In recent years, the oil and gas digital transformation wave has been gaining momentum. The sector is leveraging increasingly sophisticated digital oil and gas technologies to streamline operations.
For example, companies are integrating smart devices and hardware (such as AI-powered sensors and robotics) into their operations. These devices are cloud-connected, meaning companies can monitor equipment in real-time and collect valuable data from their machines. The data sets collected by these smart devices provide oil and gas companies with detailed day-to-day analytics and useful insights.
These developments are powerful advances. However, the increasing digitalization in oil and gas brings volumes of digital oil and gas data into play. This data needs an effective and secure backup and archiving process for two key reasons. Firstly, to act as insurance against the risks posed by cyber-attacks on oil and gas companies. Secondly, to meet the regulatory requirements put in place by the authorities.
Let’s dig deeper into the oil and gas sector and discover how data backup solutions can assist the industry.
The Digitization of the Oil and Gas Industry
Oil and gas companies play a vital role in the global economy. As a result, innovation is happening fast. Frost & Sullivan predicts that the total oil and gas automation market is expected to reach $24.63B by 2025, with a compound annual growth rate of 7.5%.
- 44% of oil and gas companies consider the adoption of digital oil and gas tools and processes as their most important objective for digital transformation.
- 52% said digital tools are expected to assist in efficient operations.
- Oil and gas companies, which usually operate physically in remote locations through digital oil and gas tools, are now allowed to operate their machines remotely.
Digitization in the oil and gas industry is valuable because the sector depends on data sets for its business activities. Oil and gas companies depend on external data to understand market trends and price changes. But more importantly, they store and leverage a great deal of internal data. Machines and equipment that use AI-powered smart sensors and robotics collect data in real-time as core operations — such as drilling, exploration, or production activities, oil recovery, and engineering technology production — occur.
These volumes of oil and gas data are utilized by employees and executives in real-time, as the internet-connected devices transmit the data into the company’s internal network and its cloud platforms. Information gathered from these smart devices helps in a range of ways. For example, companies can analyze the volume of work they are executing on an average day, enabling them to take a certain project or machine and set goals.
The downside? All this data collection means that oil and gas companies now have to manage thousands or millions of logs. They are sitting on data lakes of sensitive information. Though this newfound digitization brings operational efficiencies, sitting on such a huge volume of important data can be a time bomb, considering the rise and rise of cyber-attacks on oil and gas companies.
Cyber-attacks on Oil and Gas Companies
This increased digitalization – and an absence of regulations on cybersecurity standards and investments – has seen cyber-attacks on oil and gas companies become alarmingly prevalent in recent years. And without sophisticated data management in oil and gas companies, such attacks can lead to massive data and financial losses.
A recent survey echoes this belief from stakeholders in the industry, with 85% anticipating that cyber-attacks in the sector will likely cause operational shutdowns in the next two years. Meanwhile, 84% expect that such attacks will cause damage to energy assets and critical infrastructure. According to S&P Global, cyber-attacks in the sector most commonly aim to hit organizations’ assets and infrastructure. This kind of targeted attack accounted for a third of all incidents between 2017 and 2021.
These cyber-attacks on oil and gas companies brought the cost of data breaches in the global energy sector in 2021 to USD 4.65 million – making it one of the five industries suffering the highest financial impacts from breaches. In the US alone, a quarter of the country’s 150 biggest energy companies are “highly susceptible” to a ransomware attack, according to a 2021 report by cybersecurity firm Black Kite. Among these energy companies, oil and natural gas operations are at the highest risk due to out-of-date systems.
One of the biggest cyber-attacks faced by the gas industry was the ransomware attack on the systems of the US-based Colonial Pipeline, which saw the hackers steal 100 gigabytes of company data, resulting in the company paying the hackers a ransom of USD 4.4 million.
This attack prompted the reintroduction of the Pipeline Security Act in the US Congress. It is a proposed legislation that aims to delegate the Transportation Security Administration to enforce security measures on oil and gas companies against various threats, including cyber-attacks. The legislation failed to get a majority vote in the House in 2019 and was revisited in mid-2021 following the Colonial Pipeline incident. It is expected to be reviewed by the US congress and senate in 2022 before it becomes law.
However, while the government works on these additional legislative protections, more cyber-attacks are happening. In April 2022, hackers targeted US liquefied natural gas companies, which led to hacking computers of more than 100 employees in 21 companies, including Chevron, Cheniere Energy, and Kinder Morgan.
In other areas of the globe:
- Saudi Aramco dealt with a cyber-attack that led to 1 terabyte of data leaking and hackers demanding a USD 50 million ransom.
- Three organizations in Europe–SEA-Invest, Oiltanking Deutschland GmbH & Co. KG–are the most recent cyber-attack victims in the industry in 2022. Their IT systems were severely impacted by the cyber-attacks and had to be shut down. The company did not disclose the full economic and technological impact of the attack, but admitted to halting some business activities and facing operational delays.
- Two German oil companies — Oiltanking GmbH and Mabanaft GmbH — experienced a cyber-attack that affected the normal operations of their IT systems. Although the true ramifications are closely guarded, Mabanaft’s subsidiary, which operates all the company’s terminals in Germany, was unable to meet certain commitments around the time of the attack.
- The German unit of the Russian energy company Rosneft was also hit by a cyber-attack, with the hacker capturing 20 terabytes of data. The company brought its IT systems offline after the incident, halting some parts of its operations.
