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A two pronged approach

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Oilfield Technology,

Gareth Davies, Eigen, UK, discusses different process methods for achieving digitisation.

Several technologies have accelerated offshore productivity and performance in recent times and these have declined substantially in cost. With the rise of the Internet of Things (IoT), remote sensing, data combination and dissemination, cloud computing, industrial internet, block-chain, analytics and artificial intelligence, the foundations of the 4th Industrial Revolution are firmly in place for the oil and gas sector.

In line with this revolution, 2017 saw huge investments into digitalisation in the industry. Examples include BP’s recent investment of US$20 million in an AI company and GE’s forecast that their digitalisation platform will be part of a US$6 billion revenue stream by 2020.

Rapidly increasing numbers of digitalisation projects are being announced globally by numerous oil and gas operators, and consequently, digitalisation now rarely reports to the CIO. Instead this technology adoption is owned and driven on commercial imperatives by the COO. Digitalisation is no longer seen as a blue-sky IT project – it is now recognised as a key operations strategy component.


Benefits from digitalisation flow quickly. This is has become increasingly relevant to the oil and gas industry as low oil prices coupled with ageing assets mean profitability can only be achieved by making operations more productive. Digitalisation, when done right, captures quick productivity gains and results in tangible benefits that are delivered within specific budget-cycles – and it provides two main areas of benefit:

It removes waste from activities – translating into reduced costs from man-power, transport, logistics, and warehousing.

It reduces the number of activities undertaken through greater understanding of the current situation, options for intervention and confident prediction of outcomes.

Two ways to achieve digitalisation

There are parallel adoption processes underway. The first (operational digitalisation) is practical and delivers immediate benefit, the second (strategic digitalisation) is long term and addresses structural change.

Operational digitalisation is action-focused. It revitalises ageing assets and increases productivity. It delivers results within each budget cycle. This works because oilfields are already alive with data. With small changes, it is possible to know the up-to-the minute operating environment and risk stance (including the status of barrier functions). This can be used to safely enhance daily routines to cut waste and increase uptime.

Strategic digitalisation is a long-term structural approach that focuses on changing the way a plant is designed, built and operated. Strategic initiatives benefit from shared industry standards; however, new methods will take time to work through the system and be adopted. These projects tend to be large and company-wide – and they also promise a large impact. Unfortunately, they are not much help to the COO seeking to improve existing plant’s and this year’s operating margin. The pay-off is longer term.

Operational digitalisation leverages current systems

Alongside spreadsheets for production forecasts, most installations have digital control rooms, collect live equipment performance data, and have computerised maintenance and automated control-of-work systems. Operations use integrated planning, competency registers, rotation plans, warehousing, logistics co-ordination, helicopter schedules and weather forecasts. Integrity is maintained through records of well-integrity, physical inspections and process safety. Well-performance tests are captured and stored.

Operations do not lack knowledge about what is going on, nor do they lack knowledge about what to do and how to react. What they miss is the ability to get the right information to the right people so they can make real time decisions in a complex, interlinked environment.

Advances in technology mean it is now possible to easily access, combine and make sense of separate operational data deposits and to infer relations and consequences. This means operations have an opportunity to unlock digitalisation benefits by stitching together what is already available and by making it available to a wider team. Arguably this may not provide all that is promised in the future by the more elaborate AI and Automatic diagnostic systems, but it is practical, provides tangible real world benefits and is quick. Better yet, it is not an all-or-nothing bet as it can be deployed incrementally by balancing benefits, achievability and cost at each step.

The six steps to operational digitisation

While there are general similarities between companies and their assets, each has a slightly different technical set-up. Every organisation operates slightly differently and has its own value priorities. Success requires implementing high-impact, valuable activities that cause minimal disruption. The initiatives selected are likely to differ between assets.

Finding a valuable approach relies on identifying opportunities to create benefits, understanding current technical capabilities, discovering what people and processes are in place, highlighting options for change and considering what steps would be required to implement. The most valuable approaches are those that balance benefits attainable against technical risk and ease of changing working practices.

A general framework for an operational digitalisation programme can be summarised in six steps:

  1. The company should fix what they already have and still need.
  2. Identify value drivers and magnitude of possible impact.
  3. Assess digitalisation maturity.
  4. Propose and select among opportunities, balancing value and risk.
  5. Implement initiatives based on selected opportunities.
  6. Measure impact achieved.
Fix what is currently possessed and still needed

Some plant and equipment measurement systems, especially real time instrumentation and alarms, become degraded over time because of maintenance backlog and reduced investment. Normal IT services may not be able to address this quickly. Consider updating systems and engaging specialist services to restore existing digitalisation to a healthy state. Specialist companies focusing on real time control systems can provide a quicker, more knowledgeable service than those available from pure IT companies.

