Why the current crisis should accelerate holistic digital transformation onshore

By: Denis Voloder, head of Onshore Solutions, Siemens Energy

With the upstream oil and gas industry afflicted by low prices, declining margins and stiffer competition, further exacerbated by the coronavirus pandemic, firms are urgently seeking operational and capital expenditure efficiencies. The companies that are successfully able to adopt and integrate holistic digitalisation solutions, utilising the power of data and advances in Internet of things (IoT) technologies, will emerge from the crisis stronger, leaner and more capable.

With greater application of digital solutions, together with the incorporation of mined data generated from existing infrastructure, oil and gas producers can facilitate the implementation of remote operation capabilities, significantly streamlining processes.

The benefits attributed to remote and unmanned operations include increased reliability and availability of assets, better production efficiency and energy efficiency as well as increased Environmental, Health and Safety (EHS). These are achieved through increased automation, real-time monitoring, real-time intervention, and through the analysis of historical data and trends.

Oil and gas companies have long seen the value in technology and digitalisation and these have proved to be important in advancing data analytics and advanced operational intelligence. But, the key challenge for companies have generally been the lack of commitment to adopt and fully utilise new technologies. The industry has traditionally been conservative, risk-averse and slow to adapt to change, particularly at low points in oil price cycles. This often leads to a lack of systematic implementation and instead a piecemeal approach in technology adoption, resulting in complexity and inefficiency. Rather than using one unified, holistic solution, companies often rely on a diverse array of tools and programs, which are loosely integrated, hindering clear and concise interpretation of data, impeding decision-making and hampering performance.

The successful exploitation of digitalisation to optimise the entire value chain and manage ecosystems, will likely be a key determinator for companies’ survivability in the oil and gas space as CAPEX and OPEX is rationalised amid low oil prices. This requires the ability to marshal a system of numerous diverse, dispersed, complex, interrelated mechanical and digital assets, as well as the ability to transfer data over a network without requiring human-to-human or human-to-computer interaction.

This complexity enables thousands of manual operations to be distilled and refined into a small number of automated processes, managed remotely and with the touch of a button. The potential cost and time savings are immense. Upstream operations and maintenance are among the largest expenses for oil and gas companies. Automating manual portions of that process, like valves and pump control or field reading, can also significantly reduce safety risks, downtime and costs.

We at Siemens Energy believe that a digital transformation begins with instrumentation such as sensors and valves, connected with the equipment over processes, with a high level of automation or maintenance strategy, and concludes in an overarching intelligent view, supplemented by data analytics and protected from cyberattacks. This enables experts to remotely operate production as well as inspect and maintain facilities, securely, from control rooms on the other side of the world. These technologies are proving to be vital in the current environment, where logistics and supply chains are disrupted and severe travel restrictions and social distancing measures are increasingly the norm.

This enables the automation of processes and the implementation of remote operations, which have the potential to mitigate lost-time incidents, health hazards and keep employees safeguarded, all whilst reducing costs. Drones and other robots are increasingly moving into more operational areas, including high-risk areas.

Increased connectivity requires data sharing across equipment and command centres using reliable data exchanges, data storage (locally, or cloud based), as well as cyber security. Digital transformation will require organisations to implement a focused digital strategy. It will also need investment and commitment to revisit and revamp processes, infrastructure and systems; and a willingness to collaborate across the ecosystem.

But, with all this connectivity, organisations face an increased volume of targeted cyber-attacks, malware and ransomware. Due to the strategic importance of the oil and gas industry, companies need to make sure that people – whether they’re contractors or employees - are aware of the cybersecurity vulnerabilities and the processes they need to follow.

For operators, integration of assets means more efficient production optimisation. A universal platform with dashboards and easy to use visualisation is a prerequisite for adaption by a large community in any organisation. Any authorised user can see the exact current state of operations on their desktop or mobile device. With training this allows anyone, from senior management right through to operators, to gain insights about the status of assets and optimization potentials.

The initial CAPEX and training required to build and operate such systems can appear daunting, but the plethora of benefits are easily justifiable. Furthermore, investment and implementation paves the way for when, hopefully in the not too distant future, CAPEX budgets are increased, meaning that new equipment and assets can be seamlessly integrated into a fully digitised oil and gas value chain.

To maximise benefits, integration should be as comprehensive as possible. This means existing assets need to be integrated and although this is typically more challenging, due to the large number of legacy systems each with its own different data definitions, advantages are still available. The incorporation of machine or plant data, into operations and systems analysis, can turn the information into a competitive advantage. The deeper the integration, the better the outcome.

The post COVID-19 world will continue to be characterised by economic uncertainty, ongoing disruption to logistics and supply chains, and low oil and gas prices. Ultimately, the accelerated adoption of digitalisation, technology and remote operations, presents oil and gas companies with a quick and effective way to reduce their OPEX whilst enhancing operations.

This op-ed first appeared in the August issue of Pipeline Magazine