Energy Evolution

Energy evolution

Oil and gas companies are using new business models and digital infrastructure investments

to reinvent themselves as broad-spectrum energy providers.

By Brent Potts

When, after 45 years, the Norwegian energy corporation Statoil officially dropped “oil” from its name this spring and became Equinor, company leadership made clear this wasn’t a hollow rebranding gesture or a disavowing of the company’s past (and present) as an oil and gas producer. Rather, it was a statement about where they see the energy business heading, and what it will take to thrive there.

Equinor President and CEO Eldar Sætre said it was time for the company’s identity to evolve in step with changing customer expectations and shifting competitive priorities. “Looking towards the next 50 years, reflecting on the global energy transition and how we are developing as a broad energy company, it has become natural to change our name,” he said. “The name Equinor captures our heritage and values, and what we aim to be in the future.”

Equinor is far from alone among energy enterprises that, name change or not, are aiming to reinvent themselves on the fly to remain relevant and profitable in a business driven by the end-consumer’s growing preference for suppliers that can deliver choice, convenience and service, rather than just a commodity. In what Equinor Board Chair Jon Erik Reinhardsen called “the biggest transition our modern-day energy systems have ever seen,” even staid oil and gas standard-bearers are exploring “energy as a service” business models that allow them to compete as part of a broader “network of networks” ecosystem, while also expanding their supply portfolios with renewable and non-renewable sources. A few examples:

• This May, oil and gas supermajor BP invested $20 million in ultra-fast-charging battery developer StoreDot as part of its “electrification strategy.” Earlier this year BP invested in Freewire Technologies, which makes mobile rapid-charging systems for electric vehicles.

• In late 2017, another oil and gas supermajor, Royal Dutch Shell, announced plans to develop electric vehicle fast-recharging outlets at 80 gasoline/diesel filling stations in 10 European countries, joining an effort spearheaded by IONITY, a partnership of European auto manufacturers, to develop a retail EV fueling and convenience ecosystem from the U.K. to Slovenia.

• Another oil and gas giant, France’s Total, has been on a solar spending spree of late, acquiring battery maker Saft and before that, module manufacturer SunPower, as part of a plan to develop and deliver integrated solar energy services.

• Even before it changed its name, Statoil was aggressively building an offshore wind power portfolio as part of a broader plan to invest 15 to 20 percent of its total capex in new energy solutions by 2030. 

Wise and Agile

For oil and gas companies to successfully reinvent themselves as broad-spectrum energy companies and as role players in energy-as-a-service ecosystems – and to do so without neglecting their traditional lines of business – they need to be wise about the markets they target, the partners they choose and the investments they make. They also need to be agile, with the ability to disrupt and the ability to respond to disruption. That comes by investing shrewdly not just in physical infrastructure but in digital infrastructure as well.

A new wave of data-powered digital tools, many of them cloud-based, is giving oil and gas concerns the agility to quickly and successfully optimize existing processes and assets (something at which they have proven to be very good), extend their business processes to capture new sources of value and transform business models and the value chain by equipping them with tools to explore new channels and revenue models.

To bring a new business model to life, the first order of business is to put in place a digital foundation. That foundation includes a platform capable of quickly processing, analyzing and learning from massive amounts of data, one that integrates across the enterprise and that seamlessly connects producers, suppliers, end-users and other partners in real time, across an entire enterprise or ecosystem. From there, it’s a matter of building out and shaping the day-to-day business “experience” the ecosystem or enterprise delivers, not just to the end-consumer, but to others that are part of that ecosystem or enterprise. A suite of intelligent apps, powered by technologies such as blockchain, machine learning and artificial intelligence, gives a company the means to deliver a seamless, end-to-end experience. It also enables it to leverage the data that it and its partners collect to detect patterns, predict outcomes and suggest actions. 

So not only can an electric vehicle driver who’s roadtripping from Brussels to Budapest schedule recharging stops in advance using an app on their smartphone, but a convenience store operator tied to that charging network can use data to learn what EV drivers tend to buy during their charging stopovers. Meanwhile, the charging station operator can apply predictive analytics to a different set of data to identify and address potential equipment maintenance issues before they become a problem. In this way, blockchain capabilities can provide a secure, distributed system of record to aggregate, publish and share transactions involving multiple parties in the ecosystem. 

Solar, wind, EV charging. Upstream, downstream, midstream. Whatever business model a company chooses to explore, digital systems like these – and the data they collect, store and analyze – provide a single source of organizational truth for the parties involved, and the infrastructure with which to rapidly develop the kinds of “experiences” that today’s consumers have come to expect from an energy company.

Brent Potts is senior director of global marketing, Oil and Gas, at SAP.

 

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