A recurring theme at Cavendish Group energy conferences is the challenges faced by those implementing digital initiatives when trying to convince their leaders that money spent on AI and other digital tech – often yet to be fully proved – represents good value for money.
That task is made all the harder when digital expenditures and their benefits are frequently spread across different divisions and overlap with other company spending, making it hard to quantify them accurately.
However, Rystad Energy, in a note released earlier in December, has crunched some numbers and come up with big-picture figures for the scale of savings that digital innovation could produce for oilfield services (OFS) companies over the next five years.
Rystad predicts that the oil and gas industry could save more than $320bn by 2030, as it digitalises operations in five key areas. Drilling optimization is seen generating $95bn of these savings, predictive maintenance $83bn, reservoir management $72bn, logistics optimisation $56bn and autonomous robotics $13bn of savings.
Binny Bagga, Senior Vice President, Supply Chain, at Rystad Energy said that figure could be an underestimate given that continued merger and acquisition activity, new business partnerships with technology firms, and greater software integration could help accelerate digital-focused strategies for major OFS players.
“We estimate that $320bn is a modest figure, as broader digital adoption across other business domains could generate even greater value. To realize this, executives will need to deliberately prioritise digital transformation by fostering a less risk-averse business culture,” she said.
Rystad notes that, while digitalisation impacts are emerging more frequently in financial disclosures, most OFS supply chain firms do not yet break out standalone ‘digital profit’ in their accounts in the same way a pure software-as-a-service company would.
But, it says, this is starting to change, as companies realise the wider value in identifying growth of their digital offerings, with major players such as SLB now reporting earnings for a digital division. SLB has said it expects that division to achieve year-on-year double digit growth in 2025 with the EBITDA margin reaching 35% on a full-year basis.
Resilient revenue streams
Rystad says digital revenue streams show signs of offering more stable, resilient growth trajectories that are less exposed to the volatility of upstream capex. Another example it cites is geoscience firm Viridien, whose revenues from its digital, data and environment segment rose by 17% to $787m in 2024, producing EBITDA of $458m.
However, widespread adoption of oilfield digitalisation still faces considerable challenges, especially due to the heavy upfront costs for hardware, software, ongoing maintenance and cybersecurity.
“These hurdles are especially acute for smaller firms or those operating with legacy infrastructure, complicating the justification of such investments amid economic uncertainty,” according to Rystad Energy.
It says mid-tier companies are improving their offerings with targeted digital capabilities, while smaller niche firms and specialised software vendors are focusing more on delivering modular, custom solutions.
Collaboration is proving to be another route to success, with OFS companies such as SLB, Halliburton, NOV and Baker Hughes forging partnerships with technology firms to complement internal digital capabilities. Rystad says that reflects “a clear industry shift toward digital transformation, with large suppliers actively accelerating their collaborations with technology partners in recent years”.
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