Efficiency gains could be made through better use of digital technologies, but the industry is still shy on the uptake. Nada Ahmed, senior consultant, DNV GL - Oil & Gas, looks at the opportunities and risks.
Images from DNV GL.
"Big data” has the potential to radically reshape the oil and gas industry. DNV GL believes that by adopting coordinated, digital processes to analyze and understand the overwhelming amount of data being produced, operational efficiency and productivity could be boosted significantly
For example, by building advanced digital controls on offshore platforms, combined with improved connectivity, the industry is able to transfer tasks for data processing onshore, reducing manpower and increasing energy efficiency and operational effectiveness. Near real-time condition monitoring is another case in point where the use of data analytics can improve the decision-making process by predicting and mitigating problems at an optimal timing, thus reducing costly downtime.
Due to recent years’ development in sensor technology and advanced data storage capabilities, the industry is now faced with unprecedented amount of data arriving from all parts of the value chain. However, the ability to connect and analyze these disparate data streams has not kept up with the pace at which the sheer amount and complexity of data has increased.
To catch up, the industry will need to invest in new business models that utilize data in an innovate manner. However, this also presents a dilemma when balancing the books in a volatile economy. As has been seen in other sectors outwith oil and gas, digitalization can deliver financial savings through increased efficiency, reduced risk and streamlined processes, but the results are not immediate as the transition takes time and a new mindset is required.
Skepticism still exists on how quickly advances in digital processes will impact productivity and efficiency in the short term. According to a recent DNV GL survey, A new reality: The outlook for the oil and gas industry in 2016, regulators appear to be the most optimistic about the impact of digitalization in the coming year. Nearly a third (29%) of regulators and government authorities believe it has high potential to change operating efficiencies in 2016, compared to just 10% of operators and 16% of service companies.
One of the key opportunities for companies looking to digitalize operations and services lies in learnings from sectors that are early adopters of digital technologies, such as aviation, retail and logistics.
A major challenge facing the new digital world is ensuring the protection of highly sensitive and business critical information. Cyber-attacks on the oil and gas industry have grown in stature and sophistication in recent years, making them more difficult to detect and defend against, and costing companies increasing sums of money to recover from. Recent attacks have included theft of core intellectual property, disruption or destruction of plant and infiltration of confidential communications. Although headline-grabbing cyber security incidents are rare, many lesser attacks go undetected or unreported as many organizations are unaware that someone has hacked the system.
The results of a DNV GL survey of 1100 professionals from businesses in different sectors in Europe, the Americas and Asia found that although companies are actively managing their information security, just over half (58%) have adopted an ad hoc management strategy, with only 27% setting concrete goals.
Lack of cyber security awareness and training among employees is the number one reason for heightened digital vulnerability, according to DNV GL’s analysis of Norway’s maritime and oil and gas sectors. The study revealed the 10 most pressing cyber security vulnerabilities for companies operating offshore Norway. While it focuses on operations on the Norwegian Continental Shelf, the issues are equally applicable to offshore operations anywhere in the world.
High on the top 10 was increased exposure of critical systems to external networks. This reflects trends towards remote operation and maintenance, and management systems that transport large volumes of process data to the office domain. Due to limited fiber capacity and redundancy, networks are shared, introducing vulnerabilities. Supplying offshore power from onshore facilities introduces risk as electricity grids are digitally vulnerable.
In the coming year, cyber security attack prevention, detection and response and automation are the two IT-related digital technologies that most organizations are expected to invest in (44% and 43% respectively), according to DNV GL’s outlook report for 2016. However, investment in cyber security is lagging behind the perceived threat. This difference is most striking in Latin America, where 56% expect cyber security risks to increase in 2016, but only 42% plan to make a significant or moderate investment in this area.
Companies must go beyond standard protective measures, such as firewalls and passwords, to reduce risk exposure. It is vital that a defense-in-depth strategy is applied which involves predictive and pro-active cyber and data protections, as well as integrated risk analytics. Countermeasures can be established using a barrier management approach, familiar from managing health, safety and environmental risks. By using a bow-tie model, companies can identify threats to operations and plan barriers to prevent incidents and mitigate consequences. This includes procedures to maintain barrier quality documented in performance standards.
Bow-ties and performance standards for security management are just two tools that DNV GL offers to help the industry manage risks and leverage opportunities. The company’s software tool, Synergi Life – Risk Management Module is used to establish a live asset and risk registry and enables the assessment of vulnerabilities and threats, as well as mitigation follow-up. The company is also investing in initiatives to develop pan-industry best practice in identifying, preventing and responding to cyber security threats.
The industry recognizes the opportunity for imminent breakthroughs through use of new digital solutions. The exact next steps are not evident, but the pressures to reduce costs, increase efficiency and improve safety will play a dominant role in driving speedy implementation. Through collaboration and investment on innovation, the industry can overcome the challenge of extracting value from complex data streams. Nevertheless, effort is required to ensure data security and reliability. Companies must prepare themselves for a new reality where big data will be a cornerstone of the business and be ready for the risks and ocean of opportunities that follows.
Nada Ahmed is senior consultant, DNV GL - Oil & Gas, working with information risk management at DNV GL in Norway. She has six years’ experience in risk management and has most recently been working on building the digitalization strategy for the oil and gas business through dialogue and pilot projects with the industry.