Assess current situation and select options

A blueprint for assessment using templates, maturity models, and a standardised approach can accelerate steps 2,3 and 4. Many of the large consultancies such as McKinsey, Accenture, PwC, Deloitte and EY have methodologies that can be adapted to oil and gas. There are also specialist niche providers like Step Change and V4 Associates who only work in oil and gas. Certain software vendors work alongside internal teams to help clients perform these steps in-house.

Implement new technologies and work-practice changes

Proven platform technologies can increase the chances of success at stage 5. There are cases to be made both for specialist providers and for general platforms, provided by the likes of IBM Watson, Microsoft Power BI, Siemens, GE and Oracle. Whilst there is no right or wrong answer, there are a series of trade-offs and future assumptions that should be balanced, and a road-map should be defined to capture immediate benefits without sacrificing longer-term efforts.

Implementation does not stop at the technology. There are working practices that will need tuning. Many companies address this themselves without external assistance. No matter how you choose to address it, this step should be carefully planned and resources assigned to it.

Measure the benefits achieved

A rigorous methodology and independent assessment in stage 6 will inform the pace of future investment and control the speed of change. It does this by assuring value is delivered at each step, and learning what methods to change so that operating procedures work best. The parameters for measurement should be agreed prior to implementation and the conduct of the measurement should be free from interference.

Case study: Lundin Petroleum Norge

Lundin Petroleum Norge found, developed and now owns and operates the Edvard Grieg field on the Norwegian Continental Shelf. It also discovered the neighbouring Johan Svedrup field (the largest discovery in Norway since Statfjord) as well as Gohta and Alta in the Barents Sea.

Lundin credits its record of exploration success to giving experienced staff the tools and information needed and then giving free rein to apply knowledge and intelligence in the best way – a philosophy that permeates the organisation.

The operator sets itself two main goals: firstly, to be the only company in Norway to Operate fields from Oslo and, secondly, to extend to operations its philosophy of transparent access to information, honest appraisal of the situation and allow experienced people the autonomy to act quickly using their specific intelligence and knowledge.

As an example, during the design, development and commissioning of Edvard Greig, Lundin set up a contracting process to enable experts within contracting partners to apply their knowledge without interference and encourage open and honest dialogue. This meant any problems could be addressed in a mutually beneficial way. The result of this was a project during the pre-crash boom that was delivered well within projected time and budget.

The initial challenges that Lundin needed to overcome were:

  • As an Oslo based outfit they needed to provide a remote status overview for all their staff, which meant conveying and sharing substantial quantities of information onshore.
  • As a lean operation, they needed to avoid spending time in unproductive meetings – whilst ensuring that all staff were on the same page.
  • They wanted to enable key decision makers with access to data from across the platform, not purely within their specific discipline.
  • They want to objectively investigate issues and share the results widely in real time, and then use these investigations at a later date, rather than just archiving the result.

Lundin is already seeing the benefits. A recent analysis showed an ROI of over 500% in realised productivity gains. Enhanced ways of working also contribute to their class-leading uptime which is well in excess of 90%. This makes it among the best performing operators in the North Sea.

How was this achieved?

Lundin worked alongside multiple software vendors offering the complete set of individual systems needed and an innovative digitalisation company from the UK to help bring the information together. This close collaboration with Eigen allowed Lundin to develop a full digitalisation solution.

This was led by operations rather than IT and exactly mirrored the way Lundin itself works, culturally. It did not have to invest large sums in complicated systems as it did not have to change any of the underlying systems. What it did do was place an information layer on top. This allowed its experts to quickly compare related information from different systems, in real time for any operative to bring together an integrated analysis on the desk-top without having to call a cross-discipline meeting.

The solution meant that Lundin did not have to change the way it controls work and ensured that it operates in a safe and secure manner, whilst allowing individuals to explore ideas and potential solutions using the information available.

Lundin Norge is already planning the next steps in its digitalisation journey. It plans to extend its condition based maintenance programme as it is already starting to see the potential benefits from this.

Since it has an active drilling programme, it is also looking at ways to enhance the way it works by examining and enhancing its application of real time data in its working practices.

Next steps

For those in the industry who do not currently have a digitalisation programme underway, it may be time to examine the opportunities that are available. For those currently executing a digitalisation programme, it may be best to divide the initiatives into operational and strategic so that their approaches and value measures can be managed differently. Either way, as with all industry sectors riding the wave of industry 4.0 initiatives, the benefits to operations will realise themselves rapidly.

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