Oil 2.0: The pressing need for Digital Oil Fields

The people shortage is sure to have grown in the recent down-cycle. That will be exacerbated by the growing energy needs in the coming few decades.

BP’s 2011 Energy Outlook expects energy demand to be up by 40% by 2030 and Exxon’s forecast is much the same. Though renewables take a slightly larger slice of the pie in 20 year, the sheer scale of that demand growth will require a massive push from the hydrocarbon sector to come even close to expanding to match future demand.

As if matters needed further complicating, fields that once would have seemed too expensive and too difficult to access are now economically viable, but to run these important offshore and remote onshore operations, the industry may be facing an employment deficit that could reach 1.7 million by 2030.

Does this mean the game is up, or is there a chance that technology, if implemented soon enough, can make up that chronic shortfall?

Enter the digital oil field. Every supermajor began embracing the concept several years ago, and the Middle East’s National Oil Companies have been keen to embrace elements of the digital oilfields spectrum.

Shell has its Smart Fields, BP its Fields of The Future, and Chevron sounds rather hipper with its iFields. Saudi Aramco, ADNOC, and KOC have all adopted (unbranded) progammes.

Crux of the problem

Addressing the challenges inherent in building the successful collaborative centres needed to bring the digital field to fruition was Charles McFarland of Landmark Software & Services at Halliburton Drilling and Evaluation Division USA.

McFarland explains that oil companies the world over have struggled for the last 20 years to adopt new technologies that can improve methods and results. “Thousands of hardware and software solutions have been introduced, installed, trained and implemented over this time period, with varying degrees of success or failure.”

Fundamentally, he warns, people resist change. Without appreciating this, and arresting that human-nature kickback, the adoption of smart or digital oilfields will not emerge in the way it has to.

“What we are trying to do is transform the way technology is integrated into the industry. It’s not about buying new technology in, it has to be about real change,” McFarland says.

“Ultimately, in any walk of life, change causes stress, risk, and uncertainty and usually results in immeasurable costs to both individuals and the organization. So we have to be clear at the outset the cost and benefits of the changes we want to implement,” he says.

The benefits – or rather necessity – of successfully integrating digital solutions clearly outweigh any inertia-related issues. MacFarland syas identifying the things you want to change, even if they don’t seem broken, is critical.

Harold Grayson, global business technical solutions – project manager at Halliburton, stresses the importance of rolling out DOF from an employee’s perspective.

“Change management is at the very core of any DOF project. You have to take into account the impact on people. We have an old industry and we have to adapt fast.”

Indeed, rolling out a comprehensive DOF programme is bound to grate on workers who do things in a certain way because that way has always worked in the past.

This is further complicated because a genuine DOF deployment touches everybody’s department, be it a facilities manager who is told he needs to change to a certain type of valve, or telling a reservoir engineer he needs better modeling data – there will be considerable institutional resistance.

“Achieving the things we have identified boils down to a simple formula: Input + Process = Outcome. We cannot change the outcomes without changing the input or the process, or both,” adds McFarland.

However, far too often the industry is focused on short-term budget goals. Because of this the industry is failing to capture real benefits from process improvement opportunities. “By focusing on results we are able to consider all elements of change that could contribute to the process goals.”

He signs off on a cautionary note. “50% – 75% of the talent that found the first trillion barrels of oil is leaving our industry in the next 10 – 15 years. We have to find a way to “download” the information locked in these knowledge workers to a brand new generation.”

Design & Delivery

Many companies have wrestled with the vexed question of how a DOF programme should be designed and delivered. Mark Deutekom of SAIC Oman says starting with the end in mind and clearly defining requirements and scope are the fundamentals.

“International Oil Company DOF programmes tend to start in one area, then grow and spread across other elements of the eneterprise,” says Deutekom.

Interestingly, when it comes to finding a business case for DOF, Deutekom says the majors have largely stopped scrabbling for cost / benefit arguments, as they focus, as McFarland pointed out, on the short term.

“In answer to every manager’s question of whether or not you can present a business case for DOF, I would say that, in my experience, by and large, the IOCs have dropped this rationalisation because they have accepted it just makes sense.”

Deutekom adds that traditional measuring tools for the value of deploying digital oil fields falls somewhat short of the mark anyway. “When you are measuring the value of DOF deployment you are competing against a lot of other programmes. Plus, the dollar value is difficult to predict. It’s not just another project. It’s business transformational.”

When it comes to the design and delivery of your system, Deutekom highlights some salient points about the way in which oil companies approach their potential technology partners. “If you are going to tender then seek good advice. I see a great deal of DOF tenders which are extremely vague. Specificity is vital if you want to achieve your goals,” he says.

