Digital transformation energises the future
by Einar Gamman, Senior Partner
In a series of blogs, our senior partner, Einar Gamman explores the industry’s hot topics – the burning questions we need to address to guarantee the oil and gas sector doesn’t just survive but thrives.
Einar discusses the importance of balancing the demand for energy with the need for sustainability; the vital role of digital transformation, as well as how we can continue attracting young talent into the industry. This is his second blog in a series of three:
At EV Private Equity, we have always tried to catch important trends in the market early, and we believe we have been successful in capitalizing on such a strategy. We have a large breadth of experience, from being active investors in supporting and stewarding differentiated businesses that are focused on making our industry cleaner, safer and more efficient.
The best example of this, right now, is the digital transformation, which has had, and still has, a significant role to play in making our industry cleaner, safer and more efficient. At EV Private Equity, we have been educating and positioning ourselves on the potential of this industry trend for some time. In fact, we played a key role in one of the first commercial offerings that took real-time collaboration between onshore and offshore for drilling operations to the market, back in 2006-7. Since then, we have continued to be the lead investor in several digital focused oil and gas technology and service growth companies.
Compared to many other industry verticals, oil and gas has been considered a laggard in this space. It took the oil price shock in 2014-17 for our broader industry to really put an exerted effort in to the digital tool box. But, this effort is now yielding clear and strong results and I am confident it’s here to stay. The availability of cheap, giant data processing capacity and an exponential growth in digital instrumentation and connectivity have created a very solid foundation for harvesting the benefits of big data algorithms, machine learning and artificial intelligence, as applied to many of our industry challenges. In summary, the digital transformation can be said to have a triple benefit: one, increasing efficiency and productivity; two, providing a very strong hedge for new cost escalation in a cyclical industry; and, three, providing the basis for safer operations
We are working hard with all our portfolio companies to embrace and reap the benefits of what’s happening in the digital space. This is first and foremost about staying competitive, about getting costs down, working safer and controlling emissions; using automation, robotics, artificial intelligence (AI) to be more productive and to have greater control and make better use of the “data lakes” that have, until now, been under-utilized. It’s about reducing the cost of oil per barrel by investing in companies that provide standardized and/or high-end products and services that fit in to the digital value chain. It’s about providing the most efficient and cleanest fossil resources – supporting the sustainability of our industry.
This has to be done in a fit-for-purpose way, however. We work with our portfolio companies to make sure they have a strategy that uses these modern tools to their maximum in their particular area or specialty, for instance by applying machine learning or AI to make sure that they in a pragmatic and practical manner are doing what they do better, faster, and with more value, both internally and in what they offer to their clients. This is where we see results. This is where we can offer differentiated services and products, across our portfolio.
Read Einar’s first blog here: Balancing energy dilemmas and growth.