U.S. energy executives are looking to emerging technologies like artificial intelligence and intelligent automation to improve business operations, but do not expect it to eliminate jobs, according to KPMG’s 2018 U.S. Energy Outlook Survey. In fact, 51 percent see technology replacing tasks so employees can focus on strategic activities, and 32 percent plan to use technology to improve products and services.
“Emerging technology is disrupting the status quo, and concepts around digital labor and cognitive technology are being explored industry-wide, resulting in concerns over how the workforce will be affected,” said Regina Mayor, Global and U.S. energy sector leader. “However, utilizing innovative tech to alleviate mundane and time-consuming tasks will put organizations in a strong position to make big change as they operate with a more efficient workforce.”
On the topic of new technologies, the KPMG survey of 92 energy execs shows only mild concern over the impact of autonomous vehicles on the energy industry. Sixty-five percent of respondents say autonomous and electric vehicles (AV/EVs) won’t disrupt their businesses. In fact, the majority (59 percent) don’t expect business model changes due to growing adoption of AV/EVs to occur for at least five years, if at all.
Focus on Core Business a Priority
The survey points to a growing sense of optimism among energy executives, with 59 percent expecting an improved U.S. economy in the next year. Eighty-three percent plan to increase or maintain headcount. When asked about top strategic priorities over the next year, 21 percent cite reduction of cost structure, 21 percent cite acquisition of competitors or relevant businesses, 16 percent plan to invest in new products or geographies, and 11 percent point to reducing operational complexity.
However, the executives do see barriers to achieving growth over the next year: 38 percent have concerns over volatile commodity/inputs, followed by 15 percent who cite a lack of customer demand, and 13 percent who identify regulatory constraints as a hurdle. While there is still concern over commodity prices, expectations for 2018 are higher: 45 percent estimate the average price of Brent Crude oil to be between $50-$59, and 49 percent expect to see prices in the $60-$69 range.
Additionally, deal activity remains high, with 54 percent of respondents indicating a likelihood to be involved in a merger or acquisition this year. Twenty-nine percent indicate consolidation of core businesses as the biggest driver of M&A activity, and only six percent say bankruptcies or restructuring are an M&A driver.
On the renewable energy front, while renewables are making a strong appearance, executives indicate the future of energy is a mix. The top renewable sources for investment are solar (14%), offshore wind (7%) and biomass (7%). However, 54 percent of respondents say they have no plans to invest in renewables, and 44 percent believe we will achieve a 50 percent renewables footprint by 2035, while 30 percent say never.
“The industry is making great strides to add renewables into the mix, but power is a growing demand for our world,” said Mayor. “To achieve a sustainable future, we need to create an energy ecosystem that includes both renewables and fossil fuels, and looks at the less mature and untapped resources that will allow us to harness energy globally for the long-term.”
For more information, visit the KPMG Global Energy Institute.