In addition to getting things right at the design stage, MacFarland adds that having the right enthusiasm and drive from senior management is vital. “The whole organization has to buy in. That means the value of top level corporate sponsorship is immeasurable.”

Tech challenges

Salim Al Busaidi, head of real time operations and smart fields foundation in Petroleum Development Oman attacks the DOF challenge by explaining the technology. The digital oil field is a suite of interactive and complementary technologies that let companies gather and analyze data throughout the job site.

It includes “intelligent wells,” which have fiber-optic sensors buried in the drilling apparatus, controlled manually by operators on the surface or automatically through closed-loop information systems.

These sensors transmit a constant stream of data about the well and its environment, enabling operators to respond to shifting circumstances in real time. For instance, they can adjust fluid pressure or valve settings as the drilling surface becomes more or less permeable. Digital oil fields also have “advance alarming” systems, which predict performance levels and warn of potential equipment failure, Al Busaidi expplains.

Digital oil field data is fed into automated workflow and knowledge-management systems, which deliver it to those workers who need the information to make timely decisions.
Both historical and current information can also be linked to company-wide knowledge exchanges — in essence, global corporate wikis — that can be tapped at any time. In an industry in which field data was, not that long ago, kept on clipboards or in Excel spreadsheets in the local field office, such shared information is a bonanza, says Al Busaidi.

However, with such a wide remit, selecting the right technology partners can be a
headache for oil companies, as Busaidi describes: “The scope of what falls into the digital oil field is so wide, one vendor won’t necessarily be applicable to an entire project, which makes procurement a massive challenge.”

Al Busaidi’s sentiments are echoed by Dr Bahir Al Azawi, team leader of smart field program at Abu Dhabi Company for Onshore Operations (ADCO).

“There are restrictions for ADCO in terms of procurement. There may be smaller providers with something great to offer, but we don’t have endless flexibility. Our procurement processes prohibit us from new or smaller vendors because any supplier has to be registered with us, so finding something that works has to be a relationship within our existing frameworks too.”

Digital in Abu Dhabi

Mohamed Hafez, the Team Leader at ADCO’s Automation and Smart Field unit, presented the Abu Dhabi NOC’s smart field vision at the conference, following the successful – and ongoing – DOF implementation program, slated for completion in 2014.

“Before [DOF], we were just getting our data through pipelines,” Hafez said. The benefits of Smart Field all flow from enhanced and better-informed decision-making, he explained.

Having centralized information centres can also increase efficiency and monetization, Hafez said. ADCO are working on a collaborative working environment across all their assets, which Hafez said will lead to much more integrated decision-making shared between engineers and management.

Flow control

Adam Vasper from Schumberger spoke about the benefits of improved valve technologies in a DOF setting.

Vasper said that full-control valves, which allow aperture changes to be selected as easily as changing CDs in a jukebox, are now sufficiently reliable and flexible to facilitate real-time flow controls. Historically J-valves have been preferred by the industry, despite their lack of bi-directional control, as they were seen as more reliable.

Vasper saw the employment of several such valves in a chain, allowing operators to deliver intelligent flow control through continuous “nudging” of the valves, a process which could be automated.

Under the sea

Giles Watts of Stepchange Global, a provider of network solutions to the oil & gas industry, set out his vision for mapping reservoirs on the seabed.

The primary tool, Watts said, would be a carpet of up to 100,000 sensors trenched into the seabed to detect very small changes in the reservoir, with other technologies including satellite imagery, building up a complete picture of the state of a reservoir at any one time.

Watts was keen to emphasise that digital seabed technology “is not really about reducing costs: recovery is the real prize”.

Watts also issued a challenge to manufacturers at IDOC: “I look at some of the large and expensive flow meters we have here today, and think: “I have an iPhone here with 64 sensors in it. Surely we can do better””.

While recognizing that seabed data, due to its complexity, cannot be processed in real time, Watts said operators need to start evaluating data regularly. “A lot of data evaluation goes on in a pretty ad hoc fashion,” he said, and should be rationalised.
Reiterating the theme of other speakers, Watts emphasised that getting to “DOF 2.0” is “about organizational change, not technology”.

The conference culminated with two speeches surveying the state of DOF technology and adoption today, and the prospects for the future.

The Road Ahead

Bart Stafford of SAIC gave the conference his predictions of future DOF developments before addressing the challenges of getting DOF projects approved. Stafford took the conference on a ‘Jetsons’- style tour of future possibilities, from nanotechnologies deployed down-hole into a reservoir, through laser perforation systems and robotics, to virtual reality control rooms.

“The whole concept of virtual reality will continue to improve to the point where a control room operator can look at things in a way that is completely different to what we can imagine today,” Stafford said.

