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Oil & Gas Giants: Amidst Market Volatility, LNG Market looks to Artificial Intelligence

The Liquefied Natural Gas (LNG) market is increasingly being defined by its volatility. From increases in spot prices to intense commercial demand expectations, cargo cancellations, shipment delays and more, it is widely reported that, “unplanned maintenance at LNG export facilities from Australia to Qatar to Malaysia has led to a tighter than expected market in the second half of the year [2020].” This unplanned maintenance, combined with “pandemic prompted dramatic price swings” has led to the halt in growth in the LNG market in 2020. As a result, LNG has been looking to digital transformation to ramp up recovery, avoid stagnant growth and deliver on increasing market pressure.

While the cost of oil drops for consumers, due to social impacts of COVID-19, the LNG market is preparing for long-term implications. LNG is poised to experience more growth in comparison with the traditional use of oil and coal in consuming countries as the spot market has made LNG a more attractive option. Consumers have been incentivized by low LNG prices, relative to oil and gas prices, to make a switch.

Though the outlook for LNG growth in 2021 is quite strong at this point, the market is still unpredictable. LNG, in the position of a relative newcomer in respect to oil and coal, will benefit from swift implementation of digital in their early stages of growth. Gaining an even greater competitive edge in LNG is dependent upon digital adoption where speed to value becomes the most critical element in a technology deployment.

Source: Nobel Upstream

For years the LNG and larger Oil & Gas market have been turning towards digital technologies for their many benefits, not the least of which being promises of decreased costs and increased efficiency. However, they have never felt a more significant pressure to extract value from digital then what they are experiencing right now. Many O&G corporations that were early adopters have previously been failed by tech companies touting pie in the sky Artificial Intelligence platforms which merely turn out to be static algorithms at best. After a failure to deliver on hype and promised benefit, these tech companies have only left behind frustration and a distrust in AI’s true capabilities.

These early adopters can rest assured that the marketplace has seen a significant shift from the early days of promises and theoretical AI to concrete benefits in practiced AI. What was once seen as potential benefit is now being realized. As mentioned in the above graphic, making the best of existing technology, through the implementation of Artificial Intelligence which utilizes existing infrastructure, like Maestro, can yield significant cost savings. LNG producers, driven by everchanging costs, need to adopt Artificial Intelligence to survive in todays’ landscape.

The pandemic has been a great shock to the market but with this shock comes an exciting opportunity for change. Leaders have been given the opportunity to evaluate existing business strategies and identify opportunities for growth. LNG producers have the potential to extract significant financial value and increased profit from digital and further their growth position in the O&G market. Digital value chain transformation will afford LNG opportunities in increased flexibility and responsiveness of their production to market conditions. 

A critical element in the LNG and overall O&G journey to choosing a partner to adopt Artificial Intelligence with is the partner’s ability to deliver immediate value. Speed to value is driven by many factors but industry expertise, like that of Elutions’ Maestro, is paramount. To learn more about Maestro and individual case studies in the Oil & Gas sector, please contact us. 

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AI & COVID-19: Stabilize & Survive

In the midst of the COVID-19 pandemic, why are corporations accelerating rather than delaying their digital transformation initiatives? The pandemic’s unprecedented impact on demand, workforce, supply chain, short-term costs and liquidity has forced corporations to take immediate, strategic action to maintain operations. In exploring their means of stabilization and survival, corporations found that Artificial Intelligence is uniquely positioned to ensure business continuity in the short-term, with its proven value in improving employee safety & security, short-term costs and liquidity.

While no industry has proven immune to the pandemic, the depth and breadth of its disruption in the manufacturing vertical clearly demonstrates why corporations have adopted transformational technologies over traditional solutions to beat COVID-19. Manufacturers have felt the acute pressure of COVID-19 in their plants and across their value chains.

  • Demand: Sharp declines in demand across non-essential product segments have disrupted each step of the value chain, driving significant earnings adjustments; essential goods producers are struggling to continue operations with heightened risk, and to satiate demand with unprecedented operating and supply chain limitations.
  • Supply Chain: Despite the geographic diversity of supplier networks, sudden overseas supplier shutdowns and domestic fulfillment delays have disrupted if not halted downstream activity, depleting on-hand inventory, prompting a rapid search for market alternatives, and driving material and part shortages, price increases, and an expected spike in upstream transportation costs as restrictions lift.
  • Workforce: Rapid adoption of new distancing protocols, shift structures and offsite resourcing arrangements have ensured employee safety & security, but constrained operating efficiency, quality, throughput and yield; deferred critical asset maintenance and replacement have increased downtime risk and may increase mid-term CAPEX obligations.
  • Short-Term Costs: Essential and non-essential product manufacturers have made significant adjustments to minimize variable costs, maintain business operations, and operate in an environment of significant macroeconomic and trade policy uncertainty, including layoffs, furloughs and temporary plant closures.
  • Liquidity: With strong macroeconomic headwinds, demand and supply side disruption, and constrained operational agility, liquidity is a principal concern of manufacturers that will not be alleviated at the moment restrictions are lifted, but gradually as the supply chain and broader economy rebound.

