An ocean of opportunity
The global oil and gas industry is continuing to suffer reverberations from the 2014 drop in oil prices. Volatility in the market, with large swings in both directions, is becoming the norm. This new reality of constant change is requiring the sector to look beyond traditional belt-tightening and into opportunities to boost productivity, efficiency and flexibility. Those who do will be better equipped to navigate through choppy waters, now and in the future.
The question is no longer can you afford to make process and technological shifts to enable long-term productivity; it’s can you afford not to?
While the acute pressures on the industry must be acknowledged, the sector must embrace new digital solutions that can make oil and gas smarter, simpler and more standardised, as well as more efficient and productive. Our physical world of technology and people is now merging with the virtual world of data, analysis and insights, paving the road for the oil and gas industry to achieve these aims.
Digitisation should not be seen as a way out of the downturn, or a short-term productivity boost to meet numbers, but a path to a stronger, more sustainable industry as a whole to continue meeting rising energy needs.
By 2020 the planet will have a billion more people than it does now. The International Energy Agency (IEA) projects the global energy demand will increase by one-third through to 2040.
The oil and gas sector finds itself surrounded by an ocean of data – which should be seen as an ocean of opportunity. But to take advantage of the opportunity, companies must find the means to navigate through the sea of information, capture the right sets of data, analyse it, and turn it into a competitive advantage.
Compared to the consumer technologies we use in our personal lives, the enormity of ‘industrial-sized’ data can seem daunting. The consumer world works with terabytes of data, whereas in our industrial world of big machines, we work in petabytes.
And yet, the first wave of industrial internet solutions is already proving that it is possible to harness, crunch and utilise that kind of data today.
For the oil and gas industry to achieve the productivity, efficiency, and flexibility it so desperately needs, it must embrace digital fully – from reservoir to the refinery; from design through operation.
I see three key areas for transformative digital opportunity – design and build; production and reservoir optimisation; and asset performance management (APM).
Design and build
Today, more than 65% of oil and gas operating expenses are determined during the design and build process. Integrating digital into the process allows new projects and facilities to be ‘born’ digital, enabling operators to optimise the performance of their assets and operations from the very start.
Our current industry is segmented and siloed. There is immense value in capturing data across the entire value chain to create a unified view of both greenfield and brownfield developments.
By embedding digital into the engineering, procurement and construction processes, the oil and gas industry will realise faster benefits from digital solutions. It will be able to condense design and build schedules, and identify efficiencies to improve reliability and reduce cost through the entire process.
In the area of production, it has been estimated that by analysing all existing data, oil and gas companies can improve production by at least 6–8%. Many oil companies are conscious of this and are re-positioning themselves to take advantage of digital developments and the expected productivity dividends.
By using a combination of well and pump data, advanced analytics and optimisation tools to provide a holistic view of production operations, customers can see field-wide benefits. For example, through data and analytics, operators have seen up to 20% production improvements.
Asset performance management
Asset performance management (APM) solutions leverage sensors, connectivity, data and analytics to improve the reliability and availability of assets and minimise the total cost of ownership.
In 2015, five of the top oil and gas companies in the world spent 55 times more money on assets (property, plant and equipment; PP&E) than on other general expenses (selling, general and administrative; SG&A.)
In asset-centric industries, strong APM strategies enable operators to make better, quicker decisions aimed at outcomes such as increased uptime, cost-efficiency, productivity, and operational flexibility.
In today’s climate, we know uptime is more precious than ever. By monitoring and analysing performance data, digital solutions can identify impending issues and eliminate unplanned downtime through a focus on analytics-based, planned work management, rather than reactive, ad-hoc maintenance. This enables operators to ensure the health, integrity and performance of their equipment in a truly revolutionary way.
Getting bullish on digital
The oil and gas industry is at the cusp of a new frontier. The evolution of cloud technology, big data, analytics, machine learning, and the convergence of IT/OT (information/operational technology) is paving the way for a sea of change in productivity improvement.
Those who seize this opportunity will not only keep their heads above water during this downturn, but flourish in the new digital age.
This article first appeared in Petroleum Review in August 2016.