Stafford also thinks the advent of cloud computing is “frankly pretty exciting in the context of the digital oil field, not so much in terms to the functionality it deploys, but rather the ability to deploy in a completely different way”.

Committing to doing things differently is the key. “DOF is journey,” said Stafford. “If you are thinking that you can just install some technology in an oilfield and run some software and get a DOF I’d suggest you’re really not thinking in a complete way about what DOF means and what the concept can do for you.”

DOF “really is a concept; it’s not hardware and software. It’s a way of thinking about how you can improve your business. The technology is there to enable you, but it’s really about business process and organisation,” Stafford explains.

“We need to think bigger than Lean methodologies and Six Sigma if we are going to deal with things from a digital oilfield perspective,” he said.

“How do processes interact? What information do you need to make the best possible decision? Maybe it’s contained in anther discipline or process that you need to bring together”. Addressing the persistent reluctance of DOF projects to be approved at enterprise level, Stafford said “at almost every conference I go to people say “we’re still doing pilots, we need to take it slow and prove value”. Well, none of us disbelieve that there is massive value in DOF, we know it is there.”

Stafford also raised the classic implementation catch-22, asking “implementation costs right now might be difficult to justify, but how will costs come down without first doing things at enterprise scale?” Stepchange needed Tony Edwards, CEO of Step Change Global, closed the conference with a speech on what comes next for DOF.

Edwards began by looking, not at technologies, but at how oil companies work. Operators’ emphasis must be on collaboration, both within their organizational structures and with third parties. Soon, said Edwards, companies will be parts in an “ecosystem”.
Collaboration is extending to all parts of the Oil and Gas business and is how we will run our companies in the future.

Edwards said the industry must become attuned to the fact that the next generation of engineers will expect to work collaboratively, including over social networks. Instead of squeezing those capabilities out of them early in their careers, oil companies need to adapt to incorporate these new skills. “We need to stop recreating the industry in our own image,” said Edwards.

Increasing regulatory pressures, including climate policy, will drive the need for DOF technologies.

Carbon tax, credit and exchange systems will require accurate data gathering and presentation, especially in environmentally sensitive regions such as the Arctic. This will drive real time accurate environmental monitoring.

Following accidents like 2010’s Macondo disaster in the Gulf of Mexico, proving the safety and integrity of oilfilefield assets will also be an issue. “It is not going to be good enough to simply say “our plant is safe and we designed it to be safe”” said Edwards. “We are going to have to know it in real time and be able to show it.”

But it is not just a matter of meeting regulatory requirements or industry pressures: he potential commercial benefits of DOF are very real, said Edwards.

“In major projects the potential for the application of DOF that is fully embedded in the concept is huge, with potential reductions in capital expenditure for facilities in the range of 15-30% and estimated reductions in operational costs are around 50%. A huge opportunity is not being taken”.

“We now have the technology and the data to be able to truly benchmark performance in real time” said Edwards. “Supply chain and contractor models need to catch up with these new capabilities”.

The upstream sector has much to learn from other sectors, including downstream, defence and manufacturing. Edwards cited BAE Systems as an example of a complex business that has benefited from the process of connecting their assets together into a global asset services model, resulting in decreased costs and increased efficiency.

More generally, Edwards says it’s time for project managers to step up and and start making the case for investment DOF technology and organizational change to management.

Edwards concluded with a challenge to the delegates: “if someone gave you a small oil company now, today, how would you run it? Because I don’t think I’d run one the way I see them being run”.

IDOC 2011 – Abu Dhabi

Unless otherwise stated, all interviews and information here was gathered at May’s International Digital Oil Field Conference (IDOC) in Abu Dhabi, brought together the best of global talent on the issue. Oil & Gas Middle East tapped the pulse of the end-users, suppliers and technology integrators to bring you the 2011 Digital Oil Field Report.

Digital Dubai

Joel Chacon-Fonsenca, team leader for the Matrikon i-Field Soutions, a division of Honeywell, gave a presentation to IDOC delegates on how Dubai Petroleum had achieved an asset-wide real-time well surveillance and optimization capability with an out-of the-box solution.

“Dubai Petroeleum has deployed a field level real-time well performance monitoring system for all the producers and injectors in the entire asset, which includes over 360 wells,” says Chacon-Fonsenca. The well surveillance project kicked off in 2007. The pilot was so successful that the system was rolled out enterprise-wide in 2008.

“Notable success stories include the fact that many well problems were noted and solved in record time. In addition the monitoring helped unearth opportunities and well integrity issues.”

Chacon-Fonseca showed evidence of how the Honeywell solution had enabled a safer operation, which could achieve more with fewer people.

“Dubai Petroelum found that the Matrikon system has been instrumental in helping identify well performance related issues quicker and more accurately, minimizing production downtime and reducing the time spent by engineers in data gathering and issue identification.”

