Planning for Unknown in The New Age of Digital: A Paradigm for Offshore Oil and Gas Risk Assessment and Management

Abstract Major Oil and Gas operators and service companies look to undertake large scale digital transformations aimed at producing integrated, connected, and intelligent enterprises. These transformations require accelerating the journey to the cloud to modernize the entire application portfolio. By transitioning to the cloud, firms enjoy improved data analytics which allow for evolution to next generation digital work environment. This shift, however, comes with workforce challenges. Employees in all categories and at most levels will require significant cross- and up-skilling to take full advantage of the digital transformation. As vendors, suppliers, service companies, and operators move products and equipment around an expanding ecosystem of assets, security threats are likely to increase due to further geopolitical instability. Data based decision making, which enables the optimization of assets and automation of operations to minimize workforce risk exposure must be implemented with consideration of enterprise risk reduction (across the asset and workforce operational risk life cycle). As Oil and Gas operations become more geographically dispersed and diverse, they are exposed to new and evolving risk factors which can directly impact value. These risk factors make asset acquisition, development, management, and maintenance all more challenging. Analyses of risk in a digital foundation risk-based platform is most valuable at the earliest stages of asset development in determining whether to proceed with the planned development through to end-of-life decommissioning. Successful firms must create an end-to-end digital roadmap which delineates between technical and transactional activities and outlines effective stakeholder engagement at each project stage. The fundamental thesis of this paper is that although risk can be mitigated and reduced through the introduction of digital tools into oil and gas operations, it can never be completely removed. Furthermore, while industry research on the impact of digitalization usually rely heavily on cost savings, optimization, and health, safety, and environment (HSE) related cases, they typically fail to consider the contribution of digitalization on risk assessment and management. This paper argues that we need to move away from the focus on cost savings, process optimization, and HSE metrics improvement metrics. This paper sets up a mechanism for developing risk-based strategies for implementation of digital solutions.