Doing digitalization

Elaine Maslin

November 1, 2016

Intelligent energy still means quite a lot of different things to different people, including the extent of its role in the oil and gas business. Elaine Maslin reports.

In the spotlight at SPE Intelligent Energy: Judson Jacobs, senior director, Energy, IHS; Johan Atema, VP Manage Producing Assets, Shell; David Boyle, UK operations manager, ConocoPhillips; Mark Edgerton, manager of reservoirs, Chevron UK; and Greg Hickey, process engineer, Upstream Technology, BP.
Photo from Reed Exhibitions.

"A traditional response is no-longer enough in today’s downturn,” a senior executive told the SPE Intelligent Energy conference in Aberdeen this summer.

BP, for one, is looking to transform itself into a digitalized business, while others see having a suite of smart oilfield technologies as the way to maintain their competitive edge in a US$40/bbl world.

It could be a painful journey (Read more: ‘IT/OT talk’) and will not come overnight, but it will help drag the industry into the 21st century, cloud computing and all.

Greg Hickey, process engineer, upstream technology, BP, and former technology development manager on BP’s Field of the Future program, says a fundamental change is underway.

“It is not just a downturn, it is a new business climate,” he says. “Companies will have to change. There’s a lot of oil around that can be produced at $40-60/bbl and it is not going to go away. We need to be competitive.

“As a company, we are driving down cost in all aspects of our operations and in general our operations are leaner. We have fewer people than two years ago and an ongoing focus on standardizing the way we do things, and elimination of non-value adding things. But, we know this traditional response is not enough. Doing more in the same way only takes us so far.

“We realize at BP we need to set out on a journey to modernize the upstream business. We need to focus on our margins and we recognize part of that is to digitize the upstream business. We need to pursue a manufacturing ethos, such as Toyota. We are responding with smarter ways of working and a new generation of business solutions to support this environment.”

Mark Edgerton, manager of reservoirs, Chevron UK, agrees. “As an industry and as a basin [UK North Sea] we are struggling to remain an attractive place to put capital. It is here that I feel intelligent energy has a role to play, it provides us with a way to change.”

Beyond the future

BP launched its Field of the Future program 15 years ago. It centered on connectivity and collaboration between on- and offshore operations, fiber optic communications and advanced collaborative environments, and real-time data monitoring centers.

“Now, our CEO [Bob Dudley] says digitalization of the business is fundamental to the way we need to operate in this new business climate,” Hickey says, just like how the pharmaceuticals, aerospace and mining industries have already done, with some great success stories.

So, why hasn’t the oil and gas industry done this before? “We didn’t have the platforms to allow inter-operation,” Hickey says. “We didn’t have the databases to support it. There was no cloud infrastructure to allow the software as a service model to become a more normal way of working.

“We could collect data in real time and put it in a historian and analyze it, but we couldn’t really find the patterns in it once it was there,” Hickey adds. Back in 1990, most of the data in the control system was in silos offshore, he says. McKinsey has said that only 1% of the data from an average 13,000 sensors offshore is used in decision making.

“Development of smart oilfield tools didn’t keep pace with the complexity of availability of large amounts of data being created,” says Mike Hauser, project manager, CiSoft Solutions, at the University of Southern California. “A lot has changed in the last decade. Many building blocks (for the digital oilfield) have been created and are becoming more commonplace.”

Hickey adds: “Today, we can bring [data from] 50,000 sensors onshore every few seconds and have industrial strength platforms to work with, like GE’s Predix, to process the data and run productivity analytics.”

Hickey admits that when BP implemented the Field of the Future, “[the company was] in a glass box,” meaning that BP had wanted to keep the technology to itself. However, now it wants to change the model.

“We don’t want to own digital technology and we want to move fast,” he says. “We are committed to cloud computing. We are not a company that wants to own cloud solutions. We are removing the shackles to create opportunities. We want others to help. GE delivered better capability than we can ourselves, so we can reap the benefit.”

Sharing data

Johan Atema, VP Manage Producing Assets, Shell. Photo from Reed Exhibitions.

Shell shares a similar attitude. “We want to change our inward arrogant attitude. We want to learn from industry and the outside world,” says Johan Atema, vice president manage producing assets, Shell, at the same event.

Shell has been using its data in a more explicit way inside its own business, setting targets, benchmarking unit costs, recovery from wells, etc., and making this information available across the business to help drive improved performance. Benchmarking and improvement plans are something the firm’s often more marginal downstream business is shocked that its upstream counterpart hasn’t done before, Atema says. Upstream hasn’t had the same need to improve as downstream has had, until recently.

