Digitalization and automation were key topics in the panel and technical sessions at this year’s Offshore Technology Conference (OTC) as the iconic event celebrated its 50th anniversary. More than 59,000 attendees participated in the conference, which was held 6–9 May in Houston.
OTC launched its golden anniversary with a wide-ranging panel discussion on the current viability of the offshore sector and how digitalization will change it in the future.
Total’s Energy Outlook 2040 proposes two distinct scenarios of the energy future: a momentum scenario, in which oil demand is dominated by transportation and petrochemicals, and a rupture scenario, which sees a massive shift in public policy and the growth of renewables. Either way, “our industry has a major role to play in climate change issues,” said Arnaud Breuillac, president of exploration and production for Total.
The global energy mix is changing, he said, but the question is how rapidly, especially regarding use of electric vehicles and the growth of electrification in developing countries. Given the projected population rise and the fact that 1.5 billion people do not have access to energy now, increased use of natural gas and renewables is the “right approach to stabilize the energy system,” Breuillac said. The 21st century will likely be the “century of electricity,”
he added.
“It is clear that the pace of change does not lie entirely in our hands,” he said about the use of hydrocarbons in the future, but will be influenced by the public and policymakers as well. For now, Total is pursuing projects on the low end of the cost curve while trying to reduce its carbon footprint from production to customer delivery.
Whether the industry should pursue a future of reduced hydrocarbon production and use appears to be a dilemma, said panel moderator Scott Tinker, director of the Bureau of Economic Geology at The University of Texas at Austin. If climate change is the worst problem, then reduced hydrocarbon use could be part of the solution; but if poverty is the globe’s biggest issue, then hydrocarbons are undoubtedly part of the solution.
Although the industry “does produce a lot of CO2,” Tinker said, access to readily available and affordable energy also alleviates hunger and provides clothing, shelter, and clean water, and allows access to education, health care, and medical services, among other things. Offering more perspective, Tinker noted that although there is a lot of talk about the growth in wind and power for energy, their use is but a fraction of demand for oil, natural gas, and coal. Over the past several decades, carbon emissions in the US and Europe have been flat to slightly down, while emissions in Asia have grown sharply, he said.
The offshore is still viable despite the recent emphasis on renewables and the astounding growth of the shale sector, said Roger Jenkins, president and CEO of Murphy Oil. This is a great time to participate and invest offshore because the current cost structure is low and efficiency gains in the sector are “still at the infancy stage,” and new technologies and execution models are shortly ahead. “Every day we are evolving,” he said.
Jenkins said adoption of digital technologies will continue to improve offshore operations, including improved well efficiency, real-time directional drilling, lower maintenance costs, and safer operations. Other improvements will include subsea multiphase pumping, use of electric BOP and control systems, better seismic gathering and interpretation, and use of digital twins of assets, which will lead to efficiencies in maintenance.
Malcolm Frank, coauthor of the book What To Do When Machines Do Everything, believes the oil and gas industry is “late to the party” when it comes to adopting digital technology, but could benefit from learning from the mistakes of other industries that were early adopters. “If you manage it correctly, this will open new horizons of growth and new opportunities.”
Artificial intelligence is one of the great enablers in history, he said, on a par with the invention of the loom and other groundbreaking shifts in how people work and produce goods and services.
“The robots aren’t coming, they are already here,” he said, citing common technologies such as Spotify, Alexa, and Facebook.
The industry is “wide open” to improve operations through virtual and augmented reality, smart infrastructure, robotic processes, and the use of bots, he added.
The Rise of Robots
Robots may not be ready to take over the world just yet, but they are making great strides in the offshore industry. A technical session presented some of the advances, including untethered ROVs and subsea broadband communications.
Remotely operated vehicles (ROVs) are frequently used to inspect offshore and subsea facilities. Typically, these ROVs are tethered to vessels to transfer the data they have collected and receive control commands. This tethering limits the vehicles and adds the expense of the control vessel to the inspections. OneSubsea, a Schlumberger company, is working to remove the tether and unlock the benefits of autonomous underwater vehicles (AUVs).
AUVs have their own set of challenges, especially when operating around producing fields where a certain amount of supervision is necessary, so OneSubsea is working on a platform it calls uROV, or untethered ROV. The uROV has a “person in the loop” to review real-time images and make adjustments but still operates autonomously. OneSubsea calls this compromise “supervised autonomy.”
“This is the idea that you have the best of both worlds,” said Jack Vincent, product champion at OneSubsea, while presenting paper OTC 29586. “You have a fully autonomous vehicle that does everything. But you watch everything that it does. You can intervene, and you can change things. … That’s where the value comes in.”
Optical and electromagnetic communications, although frequently used, have range limitations that make them less than ideal for communicating with uROVs. Once the distance is greater than 200–500 m, often outside the drill center, “you really have to leverage acoustics,” Vincent said. “This is all for communicating with a moving vehicle. … If I want to go to much range, I have to go with acoustics.”
Acoustics, however, has a challenger for effective underwater wireless communication. The underwater laser telemetry and remote access (ULTRA) system, presented by Ishan Mons, who works for Oceanit Laboratories, uses optical encoding to transmit data through a variety of media, including seawater. Mons presented paper OTC 29303.
“What ULTRA is essentially is a point-to-point laser communications network,” Mons said. “The idea behind it is setting up an in-place undersea broadband network. I hope everyone here is familiar with Netflix. This is essentially the transformation we are trying to enable, where, instead of going and getting the one thing that you maybe thought you wanted, you have access to everything that you have connected on the seafloor at any given moment in time.”
The idea behind ULTRA is to have a resident network that “is always there and always on,” Mons said, that allows for monitoring of subsea facilities without manual inspections.
