Five trends set to impact energy industry

Dr Walid Fayad
                   Dr Walid Fayad

Jan 4: Change continues to be the defining feature of the global energy sector in 2017. In the oil and gas industry, as well as in electric power, major internal and external forces are driving change, requiring industry leaders to revisit strategies.
In oil and gas, 2016 was a year of continued overproduction. The resulting oil inventory overhang finally had an effect in reducing US shale production, but did little to spur demand that’s needed to bring the global market into balance.
In the Middle East, a prolonged period of low oil price has impacted government spending but the move towards economic diversification and reduced reliance on oil is prompting greater investment in high-potential sectors including real estate, construction, hospitality, tourism and education. There is also a greater national focus on achieving operational efficiency across sectors — and one notable area that stands to benefit immensely from embracing digitally-enabled solutions is utilities.
The utilities sector has historically under-invested in information technology (IT), but an increasing number of utilities in the Middle East and North Africa (MENA) region are waking up to the benefits of smart technology.
In utilities and electric power, the traditional supply chain is undergoing change driven primarily by regulation, public policy, plentiful inexpensive natural gas and dramatic cost declines in renewable energy and storage.

Dr Adham Sleiman
           Dr Adham Sleiman

Dr Walid Fayad, Executive Vice President at Booz Allen Hamilton MENA said: “Energy and technology form the backbone of global economies and play a crucial role in driving the operational success of all other sectors. As innovation and technological disruption become the norm across the MENA region, we are increasingly seeing regulators and policymakers embracing game-changing trends in the energy sector — from support of renewable energy, advanced metering, and grid modernisation to big data and cloud. We expect that wider adoption of these technologies will increase overall operational efficiencies, especially in the wake of a period of prolonged low oil prices.”
Dr Adham Sleiman, Vice President, Booz Allen Hamilton MENA, adds: “Data analytics has emerged as one of the key trends that will shape the future of the energy sector in 2017. Big data is rapidly changing the way the energy sector operates globally — by reducing costs, optimizing investments and reducing overall risk. In order to achieve these objectives, and create additional value from untapped areas, organizations in the Middle East must establish holistic digital strategies that include upgrading their required digital capabilities.
Booz Allen Hamilton identified the following 5 trends that will impact the energy industry in 2017:
1. Focusing on Capital Expenditure Productivity
Market shifts are putting capital program execution under major pressure in both the oil and gas and electric power industries. In oil and gas, the global “lower for longer” cycle of oil prices has executives and boards of Integrated Oil Companies, National Oil Companies, and oilfield service providers placing high scrutiny on exploration and production activities
2. Creating Enterprise Value from Data
Like many industries, the energy sector has seen the amount of data from its operations skyrocket as advanced instrumentation and metering has been implemented. Only the most accessible benefits from this data have been realized so far, mainly focused on identifying opportunities for cost savings through labour elimination and incremental improvements to existing processes. While analytics in the industry is nothing new, companies are only starting to scratch the surface of how data can create new value within existing businesses.
3. Using Markets to Shape the Future Grid
Public sector support of renewable energy, advanced metering and grid modernisation over the past five years — in the form of mandatory deployment standards, and direct and indirect subsidies — have been very effective at driving down the costs of these advanced energy technologies, spurring their broader deployment. As regulators and policy makers consider what comes next, they are increasingly moving from a standards-and-subsidy approach to one that is more market-driven.
4. Following Security to the Operational Edge
Across the energy sector, security has been focused primarily on protecting company and customer data on corporate systems. With the increase in instrumentation, automation and virtualisation of operational assets — the rise of the Internet of Things —the security frontier is moving to the operational edge, and is growing in importance.
5. Innovation is the Tipping Point for Cloud
In most industries, the decision to migrate IT infrastructure from fixed, on-premises servers to cloud-enabled as-a-service models has been heavily based on cost. This was true for many corporate systems at the oil super majors, but it’s innovation that’s driving the current wave of cloud migration in the operational business units at these companies.
The rise of analytics within operational business units in order to create maximum business value is enabled by a digital strategy centred on the flexibility that the cloud provides. In the utility industry, movement to the cloud has been delayed by ambiguity over how the costs of new service models are categorised.