter would discuss the methodology to be followed in this research paper.
Different aspects of research methodology, like, research approach, research design, and data
collection and analysis process will be enlightened in this chapter. The researcher will collect
only secondary data. He will collect the secondary data through the government websites, news
articles and journal publications. The detailed discussion about the methodology has been made
in this chapter.
3.1 Research Method Outline
In this paper the researcher will follow the research method according to the knowledge
gained from literature review. These literatures will be helpful to know about the inefficiencies
that exist in the offshore drilling activities of the company and the impact of digital drilling to
minimize those inefficiencies. The impact can be best understood from the performance of the
company, as productivity and performance improve if inefficiencies are reduced. This will be
compared and analyzed using the secondary data of the industry.
3.2 Research Philosophy
This explains the thought process of the researcher. This is based on the values and ethics
of the researcher. There are different types of research philosophy, namely, positivism,
interpretivism, realism and epistemology (Miller et al. 2012). In this paper, the researcher has
followed the interpretivism philosophy. This philosophy is based on interpretation of available
data to reach to the conclusion (Roberts 2013). The researcher needs to assess the impact of
digital drilling on the performance of the offshore activities of the company. For that, he will

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analyze the secondary data based on various academic journals and articles. Hence, he will be
following the interpretivism philosophy.
3.3 Research Approach
Four type of research approaches are available to be used in a research paper, namely,
quantitative, qualitative, pragmatic and participatory approach. Qualitative data analysis is
related to the interpretivism philosophy. In this approach, the researcher collects the data first,
and then analyzes the data qualitatively to see if the objectives are fulfilled (Bringle, Hatcher and
Jones 2012). The deductive approach will be followed by the researcher in this case. From the
data collected, the researcher will deduct the connection between the research topic and the data
available on that.
3.4 Research Design
Resign design is the final structure for further activities such as the classification of data,
measurement, analysis and evaluation. As stated above to meet the research objective, the
researcher will be collecting relevant data from various academic journals, such as, books,
academic journals, business reports, articles and periodicals. It is helpful in conducting the
research in a precise and focused manner (Soni and Kodali 2012).
Under qualitative research design, the descriptive type research requires the researcher to
collect data about the impact of drilling on oil and gas industry and the result will be written in a
descriptive manner. Descriptive demonstration of the result is beneficial as the common people
easily understand it and helps the research cover all the points that it wants to cover to prove the
validity of the research (Reynolds et al. 2014).

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3.5 Data collection process
In a social research, there are two types of data collection process. When the researcher
collects the data directly from the field, it is call primary data. On the other hand, when the
researcher collects data from already published sources, such as, government websites, official
websites of companies, journals, news paper articles, then it is called secondary data (Best and
Kahn 2016). In this research study, the researcher has followed the secondary data collection
process for a detailed and relevant analysis of the oil and gas industry.
In this research study, the researcher has adopted the secondary data collection and
qualitative analysis method. To collect the secondary data, the researcher will follow the official
websites of the company, annual reports, and government reports to find out information on
variables used in the research topic.
3.6 Data analysis process
The researcher has chosen to perform qualitative data analysis with the help of collected
data on digital drilling, offshore activities and inefficiencies in the offshore activities. These data
will be collected from already published sources. These will be compared and contrasted with
the literatures. The thematic analysis process will be used to analyze the secondary data. In this
process, various themes will be taken and those aspects of the data will be checked and analyzed
based on the themes (Neuman and Robson 2014).
Thematic analysis is one of the most important and common analytical approach in
qualitative research. In this approach, the data collection process is focused, it is examined in a
particular direction and records the patterns or themes in the data. Themes are the patterns that
exist within the data set, which are helpful in describing the issues of the particular research topic

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(Vaismoradi, Turunen and Bondas 2013). Thus, the themes are the categories for research
analysis. In this research paper, the researcher would be using various themes, such as,
advantages of digital drilling, challenges of this type of drilling, trends and patterns in the
industry, company statistics etc. Those will be discussed in detail in the chapter 4.