Painting was one area were costs were saved. It was costing >£1000/sq m via a contractor. This was higher than in Norway. “We went back to our contractor and said ‘this isn’t competitive,’” Atema says. Their response was it was because of Shell’s permit to work systems, etc. “We had to look in the mirror. Now we are more competitive than Norway. It’s about transparency of data.”

Shell, like BP in its Field of the Future program, has also set up collaborative onshore/offshore environments. The most critical equipment is put in a tool, sweet spots of the operating envelope are monitored and automatic alarm functions, advice based on operating history, etc., used. This has been tested on the Draugen facility, offshore Norway, with the result being 95% availability, including turn arounds, Atema says, pointing out that this has all been done with existing technology and data infrastructure. “With good working practices and mindset you can achieve good uptime,” he says.

Elsewhere, intelligent energy is done differently, due to the different nature of the business. Atema says onshore Oman, where there are thousands of wells and outdated infrastructure, the approach has been to give instrumentation wireless connectivity and then use a smart mobile worker, equipped with a GoPro, a tablet device, and an iPhone, etc. They can issue a permit to work remotely, using day to day technology.

Tool kits

For Chevron’s Edgerton, intelligent energy is a tool kit, for condition-based monitoring. “Installing this equipment (e.g. sensors) costs money, but Chevron sees it as a good investment,” he told SPE Intelligent Energy. “All rotating equipment operating from Aberdeen has it installed and the signals go to Houston to an integrated team. But also to the vendor.” Subject matter experts in Aberdeen are also involved.

“Each of those groups can intervene to prevent a failure or to improve performance,” he says. “We are getting better reliability. But, as we continue to get data, we can build a history of performance to take it to another level, be more predictive about when we are going to fail and schedule maintenance as a result.” Some $9 million in equipment failures has been cut thanks to the work in condition monitoring, he says.

“The next step is real-time optimization as conditions change,” he adds. “Changes are often small, 1% in a certain piece of equipment. But it adds up, 1% change every day over the course of a year can be $3 million in extra revenue. Again, as we build the business plan, we build understanding [of how] to optimize going forward.”

However, these technologies can be used on a broader level. Data from offshore technicians can optimize plans and resources, awareness around which work teams are the most efficient can also be built and knowledge shared, like at Shell.

By doing all this, and having an integrated operations center, production efficiency has increased 4%, and some $51 million value added has been achieved in the last 18 months, Edgerton says.

Centralizing

For others, it’s more structural. David Boyle, operations manager for ConocoPhillips in the UK, outlined how the business had changed its structure, which had been an asset-based portfolio run in silos. The firm wanted to improve functional strength in key disciplines, such as asset integrity and production engineering, and create an integrated operations model, with multi-discipline teams created in support of offshore operations, standardizing where it made sense, creating more time for planners to look into data and make decisions about when and how work is best done, instead of spending time managing data.

On a practical level, this has meant a 30% reduction in staff, but increased capacity to support work, because people can work more efficiently, Boyle says.

As an example, the changes have helped increase so-called “tool time” from two hours in a 12-hour shift in 2014, to 5.9 hours in 2015, and 6.5 hours as of September this year. Boyle thinks eight will be about the best that can be achieved (tool time is the number of hours actually on the job, as compared to preparing, finding equipment and/or materials, or arranging permits to work). Reliability has seen a 50% improvement, thanks to some of this work, he says.

Maintenance has also been re-examined. Now, instead of an annual shutdown for maintenance, it will be done every three years on some UK facilities, as it is on the Ekofisk platform in Norway. Meanwhile, what had been an increasing backlog of maintenance work has been reduced.

Internet of things

Perhaps not all firms have the same vision as BP, but they’re all headed in a similar direction. “Now we truly have the capability to run the Industrial Internet of Things, to ingest and analyze [data], often in real time, to optimize the way we operate from reservoir to export, and soon we will be able to integrate all this together,” Hickey says.

The alternative? While companies like BP are not going out of business any time soon, Hickey offers a warning against complacency. “If you look at the top 15 companies 20 years ago, most are not in the top 15 now and many have disappeared altogether. We have to be aware of that.”

Furthermore, the world is increasingly full of so-called “digital natives” who will have expectations on how the businesses they join operate. The analog oil firm will not be first on their list.