It is time to put a common misconception to rest. The oil and gas industry is not lagging behind other industrial sectors in the race toward digitalization. We are leading the charge. This confidence is born from our status as one of the earliest adopters of digital technologies to efficiently transform complex reservoirs into revenues.
However, two things have happened since our industry first started adopting digital in its original form several decades ago. First, oil and gas businesses are experiencing new pressures from the downturn, which has placed increased focus on productivity and the navigation of diverse energy dynamics. Second, the Industrial Internet of Things (IoT) or Digital 4.0 technologies have developed at an increasing rate, with the democratization of cloud computing and the advancements in data analytics, artificial intelligence (AI), and machine learning creating new opportunities beyond the consumer space. The resulting environment is one in which the oil and gas industry must consider the role these new digital technologies will play in navigating shifting industry dynamics.
While the industry is at a prime point, testing and beginning to put to work new digital ideas, the draw to return to age-old, tried and tested methods can be tempting. Unlike vehicle manufacturing, we are truly a process-driven industry where simulation, data measurement, and modeling are at the core of everything oil and gas does because everything is connected. We must move forward to adopt industrial IoT technologies that optimize across assets, processes, people, production, and the reservoir and wells by delivering answers in real time. Harnessing data that have been stranded will improve reliability, optimize production, and transform overall operations beyond what existing, siloed software solutions were able to deliver.
The value in data analytics at scale across an enterprise is visualization of historical and real-time performance across an entire business, from the reservoir and well to the refinery. Connecting digital across oil and gas businesses will be a key topic at the inaugural ENGenious conference and exhibition taking place in Aberdeen, 4–6 September 2018. Four key pillars of activity will be on the agenda: data analytics, automation and control systems, robotics, and smart communications. While the event will explore what innovation means for the onshore and offshore upstream oil and gas industry, it will embrace the learnings and experiences from a diverse range of industries. Using an ecosystem approach, this will create an enlightening forum to encourage cross-pollination of ideas and information exchange.
Moving to the Cloud
While the oil and gas sector leads innovation in many ways and has been positively utilizing and capturing data for quite some time, there is a clear need to be more agile and embrace cloud-based solutions if new capabilities are to be realized. The “old” digital approach was all about capturing data and using disparate software solutions to apply some analysis. However, without cloud computing, there can be no real analysis at-scale and spanning an enterprise.
The ability to ingest and analyze hundreds of millions of data points per day and provide real-time, actionable insights from that data requires the cloud-based, Industry 4.0 solutions now being adopted across the industry. In the case of reservoir and well planning, connecting subsurface modeling data with real-time production data can create a loop of information that intelligently improves modeling and informs small shifts in extraction techniques.
However, it is important to remember that putting industrial data in the cloud is an incremental step. In my view, where the data ultimately sit is a small part of the story. Instead, much like a personal smartphone, it is about how the cloud architecture looks, feels, and behaves. It is seeing faster time to receive information, the ability to connect operational data across silos, and apply analytics and automation across big data sets to cut time to insights from weeks down to seconds.
The Future is Here
Beyond the cloud-based software story, digital has an interesting hardware story. One of the things we will explore at the ENGenious event is how the buzzwords we hear bandied about are actually impacting our industry. Aerial drones, robots, and 3D printing are no longer the tools of tomorrow but are rapidly emerging across a wide array of oil and gas industry operations. For example, Baker Hughes works with companies such as Avitas Systems so that industrial businesses can utilize robotics, autonomous drones, and predictive analytics for asset inspections that are less risky and more accurate that manual inspections.
A recent world-first project, involving the Oil & Gas Technology Centre, Total E&P, and taurob, in partnership with Technische Universität Darmstadt, will develop a mobile robot called ARGOS (Autonomous Robots for Gas and Oil Sites) for autonomous operational inspection of facilities on Total’s onshore Shetland Gas Plant and offshore Alwyn platform. It will perform visual inspections, read dials, measure temperature and gas concentration, and detect and navigate around obstacles, stairs, and humans. These types of innovative projects acknowledge the role technology can play in reducing the inherent risks of most manual inspection while also improving productivity.
Driving Adoption
While digital transformations ultimately depend on investment, it is the ability and, most importantly, the motivation for employees across an organization to adopt and implement new concepts and devices to improve safety and productivity, and cut complexity and costs, that will impact enterprisewide implementations.
“Where there’s a will, there’s a way,” according to a global survey by DNV GL. Confidence and Control: The outlook for the oil and gas industry in 2018 found that more than one-third (36%) of senior oil and gas professionals expect to increase spending in R&D and innovation this year, the highest level recorded in 4 years. Compared with the past 2 years, only 15% (2016) and 14% (2017) of those questioned were planning investment, which the technical authority suggests signals an imminent turnaround after 3 years of cuts and freezes. The report states that digitalization (37%) and cybersecurity (36%) will form the principal areas of R&D investment focus this year.
New technologies are often met with resistance. For employees, a new solution means letting go of conventional techniques and concepts that have become embedded in a company’s culture over time. This slow shift in mindset may be closely linked to investment decisions, which are habitually made in 10-year increments and can potentially hold back the full suite of benefits that digitalization promises.
These shifts in operations will be largely driven by a fundamental move in management style that pivots on a risk-free attitude. Digitally transforming an enterprise requires different instrumentation and transparency in the way a business is run. It requires a shift in culture. The need to adopt more holistic and collaborative approaches to digital strategies will help maximize productivity while cutting costs.
The rewards are clear. Research from McKinsey suggests that the effective use of digital technologies in the oil and gas sector has the ability to create additional profits from existing capacity. A recent report suggested digital technology could reduce capital expenditures by up to 20% and operating costs in upstream by 3–5%.
The industry now is different from 5 years ago. We went through a learning exercise and, while painful, it was definitely necessary. We now see different behaviors and different management structures and systems in place, which make the industry attractive for new talent.
Success is not about capturing our fragilities at any price. It is about making rational, data-driven decisions to continuously drive costs out of the value chain while improving productivity. The oil price may continue to go up and down, but with greater digital transformation we’ll be prepared for the future and have opportunities to maximize potential.
Visit www.engeniousglobal.com for more information about the event.
| Matthias Heilmann is co-chair of the upcoming ENGenious conference and president and CEO of Digital Solutions at Baker Hughes. Heilmann previously served as chief digital officer, president, and CEO of Digital Solutions at GE Oil & Gas, where he oversaw the development of digital products, services, and software that deliver asset and operations optimization for the oil and gas industry and was responsible for all product lines, systems, and global operations of the Digital Solutions business unit. Heilmann has a PhD degree in finance and management accounting from the University of St. Gallen, Switzerland, and a master of business administration from the University of Saarland, Saarbrüecken, Germany. |