The International Monetary Fund describes the global decline caused by coronavirus as the worst since the Great Depression of the 1930s. The cumulative impact upset global stock markets with a 2000-point swing on the Dow Jones. Covid-19 has had a personal effect on every one of our lives with the effect rippling into consumer spending and travel, having a direct impact on global demand for fuel.
According to Rystad Energy, global aviation activity is currently 21 000 daily flights vs 100 000 flights a year ago. World oil demand bottomed out at 71.8 million bpd in April with versus 100.1 million bpd in 2019 and they see “significant downside risks remaining into 2021. Average demand for 2020 is expected at 88.8 million bpd, a drop of 10.8% from 2019. Europe is the worst hit, with demand down 33.5% year-over-year in April, and on track for a 12.4% demand decline for 2020 as a whole.”
Few industries are immune to the impact of recent events which have put pressure on current systems and processes. Inefficiencies created by the response to Covid-19 combined in some cases with out-dated working practice is being felt across many industry sectors. Reduced workforces, closed borders, loss of continuity, the loss of face to face interaction and higher levels of anxiety and stress which can dramatically disrupt predictability in human behaviour are all playing their part in disrupting industry and reducing efficiencies.
A silver lining to consider, amidst the Covid-19 chaos, is how innovative, next-generation technologies that were once seen as unnecessary or too risky are now being moved into the spotlight. Once the threat passes, it will be interesting to look back and reflect on how the virus may have propelled these technologies beyond the tipping point and into long term mainstream use.
Black Swan events
The economic theory “black swan” was created by Nassim Nicholas Taleb, a finance professor and former Wall Street trader. He drew economic conclusions about unexpected, disruptive events in history such as global pandemics, financial crises, and wars. These are disasters that unsettle, uproot, and change governments and economies. Taleb argued that Black Swan events are impossible to predict yet have far-reaching consequences, one of which is innovation and adoption of technology. Every technological watermark moment is created through need, and massive disruption drives change and different ways of thinking.
During the First World War, for example, the previously unpopular wristwatch was adopted en masse to ensure soldiers could coordinate their manoeuvres. Wireless communications, bloodbanks and even teabags were all invented and adopted during this time, driven by need.
More recently, the period following the early 2000s SARS pandemic in China saw a mass growth in the technology market as people became more anxious around human contact and travel, contributing to the growth of companies like Alibaba.
The Covid-19 pandemic has been described as the next ‘black swan’ phenomenon, demonstrating not only the scale of the crisis, but the nature of the challenge for businesses. Which companies have seen their technologies adopted and what can we expect for the oil and gas sector?
Rapid adoption of disruptive technologies
Despite home working technologies being around for many years, many companies have fast-tracked digital transformation. Companies that were resistant to the concept of a home-based workforce have been forced to allow working from home. It has been crucial to enable work to continue during lockdown and to halt the spread of the virus. Many of these companies will continue these new working practices in the longer term to retain the best parts of this digital experience.
What advances can we expect to see in O&G?
The environment exists where people are more willing to embrace new solutions reduce risk and improve cost effectiveness. Resilient technologies that enable fewer human resources to do the same thing will likely benefit due to a reduced risk of infection, or the ability to continue with a restricted workforce.
Figure 1. Technologies that reduce cost and risk and minimise human intervention, such as TCP, are gaining traction with operators.
Magma Global anticipates 2020 will be a major turning point in the adoption of thermoplastic composite pipe (TCP). There are several drivers to this: the coronavirus encouraging operators to think differently and embrace new technology to support new working practices; the opportunity TCP offers to significantly reduce carbon footprint and support their “net zero” objectives; and the ability to reduce costs and risk in an ever more challenging commercial market.
Unmanned emissions monitoring
Unmanned aviation company Flylogix has a disruptive solution to emissions monitoring that has proven even more appealing since the coronavirus took hold. Flylogix uses unmanned aircraft to provide full-service over-horizon operations. All operations are piloted from the shore and monitored centrally from the company’s headquarters on the south coast of England.
Figure 2. Flylogix remote mission monitoring has seen a surge in demand since lockdown.
Chris Adams, Business Development Director at Flylogix said: “Unmanned aviation has been in huge demand over the past few months because no-one else has been able to fly. The sudden restriction on people movement has fast-tracked trends towards remote monitoring of operations where possible. We’ve seen a rapid upturn in demand for remote emissions monitoring of production platforms offshore and attribute that rapid adoption in part to the lockdown in the UK. Unmanned aviation is cheaper and more environmentally friendly but perhaps most critically, it is now protecting workers during this pandemic.”
Remote wellhead monitoring significantly reduces cost and environmental impact
Removing the need for onsite activity ultimately reduces risk for operators, particularly when activity at the well could be made more difficult by a restricted workforce during a pandemic.
M-Flow enables operators to reduce their environmental footprint by optimising their well pads, enabling the removal of flare stacks, and eliminating test separators, pneumatic valves and other sources of methane emissions. Measurement systems can be monitored remotely reducing the travel required between well sites, human interactions on site and the transportation emissions.
Giles Edwards, CEO, said: “Our goal is a world in which it will become normal for oilfields to be monitored remotely and technical decisions taken in real time using technology which removes the need for test separators, flare stacks and other associated sources of emissions and cost. The data provided in real-time enables the use of artificial intelligence and machine learning to identify anomalies and gain a deeper understanding of production behaviours will enhance the value of data through constant assessments which maximise performance without human intervention.”
Wider adoption of cleaner fuels
The wider adoption of LNG as a cleaner replacement to current fuels in areas such as marine and road transport together with the adoption of LNG in smaller communities is an accepted part of the industries' drive for lower overall emissions. A key enabler is the ability to lower the cost of LNG terminals, Shell and Magma are working on the development of a low cost single polymer composite pipe specifically targeted at lowering LNG terminal cost and widening LNG adoption where it can deliver the greatest economic and environmental benefit. Like other TCP it has a significantly lower carbon footprint compared with the exotic alloys it replaces.
Embracing technology for the next black swan event
We still have a way to go to determine how deep the impact of coronavirus will be on the global economy. Of course, we all hope that nothing like this will ever happen again but Black Swan events are impossible to predict. Companies that can evolve rapidly and embrace technology to offset risks and losses will be best prepared for the next “big event”.
Read the article online at: https://www.oilfieldtechnology.com/special-reports/07072020/a-black-swan-event-in-oil-and-gas/