Oil and Gas Curbing Carbon Emissions with Industry 4.0
Arguably, one of the most complex and intricate industries is oil and gas. The industry can be broken down into three divisions:
- Upstream — exploration and production of the raw materials
- Midstream — storage and transportation
- Downstream — refining and distribution
Each of the three divisions play a crucial role in the eventual use of energy in houses and cars and production of plastics and medicines. The early-adoption of efficient communication, planning, and supply chain management within oil and gas was one of the reasons why this industry was incredibly profitable during its peak in the mid-2000s. With the major players like Shell, Total, and BP adopting automation early, oil and gas companies were able to manage their complex systems efficiently.
With the arrival of Industry 4.0 poised to disrupt supply chain management (for the better), energy companies (previously known as oil and gas companies) need to become early adopters of these technologies to remain competitive in a landscape where alternative, renewable energies gain higher demand in developed countries.
During the global pandemic, many oil and gas companies were hit the hardest financially due to the reduced transportation from the national shutdowns and increasing political tensions between Saudi Arabia and Russia. These companies were up against a wall, needing to make two critical pivots in their operations. Firstly, reduce investments in petroleum exploration and instead distribute those resources into alternative energy, such as solar, wind, and geothermal. Secondly, reduce their carbon footprint with Total and Royal Dutch Shell leading the charge with the ambitious goal of net-zero emissions by 2050.
These goals are lofty and difficult to reach, but doable. However, the three divisions (upstream, midstream, downstream) must be in consistent flow and synchrony in order to raise cost efficiency, quality, and production speed.
Smart manufacturing, transportation, and distribution can contribute to a circular economy. For example, data analytics, AI, and machine learning establish efficient production processes — efficient enough to maintain net-zero emissions. Autonomous, electric transportation powered by 5G will improve navigation, cutting traveling distances and reducing carbon emissions. Augmented reality (AR) and virtual reality (VR) could bring human-less drilling operations, pipeline inspections, and plugging of wells. Finally, Industry 4.0 and 5G power this complex system to be in constant communication and collect crucial information from each other. One of these crucial pieces of information is that of the actual emission of carbon into the atmosphere. Environmental agencies, energy companies, and their investors can accurately measure the progress on reducing carbon emissions. A signal of progression would show a company’s commitment to energy efficiency, cost efficiency, and more importantly a commitment to curb climate change.
With the Biden administration and Democrat-led Congress entering the stage, companies are expecting some major (potential) changes — carbon taxes, Green New Deal, federal investments in green energies. Lawmakers hope that these policies could curtail the environmental damage previous industrial revolutions caused, directly and indirectly, yet it will also take corporations to follow these government policies and their own. Industry 4.0, not only can aid these companies in this endeavor, but also can become the first industrial revolution that is actually pro-climate.
These “former” oil and gas companies, now energy companies, will need to adapt to a very different administration and consumer landscape. Industry 4.0 could give these companies a chance to compete in an environment where the most valuable car company sells only electric vehicles. With reduced capital and a volatile oil market, energy companies will question how they can maintain a robust supply chain, retain cost efficiency, and increase carbon efficiency. Industry 4.0 is that answer.
You can also find this article on https://sites.utexas.edu/c4i4/
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