Oilfield Service Perspective

Oil & Gas Middle East took to the IDOC exibition floor. Bernie Fay, Production Manager for Iraq at Baker Hughes, was heartened that the attendance appeared to have doubled from 2010.

Fay told Oil & Gas Middle East: “if you look at the curve for the adoption of this technology in the Middle East, we are certainly behind the curve we are certainly behind some of the European operators.”

Baker Hughes is implementing DOF technologies in Iraq, including at the Rumaila, Az Zubair and West Qurna 2 fields.

“I’m in the artificial lift section,” said Fay. “The benefit [of DOF] is that operators in London, Milan and Houston can look at the data remotely. The operators are pleased with that, and we can now talk about real-life situations where we have put this in place”.

Robert Roemer, Program Manager for the Eastern Hemisphere at Halliburton, said the next big step for DOF technologies is scalability.

So far, said Roemer, DOF has been all about “mega-projects by the Shells, the BPs, the Aramcos”.

Now, Roemer said, is the time that DOF became available to everyone: “one system we had was for three guys operating in the Caspian, drilling delineation wells, two wells into a five-well project. They could get our whole system in one bag. We provided them with a geosteering solution on their laptops. Small footprint, fast deployment”.

In an increasingly challenging upstream market, operators from independents to supermajors are taking on projects in places where a large footprint is impractical, for cost, security or logistical reasons. “I hope that that’s one of the value opportunities for us,” Roemer said.

As an example, Halliburton have developed a real-time monitoring iPad app that any operator can download and login to.

The company has tested its DOF platform in Kuwait, and is in discussions about deploying it in the UAE, Russia and Norway.

In his words

vMonitor chief operating officer Sami Suheil was selected by the Board of International Digital Oilfield 2011 Conference to speak about automating oil and gas field production with wireless systems and role of wireless in enabling the digital oilfield. Below is an abstract from Suheil’s speech.

“It has been demonstrated that at the core of any implementation of a digital oilfield or a smart field lies access to accurate and reliable data. Monitoring well operating conditions and system bottlenecks using accurate and durable sensors and versatile flow computers, have contributed significantly to improving field management, but the trenching and wiring required to bring each new wellhead on line is an overhead that most field managers would avoid if they could.

Time and operational expense of trenching and wiring is time and money spent and lost in some cases!

Wireless systems eliminate the need for trenching and allow each wellhead to be brought on line and into production quickly. With the new generation of wireless communication, power management systems provide extended battery life and control capabilities with local intelligence as well as data accuracy and wireless link quality of service.
Additionally, these systems provide a secure wireless sensor network protected from both friendly and malicious jamming. This gives the field operators an opportunity to deliver a positive impact solution through cost effective and flexible installations providing reliable and timely transmission of production data.

However, automation takes time to install, and it has traditionally come at considerable expense.

As typical wellheads have no power and are usually located in remote locations, other major challenges that most field operators face are lack of remote monitoring and no visibility of well head data to the operators in the control room, lack of power availability, vandalism and theft or security concerns, high wiring cost, installation and maintenance in case of wired solution, in case of un-engineered wireless solutions—line of sight and reliability issues, high OPEX and CAPEX in case of wired solution or unmonitored situation.

Wireless promised to be a game changing technology in creating the digital oilfield, but promise has lagged performance, which has slowed the adoption process. Production optimization and data management for all types of wells depends on plug and play solutions without trading off performance.

Quality and timely information leads to better decisions and production gains, better decisions lead to better results, greater credibility and more opportunity.

It takes 2-3 companies to provide an end-to-end solution. With vMonitor field operators can get as much or as little as they want. vMonitor solution is as good as PLUG & PLAY. From hardware to software, vMonitor provides the ultimate end-to-end solution enabling the Digital Oilfield.”

ONLINE INTERVIEW EXCLUSIVE: Bart Stafford, Vice President at Wipro (formerly SAIC) and keynote speaker at IDOC 2011.

Bart Stafford’s speech at IDOC 2011 combined a spirited vision of future oilfield technologies with an impassioned rallying call to DOF advocates.

Oil & Gas Middle East caught up with Stafford after the conference for his take on the conference and a DOF future. Some key quotes: “Adoption is slow and I find this a very frustrating situation!”

“Oil company representatives continue to talk about DOF as being a process enabler, but there is also a lot of influence from software vendors who are selling a product as the answer to the digital oilfield approach. Software, and technology in general, are a critical part of the DOF approach but should not be the focus”

“At a time when energy demand is poised to see staggering increases from developing countries, it is clear that this approach is not only a better way to operate, it is truly our responsibility as an industry”

“We need to collectively stop justifying the development of the wheel and get on with developing a better race car!”