Venture Capital Fuels Deep Water
The deepwater sector is currently passing through a transitional period, with forecasts of a potentially bright, but unknowable, future following a period of low oil prices and strained exploration and production cash flows. That may be an ideal place for venture capital to play an outsized role in fostering the growth of the ideas and concepts that birth the reliable technologies operators need to succeed.
“For innovation, that is the best time to invest,” Kemal Anbarci, vice president and managing executive of Chevron Technology Ventures, said. “In the oil and gas industry, when times are tough, that’s when the breakthroughs happen. When you look at the decline, or at a troubled time, you start to see the innovations come in and they can make an impact. For deep water, you have companies working to make that happen.”
A panel session during OTC looked at the role of venture capital in advancing technologies for energy companies. Digitalization came up early in the session as an area the panelists thought was ripe for future investment, but the subject engendered somewhat cautious responses. Anbarci said that digitalization enables further understanding of physical systems, but companies still need the physical equipment to deliver results.
Ram Shenoy, chairman of WellDiver, echoed a similar sentiment. [WellDiver develops materials science processes to deliver improved oilfield technologies.] He said the digitalization trend has made it “tempting” for companies to look at digitalizing their existing processes instead of thinking about how digital technologies reconfigure their operations. On the other hand, Shenoy said the industry has “tremendous capability” for the general improvement of offshore infrastructure.
“Generally, when I look at my activities with smaller companies, one area I look at is materials science, one area is around machine learning, and the other one—which I think the oil and gas industry has a lot to learn from—is just basic operations and logistics. I think the whole industry really could learn a lot from a company like Amazon, on how they manage the cash flow through their supply chain compared to how they manage their own operations,” Shenoy said.
Greg Powers, the former chief technology officer at Halliburton who now serves as the company’s vice president of global innovation, cited investment in machine learning as an opportunity for energy companies to become more efficient because it may enable greater automation of operations, minimizing the high variability in human labor. This may ultimately help companies better model and predict the behaviors of their entire operational systems.
James Sledzik, managing director of Saudi Aramco Energy Ventures, said machine learning and artificial intelligence appeal to investors because they are not capital-intensive sectors.
“Ultimately, you go after whatever opportunities offer the best return. When you think about offshore, it’s capital-intensive, so investors are more inclined to go outside of that area. If something’s capital-light, it can return more capital than what you put in quicker. By definition, that’s an area all of us are focusing on because it can bring more bang for your buck than these capital-heavy opportunities.”
Idle Drilling Rigs Actually Require a Lot of Work
It turns out that owning an out-of-work drilling rig is actually a lot of work.
A pair of presentations from offshore rig contractors offered an unvarnished look at the pains involved. The discussion was a reminder that though the offshore drilling market is making a comeback after years of sluggish activity, the wounds have not fully healed.
This is especially true for companies that have found themselves taking on brand-new assets in what is still an oversupplied market.
One of those firms is Houston-based Northern Offshore, whose rig fleet mostly consists of shallow-water jackups that are currently stacked in Chinese shipyards. As the company continues to build new ones, it faces a risk of bringing them into this world without a contract. Such was the fate for a newbuild that has sat idle for the past 16 months.
“Stacking a rig after delivery is terrible—no one ever wants to do that,” said Anthony Beebe, the senior vice president of project management and engineering at Northern Offshore. Speaking from experience, he said worse yet is that, “Nobody wants to hire a stacked rig, there’s never enough money budgeted, you’re always stacked too long.”
Beebe’s presentation included a recent industry survey that showed that 86% of oil companies prefer not to hire a stacked rig after it has sat idle for a year. “That’s the most depressing slide in the whole deck,” he quipped.
But there are ways to become competitive in a saturated market. As painful as it is for the rig contractor, it requires spending millions of dollars more on the laid-up asset.
Dubai-based Borr Drilling formed just 2 years ago as a pure-play jackup contractor and has faced many of the same issues as its rival. The big difference between the two is that by virtue of being a new firm, Borr Drilling has had less experience in the tedious process of keeping idle rigs in a state of readiness in case a contract does come through.
“If there’s one key takeaway, it’s that it takes longer than we all think,” said Doug McEwan, the director of newbuilds and reactivations at Borr Drilling.
When a contract does finally come, the reactivation period for Borr Drilling is hoped to only take 90 days. Its fastest turnaround was 45 days, an experience McEwan described as “a real struggle.” Northern Offshore takes a slower approach and promises operators rig delivery in 6 months to account for long supply chains.
But for a rig to be reactivated, it must first be prepared with meticulous and costly attention to detail.
On a newbuild, the process of getting ready to do nothing months on end begins with a drilling systems test. If the topdrive works as it should, a loan is then taken out to buy the rig. The rig contractor then must hire a crew of up to 20 people to help bring onboard several million dollars of tools and spare parts.
After all that, the real work to preserve the brand-new asset is launched. Beebe said “priority number one” is to protect the rig’s electrical systems. His advice is to start with installing dehumidifiers and heaters while ensuring there is good ventilation.
Both companies also rely heavily on companies such as NOV and Cameron which make the mission-critical mud pumps and blowout preventers. These companies are hired to help strip down, grease up, and then wrap in plastic the equipment they have just sold to the rig contractors.
The solution, he emphasized more than once during his remarks, was to improve the company’s lines of communication. This goes for the operations team within the company, and all the external engagements with vendors.
Another learning moment came when an email server was not installed before the crew assembled on a rig about to undergo reactivation. A complete breakdown ensued.
“It was amazing how, as a group and collection of individuals, we couldn’t communicate,” McEwan said, adding that the company has since decided to get email servers onboard “as quick as possible.”
This article includes contributions from editors Adam Wilson, Stephen Whitfield, Trent Jacobs, and John Donnelly.