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Adding process and optimization to the oil and gas industry

Digital oil field of the future expert discusses the future of the industry

From automotive manufacturing to retail distribution, many industries have witnessed quality improvements through initiatives to optimize processes and maintain consistent control over repeated activities. In the energy industry, IHS Cambridge Energy Research Associates (IHS CERA) coined the term "digital oil field of the future" to describe such efforts in the upstream oil and gas sector. The goal of the digital oil field is to increase production, reduce downtime and lower overall costs through total asset awareness, right-time analysis and decision making and timely execution.

We asked Judson Jacobs, IHS CERA Research Director, to further describe those benefits and describe what factors might affect the success of a digital oil field endeavor.

In brief, what is CERA's vision for the digital oil field of the future?
Judson Jacobs: The vision that we see for the digital oil field of the future is one in which oil companies and service companies gain a broad understanding of the performance for all aspects of their assets. This involves collecting data and making that information available to anyone within (or even outside) the organization who is best positioned to analyze it and continuously optimize both the development as well as the operation of assets.

We equate it to taking the oil and gas industry from what it's been traditionally and turning it into more of a process-focused industry using real-time, right-time data to continuously monitor and optimize performance. That sounds very technology focused, but it also has a very strong organizational element as well. The idea is that you begin to rethink how work should be performed and how the organization should be restructured as a result. Where should the expertise and resources be located? And then, even looking outside your organization as well to see new possibilities for working differently with suppliers and contractors that are so dominant in the industry, for example.

Of the many benefits that these changes could provide, what most excites you about the digital oil field of the future?
Jacobs: The quantitative benefits in this area are pretty straightforward. How do you increase recovery from oil and gas resources? How do you accelerate production? How do you lower costs? And one that's gaining increasing prominence is: How do you improve your health, safety and environment performance to reduce accidents and ensure asset integrity? As companies have begun to make some of these deployments around the world, they're certainly seeing very concrete improvements in these performance metrics.

One of the developments that is a bit more soft in nature is the impact that these capabilities and access to information is beginning to have on companies' organizational structures. This availability of information is helping to break down organizational barriers by allowing companies to think about how best to leverage their scarce expertise and resources across their organizations, rather than dedicating them to individual assets.

For example, say you have a subsea engineer focused on one asset. He's the best in the company, but his skills may only be utilized about 50 percent of the time. He becomes much more valuable when he's able to support multiple assets from a centralized operations center from which he has access to real-time performance data and is in video and voice communication with operations personnel. The drilling and rotating equipment domains are areas that are already benefitting from such operational support models.

What role will advanced analytics play in the digital oil field of the future?
Jacobs: Access to all this high-frequency asset performance data is both a blessing as well as a curse. Making sense of it all is often very difficult. Not only is it a flood of data coming at you, but the problems that companies are attempting to solve are also becoming increasingly complex. As that complexity increases, having tools that can make sense of data and optimize performance is incredibly valuable.

The increasing complexity comes from new techniques, new technology and the nature of issues you're trying to manage as well. If you think about the drilling side of things, where companies are collecting information from 20,000 feet below the surface in high-pressure environments, one subtle variance can make the difference between being able to control the well or not. We're seeing the importance of analytics play out in lots of different areas, including the equipment, drilling and subservice reservoir domain.

How much of this vision is currently implemented at most companies? How much of it is within reach over the next few years?
Jacobs: You see significant differentials not only across companies but within companies as well. Companies that have embraced the idea at a corporate level are not always able to achieve widespread uptake across their portfolio of assets. You also see differentials of acceptance at the functional level – like drilling, production operations, maintenance and reliability.

No single company has completely embraced the digital oil field of the future concept across their entire portfolio and across all functions. Some are seeing success within individual assets or across collections of assets. We're still pretty early days as far as wide-scale uptake. We do see, though, that as companies have success in one region or functional domain, they start to think about where they can apply it in others as well.

Five tips for digitizing oil fields

Optimized, sustainable maintenance strategies – and improved performance and availability of production equipment – depends on the detection and diagnosis of the root causes of poor performance and unplanned downtime. Your digital oil field of the future strategy should:

  • Create a single, consistent information source. Access, standardize and consolidate all relevant information regardless of location or format.
  • Reduce maintenance costs and man hours. Optimize maintenance plans and schedules – taking into account priorities, skill sets, time and resource constraints, etc. – and track work orders and resource usage through a single, integrated system.
  • Gain a big-picture view of performance. Develop, monitor and measure KPIs via a Web portal that shows how well maintenance plans are working at any point in time.
  • Proactively manage activities and control costs. Prioritize assets for maintenance, make the most of planned shutdowns, and monitor costs and completions.
  • Ensure ongoing performance improvements. Easily share knowledge – benchmark standards, best practices, maintenance history, regulatory guidelines, etc. – among those who need it, in a form that works best for them.

Are some regions of the world more advanced in this area than others? Why is that?
Jacobs: The region that really stands out is the North Sea, including Norway and the UK. To a lesser degree, the Gulf of Mexico is embracing the concept as well, but Norway especially has most embraced these concepts. For global companies, we see that even when a company has limited deployment and uptake of these concepts – their assets in Norway are quite advanced.

There are several factors behind the different levels of uptake. Some of it is has to do with the technical infrastructure in place, both communications networks and IT systems that provide widespread access to information. What you see is that the North Sea has invested substantially in subsea fiber optic networks. Communication isn't as much of an issue. Whereas, when you go to more remote regions such as West Africa, it is an issue. In some cases, governmental policies and regulators actively encourage digital oil field concepts. In others, it is a cultural issue. Norway stands out as a tech-savvy culture that embraces new technology, whereas other cultures may not be as readily willing to uptake changes.

What three things can oil companies do today to get closer to the digital oil field of the future?
Jacobs: You really need to attack this from all levels of the organization. First, the role of senior executives is critical for laying out a vision for the company in this area that takes into account both the company's particular challenges and opportunities along with broader industry trends. Where is the industry heading? Seeing how smart operations can help them address those challenges and capture the opportunities.

At the same time, there should be recognition that it is the asset managers and operations managers who truly execute change within an organization. Being able to reach those individuals and ensure they're aware of how digital oil field concepts and technologies can help to address the challenges and capture the opportunities they're encountering in their daily operations is critical.

Finally, you also have to create awareness at the lower levels of the organization, and provide training as well. Make sure they actually understand what is being asked of them and how it contributes to overall asset performance improvements and drive it forward and in some cases, give them the opportunity to take it on if they're asked.

What can advocates of this vision do to help others see the need for these changes and help spur innovation toward the digital oil field of the future?
Jacobs: Uptake ultimately has to be driven by the business. The challenge some companies encounter is that it becomes a solution in search of a problem. Once you recognize that this is driven by business needs your motivation becomes one of finding a solution that meets your particular circumstances. Engage the business as early as possible not only to understand their issues but to make sure they're aware of solutions that have been successful in the industry and within their own companies. If you can do that, you'll be more likely to get them on board to asset development at a very early stage.


Judson Jacobs, IHS CERA Research Director

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