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Chapter 4: Data analysis, Results and
Discussion

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4.0 Introduction
This chapter throws the light on the data analysis, research findings, and discussions on
the research topic. Only secondary data is used in this research study. There are some advantages
of using secondary data in a research. Firstly, using secondary data is convenient. It is already
collected, cleaned and processed earlier by other authors. Hence, it saves time, effort and money
of the future researchers while collecting it. Along with that, as the data is already cleaned and
generally stored in electronic format, it helps the researcher to devote more time in analyzing the
data rather than collecting and cleaning it. Secondly, the authenticity of the data is more accurate
in case of secondary data, collected from various governmental and official websites. A large
scale of the data can easily be accessed by the researchers through these websites and journal
publications. Lastly, an individual researcher cannot maintain the expertise and professionalism
to collect huge data from the industry. The data collection process is done more efficiently by
various organizations. Hence, it is easier to use the already collected and processed data to
conduct a research study by individual researchers. However, in many cases, the data collected is
not specific to the research topic, or might not have been collected from study related region. The
categorization of the data may not be suitable also for the specific research. This chapter will
highlight the qualitative analysis of the secondary data. The discussions will be based on the
research findings.
4.1 Qualitative Research
This type of research is fundamentally the exploratory research. This is helpful in gaining
the understanding of the underlying logics, rationales, and motivations of the researcher as well
as purpose of the data (Bertocco and Padmanabhan 2016). The researcher has chosen this type of

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analysis to gain a deeper insight about the problems of offshore activities of the oil and gas
industry.
4.2 Thematic analysis
The researcher has chosen to use the thematic analysis in this research paper. This
analytical approach is one of the most widely used analysis techniques under qualitative analysis.
To have a deeper insight about the research topic, the researcher has made some categories of
themes or patterns according to the research topic and analyzed the data as per the themes. The
thematic analysis of secondary data is as follows.
To increase the performance level and to maximize the production process to the high
efficiency, Digital drilling is known as a progressive solution. The research and development
departments of many oil and drilling company were working towards developing software and
advance technologies in order to come up with digitalization of data from the drilling process.
This technology will not only make the work process efficient it will also reduce the cost as there
is a lot of process that can be automated with the digitalization. Maybe the initial cost of
installation of the technology will be high but in the long-run it will prove to be a cost effective
method for drilling. With the advancement of technology and modernization in the business
world the acceptance of new and improved method of doing business is prevalent (Gholami et al.
2014). Companies nowadays do not follow the traditional concept of business model that focuses
mainly on growth, expansion and profit maximization rather the sustainability approach is being
more popular among the people. Drilling and oil industry owe a lot to the environment and
natural resources and hence it is regarded as a duty of these companies to find ways and means to
reduce the negative impact the business has on the environment. Digital technology and changes
are emerging as a driver of progress all around the world. Thanks to internet a click is all that an

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individual or a company needs to connect to the world, which has in turn empowered people to
prosper in the business and development, increasing the performance level.
Oil and gas industry has been the bacon of change and transformation of the world
economy; it has been the driver since the industrial revolution. Providing fuel to heat, light and
move from one place to another without any hindrance is all because of the products and services
given to the world b y this industry. With digitalization the Oil and Gas industry after a period of
falling crude prices and, frequent budget and schedule overruns, together with greater demands
of climate change accountability and difficulties in attracting talent, the Oil & Gas industry can
provide practical solutions. Digitalization can act as an enabler to tackle these challenges and
provide value to all its stakeholders.
4.2.1 Advantages of Digital drilling
Time is a constraint in any factor and with the digitalization of data time can be saved by
integrating the processed data into one channel. Most of the time the information collected from
multiple channels and this causes in disparity and takes longer time to analyses and understand
which in turn makes the review process also stretched. The digitalization will help to integrate
the collected information channel in a single path so that the analysis of this data is easy and less
time consuming. As transferring all data to one focal path for integration is a difficult option in
terms of cost of the technology, technical hindrance like lack of knowledge and also operational
issues can also prove as a disadvantage in the process and hence the use of data virtualization is a
process that is widely accepted by organizations to disperse the data in a channelized way
(Gogineni 2016).