Cyber-attacks on oil and gas companies can be catastrophic. They lead to operation shutdowns, delays of important deliveries, potential environmental disasters, and damage to the economy. This is why companies in the sector should have an additional layer of protection guarding the massive data sets they collect and leverage daily.
Regulations in the Oil and Gas Industry
Cyber-attacks on oil and gas companies are a huge challenge for the sector. The other major category of risk they face is compliance risk.
Oil and gas companies must secure operational permits from local, state, and federal agencies before they begin operations. These permits require numerous documents, such as blueprints, project plans, and environmental protection strategies, which must be submitted to the authorities for review. Once government agencies have granted the permits, oil and gas companies are required to create reports for regulatory compliance purposes. All of these documents and data forms are subject to a variety of regulations:
The National Environmental Policy Act (NEPA)
The NEPA was formed to give federal agencies the authority to oversee the environmental impacts of organizations’ actions and decisions. Part of federal agencies’ duties is to systematically assess the environmental impacts of companies’ actions or projects.
This federal action focuses on overall environmental quality. In relation to oil and gas companies’ drilling and exploration regulations, the regulation will look into the potential impacts of oil and gas development on marine mammals, birds, fish, and shellfish, along with these animals’ natural habitats, before allowing a project to proceed.
The Clean Air Act
The Clean Air Act, which is overseen by the U.S. Environmental Protection Agency (EPA), intends to regulate air emissions from oil and gas operations and machines, such as refineries and fuel distribution systems, including pipelines, trucks, and fuel dispensing facilities or service stations.
In late 2021, the EPA also proposed new regulations that would see additional policies on methane reduction and other air pollution from the oil and natural gas industry.
The Clean Water Act
This regulation requires oil and gas companies to secure permits in relation to their industrial pollution discharges on waterways. The policy sets a limit on the amount of pollutants allowed in receiving waters.
Safe Drinking Water Act
This policy gives the EPA authority to regulate the underground injection of fluids (including solids, liquids, and gases) to ensure that the underground drinking water of citizens remains safe for consumption. This involves setting minimum requirements “to prevent underground injection that endangers drinking water sources.”
Many states require oil and natural gas drill operators to obtain air and water emission permits before construction and drilling operations begin.
The Resource Conservation and Recovery Act (RCRA)
This regulation gives the EPA the authority to control hazardous wastes from industrial operations throughout the waste’s life cycle, including generation, transportation, treatment, storage, and disposal of hazardous waste. The RCRA promotes waste management practices that are environmentally safe and maximizes the potential reuse of resources. This includes clauses specific to wastes from the exploration, development, or production of crude oil or natural gas.
Natural Gas Pipeline Permitting Reform Act
This legislation calls for natural gas pipeline companies to file for a permit to construct natural gas pipelines, which is required under the NEPA law. Under this policy, any gas company must provide complete project details, including pipeline routes, to local, state, and federal regulators. Following other local permit approvals, the Federal Energy Regulatory Commission will be in charge of releasing the final permit for the pipeline project.
Oil and gas companies also must compile completion reports for testing, evaluations, and operations related to oil or gas drilling. Because of the digitalization in oil and gas, companies now usually store these reports on their computers and on their preferred cloud storage platforms. These reports track how machines operate, the materials used in drilling and production operations, and the impacts on machine components, such as temperature and oxygen levels.
Oil companies are also required by US federal laws to initiate reporting to government agencies, such as the National Response Center, in case of a catastrophic event, like oil spills. Such a report entails providing regular notice and updates based on data the company has gathered, such as the types of chemicals involved, the progress on the clean-up/recovery efforts, and more.
In a highly-regulated industry like oil and gas, data retention is of utmost importance. According to the Code of Federal Regulations, oil and gas industry data should be retained for the following durations:
- Corporate and general records – 5-6 years
- General accounting records – up to 10 years
- Plant ledgers and depreciation records – up to 25 years
- Tax records – 2-3 years
Therefore, it is imperative to have effective data management in oil and gas companies. Loss of data — whether accidental, human-triggered, or through cyber-attacks on oil and gas companies — impacts a company’s bottom line and reputation.
Backup and Archiving for the Oil and Gas Sector
Backup and archiving is a significant component of the oil and gas industry’s compliance and cybersecurity. Without it, oil and gas companies lose the ‘safety net’ protecting them from data loss and regulatory requirements.
Dropsuite specializes in helping oil and gas firms keep highly confidential data safe, secure, and protected. Dropsuite uses a custom cloud-based solution to efficiently backup, store, preserve and, if necessary, easily restore data at a moment’s notice across a range of ecosystems.
Our easy-to-use, secure, and scalable backup and recovery tools not only provide business compliance; but enable business continuity. With Dropsuite, oil and gas firms have the ability to set retention rates that are as long as necessary. This enables companies to address lawsuits and discovery processes by putting legal or time-based holds on Microsoft 365 and Google Workspace, where pertinent data is stored.
Oil and gas firms can easily set up an automated backup and/or archiving system, even with a minimal IT budget. Dropsuite provides industry-leading backup and recovery solutions for a very low cost-per-seat license, coupled with military-grade encryption that ensures data security both in transit and at rest.
To learn more about how Dropsuite contributes to efficient digital oil and gas operations and assists in mitigating cyber-attacks on oil and gas companies, talk to our experts here.