For decades, the predominant culture within upstream companies has been formed out of operating in favourable market conditions, high levels of investment, and rapid expansion of global operations. However, a combination of forces has begun to change the culture in many oil and gas companies.
As a result of the realisation that market conditions will be more volatile for a long time to come, companies are redefining the concept of operational excellence. Digital business practices have matured significantly in other industries, and the experiences of other heavy industries (such as manufacturing, aviation and utilities) have clarified best practices for expanding digitalisation, and reduced the risk of change. And the remarkable progress made by early adopters within the oil and gas industry has caught the attention of many boards of directors, as indicated via innovation leaders who have created multi-billion dollar digital transformation business cases, on par with field development plans in terms of net present value (NPV). While at the same time technology vendors, oilfield service companies and even EPCs are amplifying their digital offerings to operating companies.
Untapped digital innovation opportunities exist across the entire value chain, including: exploration, (such as improving the accuracy of simulation models and increasing the productivity of geoscientists); development, (such as algorithmic control of drilling and completion opportunities); production, (such as orchestration of whole-field artificial lift to increase recovery); project management, (such as global collaboration and information management to shorten the time to value); business operations, (such as optimising global procurement spend and better cash modelling); and, of course, IT, (such as virtualisation of field infrastructure and automated operations).
As tough market conditions continue into 2016, some firms are expanding their leadership over digital innovation that enhances operational excellence. For Middle East oil and gas companies, these innovations include:
• Advanced analytics and business simulation, which continue to identify new ways to reduce costs and increase recovery rates for all types of upstream assets.
• Integrated planning and operations solutions that enable the optimisation of technical, operational, and business performance.
• Asset performance management, which is unlocking innovative new operating practices that yield higher asset integrity, lower maintenance costs, increased safety, and higher performance levels.
• Mobile workforce solutions, the transformative impact of which will depend on the convergence of wireless technology, application development, enterprise mobility management tools, collaboration, analytics, security technology, cloud computing, and the IoT. Being able to rapidly develop applications, access/share data via the cloud, and add context at the point of activity via analytics, will substantially improve worker performance, productivity, safety and reliability.
Priorities for other digitalisation opportunities vary based on factors such as the asset portfolio, financial strength, and business strategy. Other key technologies that are emerging, but require a greater investment and have higher risk, are:
• Outsourced digital oilfield services, which will not only increase revenues, but will help provide higher reliability and lower-cost operational solutions through economies of scale. Initially these services are focused on asset performance of operating equipment, (such as a turbine, break out preventer, etc.), and are offered as a managed service. However these services are now extending to reservoir management and production operations workflow by acquiring data, (such as pressure, temperature, flow rate, water cut), and displaying it through integrated applications. These services are mostly run in pilots or proof of concepts at the moment.
• Virtual Infrastructure Management solutions that unify the physical and digital worlds. Operating companies continue to invest in technology to capture and store greater volumes of project, engineering, operational and maintenance data, with the aim of using this data to better plan, operate, maintain, and retrofit their mission-critical assets and infrastructure. They are also starting to invest in technology to improve data context and visualisation. At the heart of these solutions is the use of 3D computer models to virtualise physical infrastructure and visualise data in a more meaningful way, opening the door to an immersive approach to interacting with data through new sensory tools, such as helmets and gloves that incorporate augmented reality. These solutions are poised for rapid growth, empowered by IoT, digital business, laser scanning, engineering modelling solutions, integrated data warehouses, and next-generation smartphones.
The digital transformation of oil and gas operations has already begun. As digitalisation is at the root of this transformation, oil and gas leaders have unprecedented opportunity to deliver new value to their companies.
New management challenges will come in the form of designing digital architectures, liability concerns of digital services, security and ownership concerns over data and algorithms, and oil and gas firms will need appropriate strategies to support the new wave of digital transformation. Organisations need to create strong capabilities that focus on safe, secure and reliable operations, while at the same time conducting creative digital innovation projects utilising fast, agile and collaborative multi-disciplinary teams.