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Data virtualization makes a diverse mix of information supply seem like one rational
catalog of information to users and applications. The source of the information does not have to
necessarily available at one place or even locally available it can be anywhere and can be
transferred to relevant places for analysis. This method is useful for gathering information from
distributed sources, such as implanted sensors, video cameras as well as third-party data sources
also (Niri and Lumley 2015).
Along with time the relevance of data collection is also crucial for the company to take
any decision. Hence the right kind of data has to be present at the right place in order to be
analyzed and driven to a concrete conclusion. Most of the time the data does not reach the
correct place to be analyzed this can be solved with digitalization. Organizations, therefore, need
a linked infrastructure that enables in-depth view of the processed information. An extension of
cloud computing known as edge computing creates a mobility that offers calculations, storage,
and networking services in between the devices used by the analysts and cloud computing data
centers. It also supports connectivity applications that look out for real-time or live predictable
novice ideas such as industrial automation, transportation, networks of sensors, and actuators.
The need of edge computing is crucial in the oil and gas industry. Approximately 1TB and 2TB
of information is generated by a typical offshore oil platform in a day. Time sensitivity related to
platform production and drilling safety is dependent on the data that is being transferred and
received. The commonly used communication device and link for the offshore oil drilling
platforms is broadcasting information via a satellite connection, at 64Kbps to 2Mbps speed of
transfer of the data. To move one day’s data from the offshore platform to the central office or
operation department it would take almost 12 days give the speed of the transfer. Hence, it is
evident that the advantage of data visualization is a much more important and much easier way

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to transfer data from the off shores to the central repository. Real time data is very important for
the decision making process of the company and the industry is dependent on the information
that is gathered for other analysis purposes as well. Maintenance and repair of the off shore
platforms and pipelines will be more rapid due to transfer of information with the help of
digitalization. Sensors system like GPS and others can be implemented to understand and reduce
manual labor in areas where it is difficult for people to reach to check on a regular basis (Candell
and Lee 2015).
4.2.2 Challenges face by digitalization in the oil and gas industry
The most significant and pressing issue that digitalization faces in every industry is the
lack of knowledge and ignorance about technology and digitalization. This also in turn graduates
into a decline of acceptance of the changes that digitalization brings in the operation process. The
complex mechanism of the digitalization process makes it even more challenging. The
complexities can be combated if there is an urge to learn and grow if that is absent among the
employees then the matter is of serious concern. In order to combat the problem of lack of
knowledge among the existing members of the company many times the organization employees
new experts on the technical subject which in turn increases the cost of the project even more for
the company (Bertocco and Padmanabhan 2016). Installation of any technology required a huge
lump sum investment by the company. The investment is viewed to be a sustainable approach in
the business model and the cost is a part of expanding the company in the direction of
advancement, but the value and the cost is sky high and the not only the infrastructure and the
installation is what causes the cost to rise. The employment of expert people to run the
technology to its optimum strength also requires cost. While the infrastructure and the
installation is a onetime investment and also proves to be an asset in the long run the employee

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wages are a liability that is recurring. Digital drilling not just has an installation it has a logistics
that has to be looked after, there are software that has to be learnt to be used by the employees or
they should be trained, there rare equipment that has to be again learned to use by the technicians
(Shukla and Karki 2016).
Another significant concern with any industry that opts for digitalization is the breach of
security of the data and information. When Internet of everything is in application for the daily
operation of the business in the oil industry, then there is a chance of the security being issues. If
the security of the process is not full packed and the employees are not always ready to tackle a
crisis situation then the management will face a severe problem due to the breach of information
to an unwanted third party. There is a lot of socio-economic disputes related to the oil and gas
industry which may trigger some negative action form some third party group. If the companies
neglect the flow of information and fail to connect it with the line of management there can be a
significant loss of important information (Bugden et al. 2016). For example, a data visualization
scheduling system can be installed by a company which has a classic and efficient routing
potential may fails due to the lack of connectivity to the line management’s scheduling systems,
in this process the information can be lost which might cost the company in the future. To fulfill
few benefits in the short term the companies invest billion on a technology that does not yield
much for the company in the long run and this is a massive setback for even oil and gas
companies who have a huge turnover annually (Randhawa et al. 2013). For example, offshore
platforms of the oil and gas industry can produce more than one or two terabyte of data on a
daily basis, but the transfer of this data through the satellites are very weak and might take days
to reach the central repository so the operations teams on land can’t keep up with the available
data. An integrated plan would spot this and place the analytics resources closer to the data: on

