Digital Transformation at BP is Starting to Add Up to Billions

Abstract

About 3 years ago, upstream executives at BP came together and recognized that this down cycle was not like the ones before. The moment marked the beginning of the company’s “digital journey,” one that it says is paying off in spades. “Our industry—our sector—it fundamentally changed,” said Ian Cavanagh, the head of modernisation and transformation at BP. As a nearly 29-year veteran of the company, encompassing his entire oil and gas career, he spoke with authority on how shifting conditions have redefined what it means to be a supermajor in the 21st century. It means taking on the controversial issue of global climate change by promising to find ways to increase energy production while lowering the overall car-bon footprint. BP’s answer to this “dual challenge” includes big investments in the electrical vehicle sector, solar power, and wind power. But more to its core, the tidal forces of volatile commodity prices meant that BP needed to go on a digital technology shopping spree to either find more oil and gas, or get it out of the ground at a lower cost. Today’s portfolio features a growing list of in-house innovations, such as a new fiber-optic interpretation company that BP is spinning off to the outside world and a team of robots that will soon assume a lead role in offshore inspections. BP reported in January that its new seismic device called Wolfspar led to the discovery of more than 1 billion bbl of oil in place at its Thunder Horse field in the Gulf of Mexico. Dozens of other technology developments have come together with outside help, including a major digital twin project in the Gulf of Mexico and an artificial intelligence program that aims to prevent sand production problems in the Caspian region. But no matter how high the technology stack grows, a digital transformation ends up being a people problem. BP is keenly aware that the modern workforce—now dominated by a tech-savvy millennial generation—has expectations for management that go beyond the size of the paycheck. They want to work at companies that move fast and are willing to kill off the status quo best summarized with the phrase “We’ve always done it that way.” Cavanagh argues that BP has answered this call. “To retain and attract the best talent in the world, in our industry and outside our industry, we had to change several things about how we do work,” he said, noting that without getting this human element right, “we’re in trouble.” Transforming BP meant that executives would have to put their weight behind an effort to root out the traditional oil and gas decision-making processes that Cavanaugh recognized as “slow, and quite cumbersome.” In their place today are approaches described as “agile,” a word that has risen to become a cornerstone principle of today’s management methodology.