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How Digital Transformation Is Affecting the Oil and Gas Industry Proposal

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Updated: Jul 22nd, 2021

Abstract

Digital transformation is acting as a crucial factor in the improvement of practices across the globe. Similar to the case of the oil and gas sector, many companies are greatly reliant on just a few people whose proficiencies may be exceedingly difficult to replace. The research will assess the contributions of digital transformation in the oil and gas industry. With the help of the case study of Exxon Mobil Corporation, this research will employ both the primary and secondary methods of gathering data and the mixed method of analysis.

Introduction

Connectivity does not only create the potential to empower millions of people but has also ensured that companies get incredible chances for value creation. Presently, the oil and gas industry has the capacity to redefine its borders with the help of digitization power (Shukla & Karki 2016; Frank et al. 2016). In the recent future, the oil and gas industry will face the threat of losing a high proportion of its professionals attributable to retirement (Mayer & Burton 1985). This research proposal will seek to determine the manner in which digital transformation is influencing the oil and gas industry. Inculcation of digital expertise, in addition to case administration abilities, enables organizations to maintain competency that they would otherwise have lost with the retiring of professionals.

Research Rationales

Although digital transformation is a great foundation of tremendous change, many challenges have to be surmounted to attain its fullest potential for both companies and society. Organizations across the oil and gas industry are grappling with issues associated with the satisfaction of consumer expectations, obsolete regulations, and shortage of skills, to mention a few. The exponential enhancement in international information streams has created new risks based on safety and data privacy.

Objectives

  • To determine how digital transformation may be employed in the effective sharing of knowledge in the workforce and across different departments.
  • To establish how digitization may be used as an enabler for addressing challenges and generating value amongst all the stakeholders.

Research Question

What is the impact of digital transformation in the oil and gas industry?

Literature Review

Digital transformation merges cloud-anchored analytics and big data with organizational technology leading to enhanced efficiency and improved operations (Hans 1984; Perrons & Jensen 2015). Advancement of organizational practices such as in the oil and gas industry facilitates design, supply chain, production, product engineering, and services for efficiency and fast delivery at reduced costs (Ardolino et al., 2018; Charles & Kim 1988).

Things Done in This Field in Other Industries

Digital transformation has resulted in remarkable developments in the oil and gas sector (Pagani & Pardo 2017; Hassani, Silva & Al Kaabi 2017). Practices in the oil and gas sector contain fragmented solutions where each addresses a given operational necessity (Sganzerla, Seixas & Conti 2016; Kare 1984). For example, there could be one tool for the management of data in the course of drilling and a different one to control logistics. Nevertheless, outstanding value creation opportunities rest in the linkage of different tools and harmonizing them in the upstream and downstream workflows (Urquhart & McAuley 2018; Mäkitie et al. 2018). This will make organizations in the oil and gas industry benefit from the underlying gains (Aronson & Hilley 1986).

Added Value

Technological advancements through digitization have assisted companies around the world with the ability to obtain and carefully analyze data in an attempt to realize apparent and actionable knowledge (Kiron et al. 2016; March 1984). Asset management and optimization of operations are some of the areas that have experienced benefits from the perspective of improvements in the oil and gas sector for both suppliers and consumers. Attributable to cloud-based technologies, there has been a significant reduction in the cost of sensors, retrieval, storage, and processing of data (Nascimento et al., 2017). The linkage of demand and supply processes has enabled the advancement of the portfolio of money-creating assets (Jones, Pejchar & Kiesecker 2015).

Use as a Differentiation and Marketing Tool

It has been established that industrial gains already realized through digital transformations in the oil and gas industry have yielded approximately 20% improvements in performance, in addition to increasing companies’ sales and market share (Trappey et al., 2017). Progress of such magnitude, either found through increased efficiency, improved delivery, or high productivity, show that digitization has acted as a differentiation and marketing tool. Since processes, devices, and tasks are optimized, operators are able to comprehend the real-time condition of operations that make increased digitization improve the financial performance of the industry (Burritt & Christ 2016; Alpizar–Castro & Rodríguez–Monroy 2016) excellently.

Theoretical Framework

The stakeholder theory affirms that values such as those associated with the market economy are vital in the management of an organization (Frey & Osborne 2017; Kushairi, Singh & Ong-Abdullah 2017). The application of this theory will help emphasize the interconnected affiliations among consumers, suppliers, investors, and society, which have to be nurtured for successful digitization. This builds on other theories that affirm that a company should generate value for every stakeholder and not only shareholders (Bechtsis et al., 2017). The formation of strong relationships among internal stakeholders is crucial as digital transformation is facilitated by their involvement in a dyadic connection (Willow 2016).