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the platform. Oil and gas is expensive to produce, the manpower, the technology and the
machinery that are required to produce oil that is used to heat, light or used for mobility takes a
lot of effort. Digitalization makes the process even more costly and involves more manpower
and expertise (Dmitriev et al. 2015).
4.2.3 Scope of digital drilling in oil and gas industry
The oil and gas industry are the pioneer of industries on a global scale and any
development in this sector makes for big headlines, the digital drilling. New businesses and new
partnership prospects are bound to take place due to the technological advancement in the
drilling process. In order to keep up with the competitors and to keep up with the sustainability
models of business, the companies are taking up new partnership to develop innovations and new
ways of operation (Radnejad and Vredenburg 2015). The focus of corporate objectives will shift
to sustainable profitability than profit maximization due to the recent façade of downward fall of
prices of cured oil has pressed the companies to develop new and improved methods of business
including sustainability as a pillar in this process technology such as digital drilling and edge
computing plays a significant role. Profit maximization has been a point o interest form most of
the oil and gas industry but the prime focus is on the reserve of natural resource and development
of the production process with technology. Nevertheless, the impact of price fall and the evident
probability of the rise in the interest rates in the near future, increasing the cost of debt, has
promoted free cash flow from earnings to priority status (Hashemi, Nassar and Almao 2014).
Oil and gas is a non-renewable natural resource that is precious and difficult to find in
abundance at a place. Reservoirs are situated at a distance of about 5,000 to 35,000 feet below
the surface of the earth. This is where the importance of digital drilling and information process
IOE applications comes for the companies rescue. In order to describe the reservoirs the

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companies have two options either noisy images or expensive records of the reading in the wells.
Digitalization also helps in making daily operational data applicable and relevant which in turn
helps the company to take decisions so that there is a reduction in the operating cost as well as an
improvement in the recovery rate.
A major concern that has to be addressed is that the oil and gas industry has to do a lot
with the depletion of the natural environment of the area and the locality where the reservoirs are
set up. Digital drilling is a process that can deal with this problem by at least reducing the
harmful impact of drilling and evolving in making the sustainable model of business successful.
4.2.4 Company statistics
Compared to the other sectors, the digital transformation in the oil and gas industry is
more evolutionary, than revolutionary. The technological development, such as, big data,
analytics, cloud, social media has a great potential for the oil and gas industry. These will reduce
the inefficiencies in the offshore operations of the companies. For example, the big data and the
analytics can help the companies to innovate their strategies through analysis of huge amount of
the real time structured and unstructured data (DigiDrill 2017).

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Figure 1: Investments in digital technologies
(Source: WEF 2017)
The above figure shows the level of present and future investments on different type of
technologies that are and will be used in the near future. It is seen that, at present, the IoT,
Mobile devices, and social tools grab the maximum investments. While in the next 3 to 5 years,
Robotics and Drone, Artificial (AI) and Wearable Technology will be the major technologies for
investment. According to Moriarty et al. (2017), robotics would see a more than 15% rise in
investments, 7% in AI, and 10% in wearable technology in the next few years.

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Figure 2: Areas for improvement for effective usage of digital drilling
(Source: Moriarty et al. 2017)
According to a survey by CISCO in 2015, when people were asked about the areas for
improvement, 48% responded that data collection, formation, transmission and processing
should be improved for increase in efficiency. Digital drilling plays a very important role in data
processing. As it collects and processes the real time data, the decision making regarding the
drilling activities become faster and more efficient (Moriarty et al. 2017).
According to an article by Genpact, oil drilling is a highly capital intensive technology.
The machines cost around $350 to $500 million. The average cost of drilling is $400,000 per
day. Since, only 40% of the machine time is utilized for drilling, this is very important to
decrease the idle time of the machines so that the return on the assets can be increased. Hence,
the companies are now combining the digital technologies and analytics into their operations to
reduce the operation costs and enhance the accuracy of the activities. Massive amount of data is
collected from the activities of exploration and drilling. This is done via the textual operational
logs, sensors in the oil wells, and some other measurement devices. The sensors that are installed
in the drilling tools, capture and send out the signals on real time basis, where analysis has been

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done for a sample of the signals for a certain layer of the soil for computing the parameters of the
soil (Genpact 2016).
Figure 3: Top drivers for the industry to invest in technologies
(Source: Moriarty et al. 2017)
From the above figure it can be seen that, in the next three to five years, investment
opportunities in technology would increase. There is a 32% scope of investment in data
analytics, for better and faster decision making on offshore activities by the oil and gas industry.
26% scope is in improvement of operational efficiencies and 18% in increased productivity.
Only the top three drivers are shown in this graph.

