The disruptive force of digitalisation is being felt across most industries today and energy is no exception. Steady progress characterises the adoption of digital oilfield technologies across the industry, rather than a “big bang” transformation, with value delivered through improved field-to-shore communication, optimised production, improved safety and reduced costs.
However, there is a sense now, in part driven by a persistent low oil price and plentiful supply, that the industry should move beyond focusing on incremental value through efficiency to a more widespread digital transformation if it is fully to embrace the opportunities presented.
“Almost all major and independent oil and gas players already have some form of digital programme in place,” says a recent report from the consultancy PwC. “Some are making great strides – but few, if any, have captured the big prize: an end-to-end ‘rewiring’ that taps into digital’s full transformative power.”
Amongst other things, it’s likely that “rewiring” will demand a major rethink of the industry’s working methods, recruitment of talent, and, ultimately, its role.
This is a journey being taken by many companies in heavy industry; they have not had the life-threatening upheaval from digital experienced by consumer businesses such as retail, but they do see the need embrace the new possibilities coming from digital technology. The consultants McKinsey give the example of GE. Rather than just sell their customer a jet engine, for example, they can now use digital sensors to track how that engine is performing and offer maintenance and upgrades on it.
Julian Birkinshaw, professor of strategy and entrepreneurship at London Business School, has worked on digital transformation processes with companies from a range of industries including mining, oil services and banking, and knows that the starting point is always using data and analytical tools to extract more value out of current operations. “When you start applying digital techniques in any operation, typically you can dramatically increase their efficiency and effectiveness by understanding what’s going on better. Obviously information is the source of that,” he says.
“Then there’s another piece around how things get done and the use of so called ‘agile’ methods. This comes from the world of IT and software development where they are used to working in small, fast teams.” There are clearly questions about how far these kind of agile methods can go in an energy company with its well-defined processes and procedures designed to govern safe operations. “People at the top of energy companies like to be in control as you can’t take risks at an oil giant in the way you can at somewhere like Spotify,” adds Birkinshaw.
At the UK oil and gas company, BP, one of the pioneers of the so-called “digital oilfield”, Ahmed Hashmi, global head of upstream technology, says BP is encouraging people to be more agile and to do things more rapidly. After more than 30 years in the oil industry on both the commercial side and the technology side, and with a background in data science, he is excited by what he sees as a sense of rapid experimentation inside the company.
One example comes from the use of acoustic sensing. Initially designed to show the presence of sand in a well, the company’s researchers realised that the information the sensors were sending back to the company’s central “data lake” could also be used in conjunction with seismic imaging to deliver on-demand reservoir monitoring.
“When we gave the data to our technical specialists, we had certain applications in mind,” explains Hashmi. “But they surprised us with what else they could do.”
But oil bosses are also aware of another challenge to their digital transformation – a lack of fresh talent. “Young workers need to be actively pulled into the industry,” says a recent World Economic Forum report .
“However, millennials, projected to constitute most of the US workforce by the early 2020s, currently favour working in industries perceived to be "greener" than oil and gas.”
Greener is an issue. More exciting is another. Hashmi is working on it. “People want the same kind of satisfaction they would get working for a start-up – the excitement and energy,” he says. “It’s about giving people that rewarding immediacy of seeing the impact they create – and giving them the best tools to create that impact. I believe we can now offer this in the energy sector as well as opportunities to work on some of the world’s most complex challenges – at scale.”
Certainly there are reports of a vast range of tools being used by energy companies to improve the extraction of oil and gas including automated drill bits, undersea robots and HoloLens glasses. The main focus is to ease the hazards and challenges of accessing the often remote locations where oil and gas are found. Real-time data can be used to control the speed and pressure of drilling, for example, reducing the problems of broken equipment and even allowing remote drilling of wells. Similarly real-time data from oil rigs means they can be controlled semi-remotely reducing the number of people needed on the rigs, and helping to improve safety. All of which points to making oil and gas more accessible.
But Birkinshaw cautions that there is likely to be more ahead for the industry and it could be a long and probably bumpy ride. “Optimising your existing systems is one thing but rethinking the entire way your industry functions in society through digital innovation is a very different and ultimately more scary one,” he adds.
Birkinshaw gives the example of the car industry which has adopted a huge range of technologies to make cars more efficiently and even built computer power and connected technology into cars, yet faces more fundamental challenges from services like ride-sharing that mean people don’t even need to own cars anymore.
“The changes to the automobile industry are being driven by digitisation in ways that will make things car companies are doing at the moment completely redundant in ten years’ time,” he says. “The whole point of a digital mindset is to be attuned to all the different ways that digital can affect your business, not just your immediate job but all the other things that impinge on your job.”
Beyond Limits, an Artificial Intelligence and cognitive-computing start-up, is looking for ways to apply software first used in deep-space exploration to the oil and gas industry.
BP is investing $20m in the Californian company with the long-term goal of reducing production variability. If a machine could predict outcomes that cannot currently be predicted, it might cut unplanned downtime or production referrals.
“My vision is that we will eliminate these things from our vocabulary,” says Ahmed Hashmi, BP’s global head of upstream technology. “I believe that’s possible. But we have to learn our way into that future.”
The first projects BP and Beyond Limits are working on concern automation – of routine tasks, but also more complex ones where the machine evaluates the situation and then advises a human operator how to proceed.
The aim is to remove routine jobs from a technician’s workload, freeing them up to focus on more critical choices – choices that are then supported by machines.
“The technologies that were developed for space exploration have applicability in our world,” says Hashmi. “We both work in the unknown – and make the unknown known.”
Digital twinning has huge transformative possibilities. Already in use in the aerospace and car industries, energy is the latest sector to realise the benefits of large-scale digital models.
BP is currently developing digital twins of its physical projects, whether a new oilfield or operating an existing facility such as an oil and gas production platform. A twin uses visualisation technologies and augmented reality to build a digital incarnation of the physical asset; a 3D model that technicians, using holographic technology such as HoloLens glasses, can interact with, walk through and analyse.
With digital twin technology, new projects can be up and running more quickly. This is because different scenarios can be trialled on the twin long before cutting steel – saving both time and money.
The vision for the industry is to keep digital twins current beyond the start of a project, supporting ongoing maintenance with the ability to predict possible scenarios and reduce costly unplanned downtime.
BP has a digital twin of a gas-collection facility in snowbound Alaska, for example, and uses it to plan maintenance, identify equipment for decommissioning and perform planning for equipment installation – all from the comfort and safety of an office.
“It could be the ultimate prediction tool for a physical asset,” adds Hashmi.