Digitally powered, transition ready: Building future-fit energy systems

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How can energy companies stay resilient today while preparing for tomorrow?
Frank Schmidt, CGI’s Vice-President for Global Energy, joins host Angelina Bakshi to discuss hybrid portfolios, digital intelligence, and hydrogen strategies that drive resilience and ROI in a volatile market. 

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Episode Transcript

Angelina Bakshi (00:05):
Hello, good morning, good evening, good
afternoon.
Wherever you're joining us fromtoday, welcome to Energy
Transition Talks.
My name is Angelina Bakshi andwe're here to continue the
conversation for part two ofTransforming Energy Systems
Maximizing Return on InvestmentThrough Smarter and Secure

(00:25):
Infrastructure.
It's a pleasure for me tointroduce my colleague Frank
today for the conversation.

Frank Schmidt (00:32):
Thanks, thanks for having me.
My name is Frank Schmid.
I'm vice president for theglobal energy sector within CGI,
sector within CGI and, in thatrole, supporting primarily one
of our larger oil and gasclients we have already for over
30 years, and also supportingother oil and gas clients that

(00:54):
we have on the global scale.

Angelina Bakshi (00:56):
Integrating legacy and low carbon systems,
and so how can companiesoptimize both traditional and
renewable assets withoutcreating cost duplications?

Frank Schmidt (01:09):
And that's a good question, because cost is of
essence in nowadays energy world.
So if you look at energycompanies, they are increasingly
adopting hybrid assetstrategies that integrate
traditional and renewablesystems through digital
platforms.

(01:30):
First of all, I see the use ofdigital energy systems modeling,
which enables better simulationand optimization of entire
portfolios and that avoidsduplication in infrastructure
and operations.
A second one I see is edgecomputing and AI that allows for
real-time performancemonitoring across both the

(01:53):
fossil side and the renewableasset side and that identifies
synergies and reducingredundancy.
And a third one I see is theuse of hybrid energy systems and
, for example, think aboutcombining solar and battery

(02:17):
storage or LNG with hydrogen,which ensures reliability while
minimizing overlapping capitalexpenditure.
And one of the examples where Ithink CGI is very knowledgeable
, due to our long-termexperience in the subsurface and
wells domain, is optimizing theworkflows in that subsurface
and wells domain, but also usingthat technology that we used to

(02:42):
use to get oil or gas out ofthe ground, but use same
technology to store carbon orstore hydrogen in that same well
.
So those are all optimizationefforts and potential drivers

(03:02):
that we see in the market thatare very relevant.

Angelina Bakshi (03:07):
So what are the financial risks and
opportunities of mixed fuelportfolios?
You know, we're seeing a lot ofLNG, we're seeing a lot of
hydrogen.

Frank Schmidt (03:16):
Yeah, if you look at the opportunity side, I
think that LNG providesshort-term reliability and
arbitrage potential, whilehydrogen offers long-term
decarbonization.
Upside, another opportunity isthe flexible contracting and
portfolio optimization which canimprove margins and reduce

(03:38):
exposure to spot marketvolatility.
And a third one I see ishydrogen integration into LNG
infrastructures blending,co-locate, which can reduce
transition costs significantly.
On the risk side, I see, forinstance, high price volatility

(03:59):
in LNG markets, an uncertainhydrogen economic situation, and
that on its own can strainbalance sheets.
And another one is regulatoryshifts in carbon pricing which
may impact asset valuations, andasset valuation for oil and gas

(04:21):
companies is of crucialimportance.

Angelina Bakshi (04:24):
So I want to talk a little bit more about
something you've touched upon,but around digital
infrastructure at scale.
So we've heard about digitaltwins.
How are terminals, grids,pipelines being modernized to
reduce downtime costs andimprove their asset life cycle?

Frank Schmidt (04:47):
Well, what you see in that modernization effort
is that oil and gas companiesand the energy sector is
focusing on a few importantdrivers like predictive
analytics, virtualization, theuse of digital twin and IoT
sensors, which improves assetlife cycles and reliability.

