Hydrocarbon producers face mounting pressure to become climate resilient, reduce carbon emissions, and focus on revenue streams from renewables. To alleviate this pressure, power generation organisations need to embrace renewable alternatives, and while some companies have become early adopters, many operators are looking at substantial changes to their business models to accommodate the transition.
Oil and gas producers are still carrying out upstream operations while transitioning into renewable alternatives, and their concerns focus on the type of digital technology solutions that can help them achieve their goals. Specifically, they want to ensure that the skills and knowledge gap is kept to a minimum, overcome challenges managing and optimizing current operations while reducing the environmental impact, and solve the data problem of how to manage and extract value from the vast amount of generated data and make it accessible to everyone.
One of the main trends concerning the increase in demand for oil and gas is that despite the push toward renewables, demand for reliable and, more importantly, affordable energy will not go away until renewable sources outsource traditional oil and gas, as reliance on it could extend to the next 30 to 50 years.
The current situation
The war in Ukraine has made our reliance on energy sources even more apparent, fueling the need for cheaper alternatives. While capital investments in low and zero-carbon energy projects have grown quickly, they are still lower than the collective investments in the fossil fuel-based infrastructure. That is because hydrocarbon producers are falling into three different groups:
Carry on as normal: These companies keep producing while demand and prices are still high. It means that they are still at the mercy of downturns and recessions in the coming years, but strong returns will see them through the next 30 years and more.
Wholesale swing: The wholesale swing strategy replaces oil and gas production entirely and switches solely to renewable energy resources for a greener approach.
The best of both: A hybrid strategy implies carrying on as normal but cutting back on core activities to reduce carbon emissions and investigating and investing in renewable alternatives, such as carbon capture, energy storage, electrification, hydrogen projects, solar, and offshore wind.
These renewables will eventually replace core oil and gas activities overtime, as it is widely anticipated that growing renewable capacity will displace fossil fuels in the world’s energy mix. The transition will be achieved by exploring and acquiring strategic opportunities that are already close to them, such as assets in the North Sea, and by taking digital advancements further in design and operation, such as digital twins and analytics.
Transferable technology
One way to accelerate the process of transitioning to renewables is through reusing technology and skills from one industry to another. It could be personnel, technology, solutions, or partners applying the same principles of one project to another.
One of the main challenges the industry encounters that prevents oil and gas producers from achieving a fully digital solution is the ability to pull together information from many different data silos. It could be engineering data stored in engineering modeling systems, control systems, maintenance and operational data, data historians, and other sources. Siloed data causes bottlenecks as maintenance and operations fail to find the information they need to fix problems quickly.
In addition to pulling together siloed data, there is the question of how the oil and gas industry can calculate the return on investment (ROI). There is no single answer, as ROI can be calculated in many ways. Recent improvements delivered by a more collaborative supply chain, working with common data and information, has further improved execution performance. Critically, these improvements have facilitated better decision-making, resulting in fundamentally better solutions. Better solutions are essential if the industry is to meet the immense challenge of “net-zero;” however, these improvements are harder to quantify.
Digitisation is simply essential to ongoing operations, and imperative for companies to remain competitive while operating safely.
Incorporating analytics and machine learning techniques to reliability solutions—such as the AssetWise services that Bentley provides—enables the connectivity, interoperability, visibility, and insights that were previously hidden within these data silos. These solutions provide a more holistic view of performance and reliability across operations around the clock, as constant monitoring and reporting can show early indicators of future events or problems. These reliability and analytical solutions can provide a variety of use cases to help reduce emissions and achieve the net zero goal.
How to start a journey to net zero
The rising environmental, social, and governance (ESG) imperative will, to a large extent, define overall producer strategies, as ESG excellence could be viewed as a competitive advantage. Oil and gas companies are increasingly looking to digital solutions like digital twins, data platforms, and other technologies to move beyond monitoring to emission controls, proving that they are taking a step in the right direction. One of the first things that operators can do now, if they haven’t already started, to reduce their carbon footprint is to optimise their operations. While optimizing operations is nothing new, the effect on the environment is evident. If everything is running smoothly and as intended, then energy expenditure is minimised.
The role of the digital twin
A digital twin is a virtual representation of real-world entities and processes, combining engineering and design data/models, with operational and IT information.
As oil and gas operations become more digitised to improve operational performance, as well as remain competitive and more sustainable, the role of digital twin technology becomes even more important. As the need for renewable transition escalates, the need for complex oil and gas digital twins may slip down the list of importance. Nevertheless, the benefits a digital twin brings to any digital operation are attractive, including:
- Enabling automated, remotely operated, minimally manned, highly efficient, and more sustainable assets.
- Providing an accurate and reliable source of information across the whole lifecycle of the asset.
- Accessibility across multiple teams, from engineering design and handover through to operations and maintenance.
- Providing facilities for training and familiarisation of operations prior to on-site visits.
- Multidiscipline integration of third-party models, data, and information into one application.
- Improving overall decision-making with the addition of simulation and predictive capabilities.
Overall, digital twins can improve asset operators’ situational awareness and optimise asset performance by modeling dynamic behavior. As a focal point system for asset operations, digital twins have the significant potential to improve oil and gas companies’ asset and business performance.
Conclusion
As the climate debate has escalated over the last few years, oil and gas companies are now working hard to update their strategies and shift capital as part of the energy transition.
Technology, such as digital twins, will play a large strategic role as they provide the visualisation, context, and the right information at the right time by providing an accurate overview of energy assets, digital twins enable efficiency, emission reduction, and an acceleration of the energy transition. It may entail acquisitions of renewable companies or longer-term investments in their own technology.
Lastly, oil and gas companies need to partner with vendors that have the expertise, domain knowledge, and technology. While digital twins are only one of the options available to reach the goal of a net-zero emissions future, they remain a key focus of the digitisation process and of the oil and gas industry.