Providing better ROI with new solutions to new challenges
VARTUL MITTAL, MANAGEMENT CONSULTANT, NEW DELHI, INDIA
LOWER OIL PRICES have become the new normal in recent years. Oil and gas companies are feeling the heat, with plunging prices increasing the pressure to reduce costs, while improving productivity. As they look for newer ways to "deliver more with less," companies are investing in the digital oilfield with renewed vigor.
Today we are witnessing the next wave of digital transformation in this area. A powerful combination of emerging technologies such as the industrial internet of things (IIoT), mobile connectivity, cloud computing, big data analytics, augmented reality, and artificial intelligence (AI) is driving vast improvements in the digital oilfield framework.
This is improving return on investments by reducing operating costs, increasing output, and eliminating unscheduled shutdowns. Given its growing prominence, the digital oilfield market is poised to surpass US$30.7 billion by 2020, with a compound annual growth rate (CAGR) of 5% from 2015.
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DEFINING THE DIGITAL OILFIELD
Producers, suppliers, and employees are all experiencing the effects of the current economic environment in the oil and gas industry.
"Digital oilfield" is the umbrella term for technology-centric solutions that allow companies to leverage limited resources. For instance, such technology can help employees more quickly and accurately analyze the growing volumes of data generated by increasingly sophisticated engineering technologies, such as down-hole multiphase sensors, measurement-while-drilling (MWD) applications, multilateral completions, and down-hole separation.
Generally, the digital oilfield encompasses both the tools and the processes surrounding data and information management across the entire suite of upstream activities. More specifically, digital oilfield technologies enable companies to capture more data, with greater frequency, from all parts of the oil and gas value chain and analyze it in real-time or near-real time, thus optimizing reservoir, well, and facility performance. These engineering-based and information-based technologies can have a profound positive or negative impact on human capital efficiency, depending on how they are introduced and embedded into the organization.
DIGITAL OILFIELD - DISRUPTING THE TRADITIONAL MODEL
There is little doubt that the digital revolution will have a large impact on several industries in the coming decades. While industry forecasts differ as to its impact, the consensus is that it will be transformative and will add trillions of dollars in value to the world economy. For example, it is forecast that the number of connected devices will grow from 10 billion in 2013 to anywhere from 19 billion to 40 billion by 2019, creating cost savings and productivity gains across several industries. It is estimated the total global impact of the internet of things (IoT) technologies will generate anywhere from $2.7 trillion to $14.4 trillion in value by 2025.
The internet revolution that redefined business-to-consumer industries is set to dramatically alter industries such as energy, manufacturing, and transportation as the "Internet of Things Revolution" takes hold over the next decade, bringing both unprecedented opportunities and new risks for businesses.
DIGITAL OILFIELDS CONNECT UPSTREAM, MIDSTREAM, AND DOWNSTREAM OPERATIONS
By smoothly integrating information and operations technologies, oil and gas companies can get the full value of their asset data and accelerate high-performance production.
Is there any industry more dynamic at this time than oil and gas? The shale oil and gas revolution, advances in deepwater drilling, and automation driving higher well-recovery rates caused supplies to surge. Plunging oil prices led to aggressive cuts in output. Environmental, safety, and security pressures are reaching new heights, while the availability of skilled personnel is reaching new lows. Meanwhile, global energy demand shows no sign of subsiding, particularly in growing economies.
These market forces have oil and gas producers jumping through hoops to meet the challenges. The upstream, midstream, and downstream sectors are all under increased scrutiny for operational efficiency and performance. For this industry, realizing the vision of "The Connected Enterprise" has become a business imperative.
The convergence of automation, communications, and information technology (IT) is allowing oil and gas companies to create digital oilfields, pipelines, and refineries. Smart devices embedded in wellheads, compressors, pump stations, and within refineries are yielding a new wealth of operational information.
To make sense of the data, leading oil and gas companies are taking advantage of advancements in wireless technology, control systems, and visualization software to create The Connected Enterprise. Enterprise-wide connectivity, from exploration and drilling to transportation and refining, helps to merge disparate data into streams of actionable information, and allows assets to be monitored and optimized from anywhere in real time.
THE IMPORTANCE OF AUTOMATION RISING IN UPSTREAM AND MIDSTREAM
Driven by the need to increase operational awareness, enable real-time information sharing, and utilize powerful analytics to improve future project planning and preparation, many E&P companies have been developing their digital oilfield capabilities to decrease time to first oil, reduce operating costs, and maximize production.
Today's energy companies seek solutions for driving down project cost and complexity, reducing operating costs, and increasing production. Faced with an exodus of experienced personnel, more owner-operators are seeking out partners that possess the domain expertise, technical experience, and resources needed to support ever more complex projects requiring more advanced automation and technology solutions and cultural transformations.
THE DIGITAL OILFIELD ADVANTAGE IN INCREASING PRODUCTION AND RECOVERY
The oil and gas industry has been mesmerized by the vision of the digital oilfield, which holds the promise of enabling operators to integrate, interpret and act on production-related information in real time to optimize field operation and development.
As costs for digital oilfield projects have mounted, the industry has recognized the need to address multiple challenges to successfully design and execute digital oilfield projects that deliver quantifiable value:
To achieve a high rate of return, digital oilfield projects need to be designed to monitor and manage the development and operating metrics that actually have a meaningful impact on production and reserves, e.g. key parameters related to drawdown limits, water flood performance, and pressure maintenance operations.
Digital oilfield workflows typically should be built in phases, since optimization workflows at the field level typically incorporate information from well-specific workflows.
Digital oilfield technologies both in the field and in control centers must be robust, scalable, and upgradable to handle the addition of new wells and advances in technology.
Digital oilfield monitoring and interpretation workflows and technologies must be embraced by field operators and engineers to ensure long-term project success. Typically, optimization workflows are rather complex, and the risk exists of their being ignored in favour of making operational decisions the "old way" by using rules of thumb and isolated calculations.
THE JOURNEY AHEAD
Digital technology investment is helping oil and gas companies reduce costs and make better, faster decisions. Expanding upstream portfolios call for quality-assured capabilities for volumetric accounting, allocation, and regulatory reporting requirements. A shift toward digital oilfields has yielded numerous strategic and tactical solutions across the industry. It includes centers of excellence connecting the right minds to the biggest problems, workflow-driven collaboration, virtualization, visualization, and optimization supporting rapid insights and decisions.
Upstream businesses face significant challenges as they work to grow reserves, enhance recovery from existing fields, establish new capabilities for emerging assets, and find insights from vast quantities of information.
ABOUT THE AUTHOR
Vartul Mittal is an independent director - technology and innovation who specializes in global business transformation and automation. He has over 11 years of experience in management consulting. A mechanical engineer and MBA by education and a digital business transformation and automation consultant by profession, Mittal is a frequent speaker on the topics of digital automation and innovation.