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Figure 4: Digital Initiatives in the Oil and Gas Industry
(Source: WEF 2017)
Digitalization in the oil and gas industry is worth between $1.6 and $2.5 trillion (WEF
2017). The digital drilling is part of digitalization. The above figure shows the four themes of
digitalization, the initiatives under each of them and the applicable technologies under each
initiative. The improvement in technology has always improved the company’s performance by
reducing the inefficiencies. Hence, the application and improvement over time is necessary for
digital drilling also. The efficiency in real time data collection, transmit and analysis will help in
reducing the issues of offshore drilling activities (Anand 2016).
4.2.5 Trends of digitalization in the oil and gas industry
The trend of using the digital drilling in the oil and gas industry has increasing in the past
few years. Over the last few years, all the major oil and gas companies of the world have favored
the usage of digitalization of the offshore as well as onshore activities. For example, the

38DISSERTATION
company, Statoil applied the platform Statfjord C in 2014. The drilling platform was first
deployed in 7 wells and 17 sections. It increased efficiency by almost 10%. It also increased the
operational consistency. The operations became simplified due to automated functions. The
safeguarding of the well from human errors and assessing the constructive feedbacks from the
users have helped the companies to reduce the inefficiencies and cost of the offshore activities.
Statoil is now implementing another tool, namely, Songa Enabler. This process of transition was
easier for Statoil due to the application of digital or virtual drilling (WEF 2017).
Royal Dutch Shell drilled a well in Vaca Muerta in Argentina, which is 6200 miles away
from their location in Calgary, Canada. This was possible due to super efficient virtual drilling or
digital drilling. They used this technology to evaluate the information from a similar shale bed in
Alberta, Canada and applied it on the shale deposit of Argentina. Through digital or virtual
drilling, they accessed the real time data from Vaca Muerta for designing the well, and
controlling the speed and pressure of drilling. On the second attempt, the company was
successful to complete the well at a very lower cost, i.e. only $5.4 million. It was a sharp fall in
the cost, as 15years back, the cost used to be around $15 million (Economist.com 2017). Just like
Shell, almost all the major companies in this industry have started to use this technology. There
are many companies, who provide solution for the digital drilling, such as, DigiDrill, CISCO,
etc. DataLogger is a platform by DigiDrill which is used in the oil and gas industry (DigiDrill
2017). Similarly, the Google cloud platform allows the industry to implement high-performance
computing, remote image and velocity development.
Another example can be given from Shell again. Shell uses 3D printers for prototyping
their Stones Oil and Gas station in the Gulf of Mexico, named as the world’s deepest drilling
station. The company used a 3D printer for producing a scaled down plastic edition with all its

39DISSERTATION
components, in only four weeks. This model helped the company to plan and execute the
improvement of the elements for a real buoy in the sea bed for offshore drilling. It also helped in
designing the assembly sequence of the buoy in an efficient manner. The company could save
$40 million by highlighting the flaws in the designing at the preliminary stage. This prototype
was used to show the US authorities the exact functioning of the buoy in a rough ocean
environment and this was helpful to get the government approval. Thus, digital drilling has been
very useful for Shell for improving its drilling operations (Hbr.org 2015).
Not only Shell, the other major companies are going digitalized in the recent years. The
entire industry has realized that automation and digitization can improve the functionality of this
sector, just like in any other sector. The concept of digital oil rig has become prevalent in the
industry. The digital drilling and investments in technology can increase the safety of people
involved in the process. Thus, the sector has started to adopt the digitalization process in the
offshore drilling activities. Engineers sitting at a different location can take decisions for an oil
rig far away through the access of real time data through digital drilling. This is a cost saving
technology, as the people do not have to visit the rig personally.
Hence, the oil industry has adopted the new technology for advancement of the
automation in the planning and operations, reducing inefficiencies and minimizing risks, and for
overcoming difficult and complex challenges, such as, rough sea and sustainability of the
environment. The new technology is implemented without any compromisation with the
operational safety and security of the system. However, the experts say that, the digital drilling
forces are yet to become fully mainstream due higher cost. Less than 40% of the industry has
become digitalized by now (Economist.com 2017).

