July 01, 2022

How the fourth industrial revolution can affect the Oil & Gas Industry?


The Oil & Gas Industry has experienced turbulent times in the last two years, and in front of low oil prices, the Companies in the sector have made large efforts toward significant cuts in cost and reduction in the activity of new projects development. Based on the uncertainties about the Industry directions, there have been many speculations about the continuity of petroleum as the main source of energy in the modern civilization and about the permanence of low oil prices for an extended period. Analyses of the usual practices in the Oil & Gas Industry suggests that the sector should pass by a technological reorganization of its methods and industrial processes, following a global technological trend named in Germany as Industry 4.0 [Read the article: Critical aspects in the development of offshore production systems: a management review of the industry usual practices].

Several prospective models indicate that the petroleum, as an energy source, will become obsolete at some point in the future. The big question that challenges researchers around the World is when this energy source replacement will take place in a consistent and definitive way. Considering that the development of any basic infrastructure for a new energy source may require decades, it can be expected that the transition should happen gradually and in a structured manner. Therefore, the most likely Vision to occur is the incorporation of new technologies to make petroleum energy cleaner and more efficient, in order to allow a gradual change in the energy matrix by the introduction of renewable energies.

Considering the increase in the quality of life in the developing countries, it is expected that the demand for energy will continue to grow, regardless of which energy sources will be used to meet this demand. Based on the current reality, it is believed that the Oil & Gas Industry will retain its leading position in the global energy matrix for a long period. Whereas the production capacity of a field invariably decreases if no action of maintenance or increase of production capacity is performed, it is expected that in the near future the demand will again overcome the supply, which will generate pressure on prices, making viable field developments that are not commercially attractive today.

Because of the large engineering efforts and time required to develop new fields, there is an inertia to achieve an overall production increase, thereby maintaining the attractiveness for new developments over a period of several years when the demand keeps higher than the supply. However, since all projects begin to operate in successive waves, the supply again exceeds the demand, leading to inventories increase and fall in oil prices again, which is reflected in a seasonal behavior between supply and demand. Figure 1 presents the cyclical behavior of the Oil & Gas Industry regarding to supply and demand.

Figure 1 – Cyclical behavior of the Oil & Gas Industry regarding to supply and demand

On the other hand, one can not disregard the facts about global warming and the potential environmental risks promoted by the Oil & Gas Industry. Given the difficulties of incorporating new technologies abruptly in the energy matrix, it is imperative that methods and processes of exploration and production should evolve in order to make the industry more efficient and to minimize its potential environmental impacts. In this context, the needs of the Oil & Gas Industry meet the technological revolution wave provided by Industry 4.0.

The question is: How the Industry 4.0 can support the technological evolution of the Oil & Gas Industry?

The development of new technologies, methods and processes has been encouraged and led by major companies in the industry. Some tendencies and developments can be highlighted, such as subsea processing systems; intelligent wells technologies; new subsea concepts and equipment; and real time monitoring, data analysis and production management technologies.

The subsea processing is a solution adopted by Oil Companies to access the reserves located in remote areas or where the environmental conditions are severe, such as the North Sea, the Arctic and Alaska; and also in deep waters of Brazil and the Gulf of Mexico. The advantages of bringing the processing equipment to the seabed are to maximize and accelerate the recovery of oil, increasing its recovery factor and extending the life of field; and reducing the number of floating production units and surface processing plants [Revista Petro & Química, 2014].

According to information collected by industry experts, the discipline of wells engineering is responsible for about 40% of the development costs of a typical offshore project in ultra-deep water. In order to reduce the overall investment of the project, several initiatives have been undertaken in the search for greater efficiency in methods and processes of construction of subsea wells. In addition to the optimization of processes, innovative technologies such as smart completion systems allow multiple production zones to be produced by the same well, which reduces the need for investment in the exploration and production of an area consisting of several reservoirs or various production zones.

From the subsea engineering perspective, the development of concepts is an activity with endless possibilities and is strongly influenced by historical, political, environmental and cultural aspects of the supply chain of each region. Therefore, the development of lessons learned based on experience observed in other regions and the integration of the various disciplines have received great attention of top management team inside the major Corporations. On the other hand, the cultural aspects of each Company have been the main barrier toward the diversification and the development of conceptual options different from those already known and dominated by the corporation [BASILIO et al, 2015].

From the information technology perspective, the development of large databases, known as “big data”, has allowed industries of various segments to transform the way the automation has been applied, enabling real time monitoring and control of operations. In the Oil & Gas Industry, several initiatives have been observed in the development of technologies for real time monitoring and control of equipment and systems. It is expected that this technological wave achieves fast the Oil & Gas Industry, supporting the real time management of offshore oil and gas fields, allowing a better production management and consequently leading to economic efficiency of assets. According to Howell [2006], the “Oil and Gas Digital Field” is a tendency in the industry, and will make possible to maximize economic returns on investment facing the dynamism in the behavior of a petroleum reservoir.

Some people believe that the Oil & Gas Industry will experience by 2025 disruptive technologies that may change drastically the way we know the industry, such as fully-automated drilling operations, autonomous inspection of pipelines and the rig-less plugging and abandonment of wells will be in operation [RIGZONE, 2016]. Others see the fourth industrial revolution as a deeper change, which will fundamentally alter the way we live, work, and relate to one another [WORLD ECONOMIC FORUM, 2016]. The truth is that nobody knows exactly what are the real possibilities of the fourth industrial revolution and how we can take the benefit of it to support the society development and individual wellness. What we really know is that we are facing an eminent point of transformation in the Oil & Gas Industry and there are uncountable possibilities of using the state of art technologies and information available on everyone`s laptop, tablets and smartphones. How the Industry 4.0 can support the technological evolution of the Oil & Gas Industry? It is still an open question!


  1. BASILIO, L.P.; et al. Synergy in using rigid pipelines with subsea production manifolds. Rio Pipeline Conference & Exposition 2015.  September 2015.
  2. Revista Petro & Química. Tecnologia a fundo. Seção Petróleo e Gás da Revista Petro & Química. Edição 358,  2014.
  3. HOWELL, A; SZATNY, M.; TORRENS, R. From reservoir through process, from today to tomorrow: the integrated asset model. SPE Intelligent Energy Conference & Exhibition. April 2006.
  4. RIGZONE. DNV: Six New Technologies to be Deployed in Upstream by 2025. April 2016.
  5. WORLD ECONOMIC FORUM. The Fourth Industrial Revolution: what it means, how to respond. January 2016.

About the author:

Leandro Basilio is founder and COO at Deep Seed Solutions, Master of Science from the Catholic University of Rio de Janeiro with emphasis on Oil and Energy and Mechanical Engineer from CEFET of Rio de Janeiro. Certified as PMP-PMI, currently attends the Executive MBA Program from Fundação Dom Cabral (FDC) in Minas Gerais. With over 20 years of experience in the mechanical industry, he has advanced knowledge in design and manufacture of equipment for the Automotive and Oil & Gas industries, accumulating solid experience in companies like Caram, Surco e Michelin . Over the past 10 years, he has developed his career leading projects in Oil & Gas, with special emphasis on the development of offshore oil and gas production systems at Petrobras, and developing conceptual, basic and executive projects of subsea production systems at Wood Group.