Digital management helps reduce petroleum refining costs by more than 10%.

The latest report from Bloomberg New Energy Finance revealed that digitalization is helping global oil companies improve efficiency and reduce costs
.
According to estimates, digitalization can reduce the refining cost per barrel of oil by more than
10%.

The agency believes that if refineries producing 180,000 barrels per day were to adopt connected sensors, IoT platforms, advanced analytics and even virtual technologies and digitize them, the refining cost per barrel of oil would be reduced by $0.
44, or 11.
5 percent
of operating costs.

With crude prices falling below $30 a barrel, every oil company is struggling to reduce operating and labor costs
.
In fact, the oil industry has done a good
job in this regard over the past few years.
One of the many reasons for the general decline in oil prices over the past decade is that many companies have figured out how to discover, extract and refine oil
more efficiently.

Big oil companies such as BP, Shell, Equinor and Total have said they aim to invest heavily in becoming "digital" companies
.
Shell estimates that the use of AI-centric digital software in upstream and oil production operations will bring in $1.
2 billion in revenue, while BP expects to generate "billions" in revenue
from digitalization.

More specifically, Equinor forecasts a $3 billion increase in free cash flow due to digitalization in 2020-25, while Repsol estimates that digitization will increase cash flow by $1.
7-2.
2 billion by 2022 (more than half of which comes from exploration and production).

For oil companies, digitization refers to the collection and analysis of data, whether it's from pumps on oil rigs, compressors in refineries, or data flowing out of headsets for field workers
.
The aggregation of large data sets can be used for statistical analysis as well as using artificial intelligence or machine learning
.
With these tools, oil companies can predict when parts are likely to fail, remotely monitor and control oilfield machinery, and optimize energy consumption
.
Overall, digitalization should reduce the cost of labor, energy, machine maintenance, and back-office office while increasing the amount of
oil a company can produce each year.

However, not all refineries will do this, depending on the refinery's service time and regional differences, among other things
.
According to Bloomberg New Energy Finance, computer algorithms will help save $860 million in energy costs in digital refineries that may be adopted in the next few years, earning an additional $1.
75 billion in revenue optimization software and an additional $1 billion
in asset maintenance analysis.
However, most older refineries will not adopt digital transformation because the cost is too high, but new refineries will be managed
digitally.

Since digital management can reduce existing operating costs, analytics such as predictive maintenance and energy efficiency will be popular
in the short term.
As companies cut capital projects, digitalization will require retrofitting
existing operations.
In any period of low commodity prices, the size of the oil and gas workforce shrinks
.
Remote monitoring and automation technology means that the oil field
can be operated by less manpower.
Depending on how long oil prices remain low, IoT technology, virtual and augmented reality, drones and automation will all be used to cope with high labor costs
.