40DISSERTATION
Chapter 5: Conclusion and
Recommendations

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5.0 Introduction
This present chapter highlights on the conclusion that is acquired from data analysis and
discussion of the selected topic. Hence, in this portion, the researcher has clearly discussed the
conclusion portion in order to understand that the research objectives have been met properly.
However, the main aim of a research study is to meet the research objectives by gathering and
analyzing the data. On the other hand, this chapter provides assurance about the success of the
current research project through giving specific recommendations based on the identified
problems. Apart from this research limitations and future scope are also addressed in this portion.
However, future scope of this research project focuses on the opportunity for the researcher to
carry out more research over this selected topic.
According to the analysis and discussion of the above-collected data, it has been revealed
that the entire factors that are discussed in the literature review section are more or less valuable.
However, such factors can be varied based on the impact of the digital drilling method in oil and
gas industry. However, oil and gas industries contribute a valuable amount in the economy of a
country. Big oil, Saudi Aramco, BP, Petro China and NIOC are the popular oil and gas
organizations in the global oil and gas industry. The major risk that is faced by the oil and gas
company include price risk, political issue, high production cost, geological barrier and the
technical issues that affect the operation of such organization. This current study highlights on
the operational issue of oil and gas industry and application of digital drilling and its significance
on such specific industries. The onshore and offshore production is increasing rapidly with the
rising demand for oil and gas in worldwide. Hence, it is addressed in this study that as well as the
production is enhancing in oil and gas industry problems are increasing. As a result, such
organizations have to face rising production cost and high price. Digital drilling is a data system

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that involves in reducing the inefficiency of the operation system in oil and gas industry.
Collection of data aggregation of data and presentation of the data is the major there areas of
digital drilling. However, digital drilling is a cost-effective technique that leads the oil and gas
industry to carry out a smooth operation by communicating with the information through this
software.
This current study discusses that application of digital drilling in the oil and gas industry
and its efficiency in minimizing the high production cost in such industry. However, this
technological approach for data automation is effective to reduce the present crisis of oil and gas
industry. A decision-making model based on the software with automation system is associated
with digital drilling. The oil and gas industries can be benefitted from such cost-efficient drilling
technology. The oil and gas industries get help regarding process planning, decision support and
automation from such digital drilling technology. However, from the above discussion, it can be
said that digital drilling is data management system that has been used in the oil and gas industry
to make the operation process easier and cost effective. Reduction of the operating cost is the
main aim of the oil and gas industry in the recent years as they have to collect crude oil and
natural gas from underwater that needs drilling and operating the wells, which is the very costly
process. Hence, the literature review section highlights that the digital drilling can improve the
productivity of the gas and oil sectors by reducing the cost. It has been received that digital
drilling also enhances the customer’s service by offering new service to the customers. On the
other hand, the maintenance cost of the oil and gas industry can be reduced by digital drilling.

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5.1 Linking with objectives
5.1.1 To critically evaluate the impacts of digital drilling on the operations of the oil and
gas companies
This present objective focuses on the impact of digital drilling on the operation process in
the context of gas and oil industry. However, in this current research study, the literature review
section has given a brief account about the impact digital drilling in reducing the inefficiency of
the operation process of oil and gas industry. However, application of digital drilling is cost-
effective technology that mitigates the crisis of the oil and gas industry. The researcher has been
found in this study that high production cost is the main issue of oil and gas sectors that can be
overcome by using digital drilling as it reduces the operation cost in such organization. Such data
system maximizes the efficiency in such industry. Hence, it can be said that this objective is met
in this study as this study has given a brief overview of the impact of digital drilling in oil and
gas industry that highlights on the reduction of the inefficiency of the operation process by
adopting digital drilling technology.
5.1.2 To examine the types of inefficiencies that can occur in offshore drilling activities of
the oil and gas industry
This current objective reveals the nature of the inefficiency in context oil and gas
industry that usually occur in the offshore drilling mechanism. However, from the literature
review portion, it has been identified that traditional drilling method includes risk and high cost
that affect the profitability of the oil and gas sectors. The traditional drilling process is not
effective in reducing the wastage in the supply chain while digital drilling process reduces such
wastage in the supply chain management. On the other hand, poor data maintenance is another
example of inefficiency in drilling method of oil and gas sector as a result production is affected.

