Share with your friends

2018 KPMG CEO Outlook: Oil & Gas

2018 KPMG CEO Outlook: Oil & Gas

Ninety-seven percent of oil and gas CEOs say new tech creates opportunity, but many unprepared to actively disrupt

michael t mckerracher

National Energy Leader, Partner, Audit

KPMG in Canada


Related content

Almost unanimously, global oil and gas CEOs see technology disruption as an opportunity — at 97 percent in a survey by KPMG International — but a significant number are finding it difficult to translate that into their own company’s operations.


Eighty-five per cent of the global survey respondents said they are piloting or have already implemented artificial intelligence (AI). Only 59 percent said they feel their organization is an active disruptor in their sector and 57 percent feel that the lead times to achieve significant progress on transformation can be overwhelming.

The survey included chief executive officers from the world’s biggest economies, and generally reflect the sentiments of Canadian CEOs to technology disruption. Canadian energy companies have started to embrace digital solutions, but are behind the curve of many other industries in adoption.

“Canadian energy companies tend to be fast followers, quick to adopt new technologies once proven rather than leaders in pioneering the new technologies, “says Michael McKerracher, National Industry Leader for KPMG in Canada.

“The large integrated oil and gas companies in Canada are tackling innovation by investing in tech start-ups and seeding research and innovation through collaborative groups such as EVOC, Energy Futures Lab, Alberta Eco-trust and COSIA, [Canadian Oilsands Innovation Alliance].”

Biggest long-term benefits of Artificial Intelligence (AI)

When asked to rank the long-term benefits to AI, global oil and gas CEOs indicate acceleration of revenue growth as number one.


“In the Canadian oil patch, technology disruption is driven more by cost efficiency — reducing the cost to produce oil and gas — rather than to drive revenue growth,” says McKerracher. “The most frequent applications of disruptive technologies are reducing back office expense and production costs in the field. Some applications provide immediate cost reductions, others are spread out longer-term.”

KPMG in Canada finds the most frequent applications of AI and digital technology in:

  1. The use of big data and analytics to uncover ways to optimize production costs, such as reducing days of drilling or completing a well.
  2. Internet of Things systems applied to field operations to enable remote monitoring and predictive maintenance while improving safety and reducing operating costs.
  3. The implementation of automation processes in the back office to reduce repetitive tasks.
Impact of AI on the workforce

Indeed, AI will change the workforce as we know it; but that change does not necessarily involve job loss. It will mean a new breed of worker will be required, just as others will be repositioned to complete new tasks.

AI will change the type of employment in the sector to be more data scientist-focused. Companies can be seen transforming the skillsets of employees to maintain and monitor digital processes and more importantly provide the analysis and recommendations that lead to cost efficiency and process improvement.

Energy executives in Canada have recognized that employees are key to unlocking maximum value from AI by guiding the organization in its application of the digital solutions. They understand the processes of the business as well as its challenges and provide the critical “know-how” to achieve maximum value from technology.

Continued confidence in the market

Globally, 85 percent are very confident on industry growth and 88 percent are as confident on their company’s growth prospects. The same cannot be said for Canadian CEOs. With the inability to build new infrastructure and our lack of access to global markets for our products, Canadian CEOs are not near as confident in their growth.

International investments in Canadian oil and gas remains relatively low. LNG Canada’s recent decision to build their LNG facility was one positive sign that has triggered some renewed interest from international firms, who are actively researching opportunities for Canadian LNG.

Divestments from international investors in recent years has provided opportunities for Canadian-owned companies to take stronger positions in Canada as well as internationally. In addition to buying companies and assets, and consolidating and selling non-core assets, Canadian companies have taken the opportunity to buy out international joint venture partners.

Going for growth through M&A

As part of their growth strategies, 83 percent of global oil and gas CEOs anticipate a moderate to high appetite for M&A activity over the next three years, largely driven by the need to reduce costs through synergies/economies of scale; a speedy transformation of business models; increased market share; and low interest rates.


The Canadian outlook on mergers and acquisitions is positive. Activity is largely asset driven, with assets changing ownership due to anticipated synergies with companies’ existing portfolios or other perceived value. Companies looking to sell their non-core assets have interested buyers.

Potential risks to growth

Among the biggest threats to growth perceived by global oil and gas CEOs, 23 percent point to emerging/disruptive technology risk and 20 percent say environmental and climate change risks are most concerning.

In Canada, the greatest risks to growth are market access as pipeline capacity is surpassed and rising U.S. output dampens demand for Canadian crude, an uncertain project approval process at the federal level, and a continued lack of international investment.

“Longer term, I think Canadian CEOs are considering the threat of reduced demand for hydrocarbons brought about by emerging disruptive technologies — like growth in renewable energy sources and electric vehicles — driven as responses to climate change. Canadian oil and gas companies are investing in technology, to continue to reduce their costs to produce, but to also continue to be less disruptive to the environment.” said McKerracher.

Download the key results from the global oil and gas CEO outlook.

© 2020 KPMG LLP, a Canada limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

KPMG International Cooperative (“KPMG International”) is a Swiss entity.  Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.

Connect with us


Want to do business with KPMG?


loading image Request for proposal