Methodology

Research Design

This study will employ both the primary and secondary approaches for collecting data and the mixed method of analysis. The researcher will employ the case study of Exxon Mobil Corporation. The employed research design will ensure that information is collected from numerous sources hence guaranteeing reliable and accurate data.

Research Context

Exxon Mobil Corporation is suitable for this research as it is the largest publicly traded oil and gas corporation across the globe and has extensively employed digital transformation in its operations. The researcher will use employees of the company as participants in the study. Through random sampling, the researcher will send requests for contribution in the study to 55 employees.

Procedure

The employees who agree to contribute to the study will become the participants. For ethical consideration, the researcher will uphold confidentiality, allow free will where the participants will have the freedom to take part in the study to its completion or withdraw at any point. One problem that could occur in the study is an overrepresentation of either male or female employees depending on the number of those who will agree to contribute to the research.

Data Collection

After choosing the participants, semi-structured interview questions will be issued for the collection of primary data (Appendix 1). This method is suitable as it will enable the researcher to obtain comprehensive information from the respondents. Before responding to the questionnaire, the participants will be briefed about the ethical considerations and the nature of the questions. Secondary data will be gathered from books and peer-reviewed journals from online libraries such as EBSCOhost and Emerald. This is suitable as it will enable the researcher to gain insights from previous studies on the topic.

Data Analysis

This study will use the mixed method of data analysis, quantitative and qualitative approaches. This technique offers strengths that counterbalance the weaknesses of either of the approaches. Therefore, using both seeks to minimize the limitations of the research and ensures its intelligibility.

Discussion

Digitization enables companies in the oil and gas industry to discover practices that drive excellence in their operations (Derani & Naidu 2016). The study will uncover optimal operational performance enhanced by digital transformation. Digital tools may offer a connected view across numerous components to oil and gas companies (Ajaero et al., 2017). The management of asset performance and increased profitability are some of the greatest benefits of internet-associated solutions in the oil and gas industry (Pagani & Pardo 2017).

Research Limitations

The envisaged limitations to the research include a small sample and failure to interview the senior managers in Exxon Mobil Corporation. An inadequate number of participants will affect the integrity of the study results attributable to increased variability that could result in bias. The failure to interview senior managers will make the research lack the wealth of information that they hold concerning the impact of digitization on the company.

Provisional Work Schedule

April May June July Aug Sept Oct Nov Dec
Background reading X X
Proposal completion X X
Literature review X X X
Planning of the research methods X X
Data collection X X
Data analysis X X
Discussion X X
Submission of draft X
Completion of the research project X X

Appendix 1: Questionnaire

  • Do you feel that digitization has highly benefited companies in the oil and gas industry? Discuss your response.
  • What is the impact of digital transformation in Exxon Mobil Corporation?
  • How has the digital transformation been employed for the successful sharing of knowledge among employees in different departments of the company?
  • Explain how digitization has been used in the corporation as an enabler for tackling challenges and generating value among all the stakeholders.
  • How can the application of digital transformation by Exxon Mobil Corporation and other companies in the oil and gas industry be improved?

Reference List

Ajaero, C, McMartin, D, Peru, K, Bailey, J, Haakensen, M, Friesen, V & McKenna, A 2017, ‘Fourier transform ion cyclotron resonance mass spectrometry characterization of Athabasca oil sand process-affected waters incubated in the presence of wetland plants’, Energy & Fuels, vol. 31, no. 2, pp. 1731-1740.

Alpizar–Castro, I & Rodríguez–Monroy, C 2016, ‘Review of Mexico׳ s energy reform in 2013: background, analysis of the reform and reactions’, Renewable and Sustainable Energy Reviews, vol. 58, pp. 725-736.

Ardolino, M, Rapaccini, M, Saccani, N, Gaiardelli, P, Crespi, G & Ruggeri, C 2018, ‘The role of digital technologies for the service transformation of industrial companies’, International Journal of Production Research, vol. 56, no. 6, pp. 2116-2132.

Aronson, J & Hilley, J 1986, Financing state and local governments, 4th edn, The Brookings Institute, Washington D.C.

Bechtsis, D, Tsolakis, N, Vlachos, D & Iakovou, E 2017, ‘Sustainable supply chain management in the digitalization era: the impact of automated guided vehicles’, Journal of Cleaner Production, vol. 142, pp. 3970-3984.

