Is the oil industry good at lessons learned but not at learning lessons? – asks Jan-Erik Nordtvedt, SPE Intelligent Energy program committee chair 2014 and President and CEO, Epsis
Almost a year has passed since the SPE Intelligent Energy 2014 conference. A key discussion topic during the event was why the deployment of Intelligent Energy (IE) is taking so long. Why wasn’t IE more broadly and deeply embedded in the oil companies and in the service sector? Particularly, at that time, when the oil price had been stable at around US$100/bbl for a number of years.
One would have expected that the improvement potential from IE would have made attractive business cases across the industry. Still, many of the delegates commented on the slow uptake of loosely integrated solutions. Since then, the oil price has halved. It is natural to ask if there is more or less need for IE in this environment and if one should expect more or less active IE programs in a low oil-price/lower cost environment.
There are many facets of this complex question, but I would like to focus on one – efficiency. Many claim that the amount of engineering work needed to produce a barrel of oil has sky-rocketed over the past decade. For example, an up to 50% increase has been reported on the Norwegian Continental Shelf (NCS). People point to compliance, technical requirements, and competency as possible reasons why this is happening.
Investment in IE
The NCS has made substantial investment in IE initiates; with many reports of significant value being realized – particularly within improved operations. Most companies have put in place video conferencing, real-time data collection, data sharing and collaborative facilities. Over the last decade, bandwidth to Norwegian offshore installations has followed Moore’s law of exponential growth. This has allowed for video conferencing, data sharing, and the replication of high resolution real-time data to onshore.
In many ways, we have increased the complexity of the onshore and offshore working day – we can analyze, assess and discuss much more than before. This holds the promise of understanding the root-cause of any operational problem faster and in a better way – surely one of the pillars of IE. One should expect that this would also result in the opportunity to produce more oil with the same number of people, and thus, give an increased efficiency. But, the opposite is being experienced.
A simple, yet important, reason for this could be that the added complexity is introducing new inefficiencies, e.g. the technology is not integrating easily with the other components of the business. Video conferencing gives us the ability to put a face to a voice, real-time data to understand the dynamics of the reservoirs, and collaborative facilities the opportunity to improve decision-making.
Joining up the dots
However, if we’re not able to align people to the same goals, get consistent execution of process (between people and crews) or link business processes to day-to-day operating procedures, the technology implemented will not give all the improvements it promises. In short, if you’re not willing to change the way you work, don’t expect ground-breaking results from IE solutions either.
In Norway, and probably in other oil and gas provinces, we have – in the good times – simply added more engineers to resolve a problem, because, in prosperous times, no one asks about how to save an hour or two per engineer each week; how to align the various goals, make technology stick or help to adhere to processes is not on top of the agenda. There is less focus on running more effective meetings, having standardized processes, providing situational awareness data to immerse staff in or to save time during handover. We could just use another engineer if we’re not able to complete what needs done. Now, in more challenging times, we have to use fewer engineers. The result is that less work gets done.
This is not new. That we are in an industry that gets a “kick” out of technology is well known, after all this is an engineering-heavy industry. That we’re not overly enthusiastic towards process adherence and knowledge-sharing is not new either. This has been on the “lessons learned” flipcharts of most organizations for years.
It seems like we’re pretty good at lessons learned, but less so at learning lessons. In our current environment we will need to be. We may even find that it is hugely rewarding. Changing the way we work – ensuring process adherence and people’s buy-in – will, in my mind, be a big step forward within IE. Not that we need a low cost environment to do so, but maybe it can provide the right incentive.
SPE Intelligent Energy 2016 will run 6-8 September 2016 at AECC, Aberdeen.
Jan-Erik Nordtvedt is president and chief executive officer (CEO) at Epsis and was SPE Intelligent Energy program committee chair 2014. He holds a PhD degree in physics from the University of Bergen in Norway. Nordtvedt started his career with Statoil in Norway, and has since worked more than 25 years within the oil and gas industry. Epsis assists clients in implementing and getting value from deploying integrated-operations workflows using collaboration-management software.