Integrated production models are now ubiquitous, and the software and data required to deliver optimal performance increasingly complex. The industry is no stranger to data.
You could argue, therefore, that the results of a DNV GL study published earlier this year are rather surprising. It showed that nearly half of senior oil and gas executives think that embracing digitisation will increase profitability.
Is that all? While some in the oil and gas industry are recognising the need to better manage, use and share data, there are clearly many who remain to be convinced. The impact of digitisation has been well-documented for the past decade. Those embracing data analysis and digital integration can potentially avoid higher costs, improve production efficiency, choose equipment and develop meaningful long-term planning approaches.
Moving ahead slowly
So what is preventing a faster pace of change? Should existing workforces be seen as a hindrance to change, or an opportunity? Is it as simple as cutting workers and replacing human insight with digitisation to save money? Or rather is there a stronger need for significant investment in human capital and development programmes that promote new, digital thinking? It could be argued, for example, that a digital-savvy workforce can ease any digital transformation and add value in the long-term.
The impact of oil price deflation is bound to be a key factor. It has created an incredibly competitive marketplace that puts huge pressure on margins, particularly in the supply chain. While better use of data could deliver efficiencies right across the upstream value chain, the whole process could be viewed as a distraction, or an unpalatable investment cost.
This is a view often heard by Scott McClurg, head of oil and gas at HSBC Corporate Banking, when visiting clients. “Many oil and gas companies are realising that insight is power,” he says. “But taking advantage of data analytics, big data or other digital control systems is not a natural, or straightforward, step for most.”
That downward pressure on margins is why the sector faces a constant battle to reinvent itself. For many, the path to greater efficiencies and a more future-fit business will probably come from within, according to McClurg. “The everyday insights that can be taken from data analytics could be the difference between leading the next wave of industry innovation and being left behind,” he says. “The starting point is almost always
discovering what differentiates your business and how change can support the industry.”
Cost effective exploration
Minimum-facility platforms continue to be used as a way of achieving cost-efficient exploration for marginal field developments, particularly in the Gulf of Mexico, the Arabian Gulf and the North Sea, and McClurg understands the appeal. “By having the platform unmanned, you reduce the risk to personnel, while also keeping costs down,” he says. “They are kept simple by design and focus on necessary equipment only, which means they require minimum manual operation and maintenance.”
As well as exploration, measuring and monitoring production has always been an important cornerstone of the energy sector, whether it is the use of sensors or machine-tomachine communications. However, McClurg argues that this has not always been incorporated into strategic business thinking. He says, “As technology has moved on, there have been cases of standalone tools and analytics being boltedon to improve performance. What companies are doing now is incorporating it much more holistically into their processes, which is positive for the industry.”
According to McClurg, oil and gas firms investing in digital technologies, data analytics and optimisation to support the development of operational insights is a “nobrainer” and a move that will “differentiate the winners from the losers.”
He adds: “Advances in technology offer oil and gas companies the opportunity to systematically and safely complete work, especially where it is otherwise considered dangerous or high-cost.”
But how do oil and gas companies maintain and accurately apply insights in a commercial context?
“Often, efficiency can be lost if systems aren’t adequate enough, or workflow and the lack of end-to-end integration causes a hindrance,” says McClurg. “The technology itself, and its advancement, is still vital to support the development of the operational insights it provides.”
The benefits of automation
Automation has already led companies to rethink operational strategies, argues McClurg. “Automation can, for example, help combat the skilled labour shortage being felt by the energy sector. Companies have already
started implementing automation or digitally connected infrastructure.”
The hope is, unsurprisingly, that this will help increase productivity and efficiency. Having easier, quicker and more efficient access to data and real-time information regarding operations and maintenance will help the industry improve production levels.
The argument for automation is compelling. “The beauty of data in the context of automation and integration is that it allows for a variety of different solutions to be formed,” McClurg adds. “Co-ordinating the flow of data between operators and suppliers, and within different departments at the operator, will also be important for progress to occur at a steady pace.”
Does automation spell the end of potential employment opportunities and the need for skilled industry workers? McClurg doesn’t think this will necessarily be the case. He says, “Whilst technological advancements
may see some workforces cut, it also offers the opportunity for employees to take on new, more skill-orientated jobs. Automation will require human involvement in maintenance and engineering, as well analysis of new and higher volumes of data generated.”
McClurg points to the Underwater Unmanned Vehicle (UUV) market as an example of a sub-sector reaping the benefits of technological advancements and the application of real-time data analytics. The market itself is predicted to grow to USD5.2 billion by 2022, according to a 2017 Research and Markets report. It is broken into two sub-categories including Autonomous Underwater Vehicles (AUV) and Remote Operated Vehicles (ROV). ROVs rely on the skills of its surface pilot to complete complex underwater activities, whereas AUVs rely solely on high-level programming and orientation technology.
McClurg believes advancements in technology is seeing AUVs becoming more and more reliable, with new algorithms designed to navigate strong currents more effectively. “The benefit of an AUV over an ROV is that control systems on board the AUVs can react far quicker than a human pilot to the conditions experienced subsea and, therefore, provide a more stable platform from which to gather data,” says McClurg. “They can beam back live data to be recorded and analysed. You can compare it to the use of airborne drones used for surveying. They too reach areas humans cannot and provide hard pieces of conclusive data in the form of video and photographs which trumps a person’s opinion.”
Digital tools can give oil and gas companies a connected view across various business units, sites, and divisions. This approach has been evident recently with General Electric (GE) focusing on this from the expertise it has from the healthcare side of its business. Last year the MIT Sloan Management Review analysed GE’s expansion into industrial analytics. The company is known to have put sensors on gas turbines, jet engines, and other machines, connecting them to the cloud and analysing the resulting flow of data.
The reason? To identify ways to improve machine productivity and reliability. GE applies a cross-pollination effect, using technical assets and analytics and big data to make strategic decisions in different businesses. McClurg views this as a sign of things to come. “The oil and gas industry is starting to integrate massive amounts of information to help decide how best to mine all of it to deliver the lowest cost of production and highest levels of utilisation of assets,” he says.
There is another industry too, that has been adopting technology successfully in this way. “The automotive industry has already begun adopting technology that directly impacts efficiency,” says McClurg.
“Volkswagen is an example of one where the idea is ‘lose the spanner and improve efficiency’. It’s using sensor technology to identify issues before a person can. The cars are constantly assessing performance and
reports data directly to the garage if there’s a problem.”
Real-time streaming data from rigs can be compared with historical drilling data to help predict and prevent problems and better understand operational risks. The merger of big data and cloud-based analytics can help
the oil and gas industry shift from a mindset of increasing production to one of maximising productivity, lowering costs while maintaining operating flexibility.
McClurg believes oil and gas firms will soon value data as much as drilling. “It’s about getting more bang for your buck, which is what the industry is crying out for.”
Future Oil & Gas – an oil and gas event on Disruptive Technology and Innovation takes place in Aberdeen on 12-13 June.