44DISSERTATION
Safety issue is another type of inefficiency in the drilling method of oil and gas industry as
leakage of methane harms the safety of the worker. Hence, digital drilling technology makes the
operation process digital that may reduce the safety issues and high production cost in such
industry. Thus, it can be said that the objective is met as the study has exhibited the different
types of inefficiencies in the context of traditional drilling method.
5.1.3 To find out the advancement of technology in this sector and its pros and cons
In objective three, the aim of the researcher is to address the positive effect of the
technology in oil and gas industry as well as its drawbacks. However, the advantages and
disadvantages of the technology have been received from the data analysis and discussion part of
such research study. Hence, it has found that digital drilling is a gift of advanced technology for
the oil and gas sectors. A clear indication has been given by the researcher about the reduction of
maintenance cost through digital drilling process in oil and gas sector that ensure the efficiency
of the technology. On the other hand, the major drawback of digital drilling is the breach of
digital security that is addressed in the discussion portion.
5.1.4 To find out the implementation of digital drilling on the offshore drilling operations of
the oil and gas companies
This objective is associated with the previous objectives that reveal the advantages of
digital drilling in context of gas and oil industry. The researcher has given an overview of the
implementation of the digital drilling in the literature review section. Hence, it has found that
monitoring, maintenance of safety program and task and arrangement of data are associated with
the implementation of the digital drilling process. Reduction of the footprint can be done by
digital drilling process that also mitigates the need of satellite. Therefore, enhancing the
flexibility during the selection of drilling sites is a major part of the implementation of digital

45DISSERTATION
drilling that has been addressed in chapter two. It can be said that this objective can be linked
with the literature review section to evaluate the implementation of the digital drilling in oil and
gas sectors.
5.2 Recommendations
Development of the digital strategy roadmap
Digitization should be a strategic agenda for oil and gas sectors to make improvement in
their operation process. For this reason, the digital transformation that can be done by the
application of digital drilling in oil and gas, the industry requires to be sponsored by the senior
executives. Development of the digital strategy road map will be helpful for the oil and gas
industry to set a clear vision and arrange the proper resources for the implementation of digital
drilling in the oil and gas industry. However, digital strategy is associated with the corporate
strategy thus it is necessary for the oil and gas companies to ensure that digital strategy is
completely integrated into the core business of an organization.
Establishment of the multidisciplinary team that is digitally powered
In order to utilize the technology and to maximize the business performance, it is
important for oil and gas sectors to encourage their employees to generate new ideas. However,
to access the digital drilling process for the reduction of high cost the oil and gas companies
should develop a digitally advanced multidisciplinary team in their organization. For this
purpose, creation of digital officer will be helpful for such organizations to build and lead the
multidisciplinary team to utilize the efficiency of digital drilling.

46DISSERTATION
Creation of new digital thinking
Lack of proper skill is a big challenge for the oil and gas industry to utilize the
technological advancement. The organizations should know how to incorporate new features into
a tangible strategy. Needs and skill gap can be determined by assessing the present capability of
the individuals in an organization. For this reason, the oil and gas industry should identify the
new skilled employees to develop new digital thinking. This will be helpful for the oil and gas
companies to access the modern technology in their operation process.
Reformation of data architecture and development of multilayer budget to enhance the
digital capabilities
The core area of the digital transformation is the data sites. Hence, the oil and gas
companies need to optimize the application of various data platforms. This will support such
industry to improve their data architecture to access the advanced technology. Apart from this
establishment of a multilayer budget will enable the oil and gas industry to keep a balance
between the financial burden and economic benefits. In order to digitize the core functions of oil
and gas sectors, the proper budget allocation should be done by such sectors.
5.3 Research Limitations
The researcher has faced various challenges during the conduction of such research
study. One of the major limitations of such research study is the short frame of time. However,
due to lack of time the researcher was not able to collect the data properly over the impact of
digital drilling in reducing the inefficiency in oil and gas sectors. This study requires more time
to pursue a depth analysis over application of digital drilling in gas and oil companies. Another
limitation is the lack of secondary information. However, very few articles those are authentic

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for this study. On the other hand, some articles are not valid and some are not recently published.
This research study is completely based on the secondary data thus, lack of secondary articles
build limitation for such study. Apart from this, some journals were paid version thus the
researcher failed to access these.
5.4 Future Scope of the Study
Uncovered sections of a research study can be evaluated in the future scope of the study
that needs more investigation to improve the components of the study. However, there is less
account of the factors regarding the application of digital drilling in gas and oil companies.
Hence, the future researcher can explore such area by gathering more information about.
Therefore, this study is based on the secondary data thus primary data collection method can be
carried out in future research to improve the study. Apart from this, such present study can be
served as the secondary source for the future study based on which the researcher will able to
carry out further research. On the other hand, this current study will be a valid source for the oil
and gas industry to understand the significance of digital frilling in their business.

48DISSERTATION
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