(05:08):
Asset life cycles andreliability so that is what you
see happening all over thesector and it goes across all
assets, offshore, onshore, also,in the chemicals side of things
, you see that these, let's say,drivers are used more and more.

(05:33):
And let me give one example.
Imagine you need to go with aHaley to a rig to do a pipeline
inspection If that same pipelinehas IoT equipment, so you can
do it remote, or you can havesomeone from the rig do the
inspection with remote supportthat is, for instance, not on

(05:59):
the rig.
That saves a lot of money andit's faster and it's cheaper.

Angelina Bakshi (06:06):
So you really are getting a return on
investment fairly quickly here.

Frank Schmidt (06:11):
Yeah, absolutely, it's very visible.

Angelina Bakshi (06:14):
That leads me to a question that I often hear
from executives of you know whatare the key performance
indicators that prove the costefficient effectiveness of these
digital investments?
Because they can be quitesignificant.

Frank Schmidt (06:41):
Absolutely so.
Currently, if you look in theoil and gas sector and you focus
on that side, you could, forinstance, mention energy
production efficiency, whichmeasures the actual output
versus capacity.
More into the utility side, youcould look at cost per kilowatt
hour or megawatt hour, whichtracks operational cost per unit
of energy.
A traditional one, but stillreally important, is system
availability, so the uptimepercentage across an asset.

(07:03):
More environmental is carbonintensity, so emissions per unit
of energy produced, forinstance, and also a traditional
one is the return on investment, so the financial return from a
digital upgrade, for instance,and these are a set of KPIs that
you see used a lot, and theseKPIs help quantify both

(07:27):
financial and sustainabilityimpact within the oil and gas
sector.

Angelina Bakshi (07:33):
Really appreciate your commentary and
description about some of thekey performance indicators that
oil and gas executives can focusin on when we talk about
building resilient and adaptivenetworks, because the reality is
that we live in a fairlyvolatile place and energy

(07:54):
security is top of mind for alot of companies and governments
and individual citizens.
So how do geopolitical risksand climate volatility create
hidden cost exposures?

Frank Schmidt (08:08):
Yeah, that's a very good question.
Let me start by saying thathidden exposures arise from
supply chain fragility,regulatory shifts and
infrastructure stress, and letme give you three examples of
those First geopoliticaltensions, and in particular

(08:31):
those ones, disrupt fossil fuelsupply routes and renewable tech
sourcing, so that's animportant one.
A second one is the climatevolatility that increases asset
damage risk and increasesinsurance costs for our clients.
And a third one iscybersecurity threats to energy

(08:54):
infrastructure, which cantrigger and cascade failure,
which obviously is of high risk.
Ways to mitigate are, forexample, diversification of the
portfolio, keeping strategicreserves and that's, by the way,

(09:14):
also an important KPI for oiland gas clients, because the
stock they have is also valuedin regards to their strategic
reserves.
And a third one is the digitalresilience.
If a company is digitalresilient, the risk of

(09:38):
cybersecurity threats isminimized, and that's why you
see a lot of oil and gascompanies spend a lot of time
and effort into thecybersecurity side of things.

Angelina Bakshi (09:52):
I guess one of the next questions I have is how
are public-private partnershipsde-risking investments and
accelerating cost-effectiveenergy security?

Frank Schmidt (10:02):
Yeah, this is a very important one again.
And why?
Because if you look atpublic-private partnerships,
they are unlocking capital andinnovation right.
So when governments providepolicy support, subsidies and
permitting acceleration, privatefirms can bring capital and

(10:24):
expertise for the long term.
And that combination is ofgreat importance to the sector
and to us as a whole.
And we need these collaborativemodels and cooperation,
especially in hard-to-abatesectors like chemicals, hydrogen
, to enable sharedinfrastructure and risk pooling

(10:47):
to get us through the energytransition.

Angelina Bakshi (10:49):
Let's see all the time we have today.
I really enjoyed theconversation about our
transforming energy systems andmaximizing the return on
investment through smarter,secure infrastructure.
Really fascinating thingshappening in this space.

Frank Schmidt (11:05):
Thank you for your time.
Many thanks, angelina, forhaving me, and have a great rest
of your day.