Burritt, R & Christ, K 2016, ‘Industry 4.0 and environmental accounting: a new revolution?’, Asian Journal of Sustainability and Social Responsibility, vol. 1, no. 1, pp. 23-27.

Charles, M & Kim, J (eds) 1988, Crisis management: a casebook, Charles C Thomas Publisher, Springfield, MN.

Derani, N & Naidu, P 2016, ‘The impact of utilizing social media as a communication platform during a crisis within the oil industry’, Procedia Economics and Finance, vol. 35, pp. 650-658.

Frank, A, Molle, N, Gerstlberger, W, Bernardi, J & Pedrini, D 2016, ‘An integrative environmental performance index for benchmarking in oil and gas industry’, Journal of Cleaner Production, vol. 133, pp. 1190-1203.

Frey, C & Osborne, M 2017, ‘The future of employment: how susceptible are jobs to computerization?’, Technological Forecasting and Social Change, vol. 114, pp. 254-280.

Hans, J 1984, ‘The political economy of group membership’, American Political Science Review, vol. 79, no. 1, pp. 70-96.

Hassani, H, Silva, E & Al Kaabi, A 2017, ‘The role of innovation and technology in sustaining the petroleum and petrochemical industry’, Technological Forecasting and Social Change, vol. 119, pp. 1-17.

Jones, N, Pejchar, L & Kiesecker, J 2015, ‘The energy footprint: how oil, natural gas, and wind energy affect land for biodiversity and the flow of ecosystem services’, Bioscience, vol. 65, no. 3, pp. 290-301.

Kare, M 1984, American arms supermarket, University of Texas Press, Austin.

Kiron, D, Kane, G, Palmer, D, Phillips, A & Buckley, N 2016, ‘Aligning the organization for its digital future’, MIT Sloan Management Review, vol. 58, no. 1, pp. 1-27.

Kushairi, A, Singh, R & Ong-Abdullah, M 2017, ‘The oil palm industry in Malaysia: thriving with transformative technologies’, Journal of Oil Palm Research, vol. 29, no. 4, pp. 431-439.

Mäkitie, T, Andersen, A, Hanson, J, Normann, H & Thune, T 2018, ‘Established sectors expediting clean technology industries? The Norwegian oil and gas sector’s influence on offshore wind power’, Journal of Cleaner Production, vol. 177, pp. 813-823.

March, J 1984, ‘Theories of choice and making decisions’, in FA Lane (ed), Current issues in public administration, St Martin’s Press, New York City, NY, pp. 229-246.

Mayer, R & Burton, J 1985, ‘Distributional impacts of consumer protection policies: differences among consumers’, Policy Studies Journal, vol. 12, no. 1, pp. 91-105.

Nascimento, D, Sotelino, E, Lara, T, Caiado, R & Ivson, P 2017, ‘Constructability in industrial plants construction: a BIM-lean approach using the Digital Obeya Room framework’, Journal of Civil Engineering and Management, vol. 23, no. 8, pp. 1100-1108.

Pagani, M & Pardo, C 2017, ‘The impact of digital technology on relationships in a business network’, Industrial Marketing Management, vol. 67, pp. 185-192.

Pagani, M & Pardo, C 2017, ‘The impact of digital technology on relationships in a business network’, Industrial Marketing Management, vol. 67, pp. 185-192.

Perrons, R & Jensen, J 2015, ‘Data as an asset: what the oil and gas sector can learn from other industries about “big data”’, Energy Policy, vol. 81, pp. 117-121.

Sganzerla, C, Seixas, C & Conti, A 2016, ‘Disruptive innovation in digital mining’, Procedia Engineering, vol. 138, pp. 64-71.

Shukla, A & Karki, H 2016, ‘Application of robotics in onshore oil and gas industry- a review part i’, Robotics and Autonomous Systems, vol. 75, pp. 490-507.

Trappey, A, Trappey, C, Govindarajan, U, Chuang, A & Sun, J 2017,’ A review of essential standards and patent landscapes for the internet of things: a key enabler for industry 4.0’, Advanced Engineering Informatics, vol. 33, pp. 208-229.

Urquhart, L & McAuley, D 2018, ‘Avoiding the internet of insecure industrial things’, Computer Law & Security Review, vol. 34, no. 3, pp. 450-466.

Willow, A 2016, ‘Wells and well-being: neoliberalism and holistic sustainability in the shale energy debate’, Local Environment, vol. 21, no. 6, pp. 768-788.

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