How is Artificial Intelligence empowering corporations with substantial value chain disruption to act fast and weather the storm?

Elutions’ highly-automated and autonomous Artificial Intelligence solution, Maestro, leverages historical data, deploys rapidly and delivers immediate improvements in safety & security, short-term costs and liquidity. The following Artificial Intelligence use cases are paramount to ensuring business continuity in manufacturing.

  • Remote Operability, Operational Automation & BEP Adherence: By enabling remote asset and process control, visualization and planning, and automated system-driven asset and process optimization, corporations ensure operational continuity, resilience and efficiency, improving employee safety & security, reducing labor requirements and operating costs, and increasing cash-on-hand.
  • In-Line Quality Assurance & Scrap Reduction: By enabling automated quality prediction and dynamic operating parameter adjustment at each stage of production, manufacturers autonomously ensure end-product quality, minimize scrap and rework, and optimize the Unit Cost of Production as conditions change, improving operating margins, yield (revenue), and liquidity through minimized waste.
  • Dynamic Downtime Prevention & Predictive Preventative Maintenance: By enabling dynamic, system-driven alternate control sequencing in the event of a sensor, asset or process failure, corporations autonomously avoid unplanned downtime, associated repair and replacement costs, and foregone revenue. With system-driven Predictive Preventative Maintenance and automated Work Order creation, corporations minimize downtime and production risk, extend asset use life, generate significant savings through right-time, right-size maintenance, and improve safety & security through truck-roll consolidation.
  • Market, Demand & Capacity Driven Procurement & Inventory Management: By continuously predicting raw material costs, sales and capacity alongside the live environment, and enabling automated procurement and IM directives, corporations optimize operating productivity, inventory levels, and the margin value of Inventory on-hand. Similarly, by continuously predicting replacement part costs, process demand alongside forecasted utilization, and automating replacement part purchasing, corporations optimize part inventory levels, reduce short-term costs and improve liquidity.

Beyond short-term survival, corporations have placed their bets on Artificial Intelligence to thrive in the mid-to-long-term. Stay tuned for more market intelligence on how AI is helping corporations build resilience and optimize operations.

Up Next for NCW: Digitization and Chemical Manufacturing

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AI & COVID-19

Throughout modern history, several infectious diseases have spread with sufficient speed, scale and severity to be considered pandemics. Malaria, Smallpox, H1N1, and HIV/AIDS, which remains active, made the list. COVID-19, however, is in a league of its own. The last pandemic of comparable economic impact, if not on human life, was the Spanish Flu, which directly followed WWI and wrought havoc in a significantly less interconnected world than the one in which we live today.

The Global Impacts of COVID-19 have already been unprecedented. “Stay-at-home,” “social-distancing” and travel and trade restrictions imposed to protect public health have had devastating impacts on the global economy, supply chain and employment. How and when this pandemic will end remains unclear. What is certain is that businesses now face an existential threat, and their leaders must take immediate action to set and execute strategies to weather the storm and ensure they are prepared for future economic, operational or human crisis.

In a time when “non-essential” businesses have been forced to shutter operations or shift to remote collaboration, and “essential” businesses face unparalleled demand alongside novel operational and supply chain challenges, how can manufacturers, O&G companies, airports, utilities, universities and other major businesses survive?

If they adapt quickly, can they thrive?

The answer to this question for industry lies in the adoption of end-end Artificial Intelligence.

Over the next few weeks, we will dive into the major business impacts of COVID-19 and how Elutions‘ Artificial Intelligence platform, Maestro, is addressing them across multiple verticals.  We strongly believe that businesses that successfully and swiftly adopt automated, autonomous applications of AI and rethink their business models will be the ones realizing a competitive advantage once we return to a “new normal”.

Inspired by industrial trends a multitude of sources, reports by McKinsey and many others, Elutions’ AI & COVID-19 Series will specifically address the themes of Survival, Optimization, and Transformation. 

Survival: Artificial Intelligence applied immediately to stabilize business operations.

Optimization: Artificial Intelligence’s intermediary impacts, growing and preparing for a “new normal.”

Transformation: Artificial Intelligence’s long-term impacts in a post-pandemic landscape.

Check back in with us weekly for new content on how to address the business impacts of COVID-19 through the strategic application of end-end Artificial Intelligence.

Up Next for NCW: Digitization and Chemical Manufacturing

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