The pace of change is accelerating on a global scale, and the agent of this accelerated pace is digitization. Digitization has had a profound impact on our personal lives. It has transformed and created industries and has creatively destroyed some existing business models. Certain industries, such as finance, automotive, aerospace, communications, and media, have led the way. Others have been slower to adapt.
The oil and gas industry is a major driver of high-performance computing development, particularly for upstream seismic processing and permanent field monitoring. The oil and gas industry currently has the highest refresh rate across all industry sectors that high-performance computing addresses. Yet findings from leading information technology research and advisory firms such as Gartner and AMR indicate that the exploration and production (E&P) industry is in the low quartile for digitization.
Realizing the Digital Vision
“Digital oilfield” is an umbrella term for technology-centric solutions that allow E&P companies to leverage limited resources and improve decision making to maximize production; minimize capital and operating expenses and environmental impact; ensure the safety of the people involved; and protect the integrity of associated equipment across the entire upstream process. It encompasses both tools and processes surrounding data and information management. Its success depends on capability, organizational alignment, and—ultimately—attitude.
The industry has crossed many of the technology barriers to enabling the digital oilfield. Remote sensing is available for almost all facets of drilling and production operations, and the number of choices for network transmission of data continues to expand. The industry has invested heavily in knowledge management systems, real-time operations centers, and collaborative decision environments. It has become adept at moving data gathered from field devices into software applications and using it to enhance some specialized field operations. However, the industry has not yet succeeded in achieving the cross-disciplinary data transparency, information sharing, process integration, and collaboration that are essential to realizing the ultimate vision and value of the digital oilfield. Examining other industries’ paths to digitization may help us in our quest.
A Look at Aerospace
A number of parallels can be drawn between the aerospace industry and E&P, including the fact that both involve “flying in the dark”; both rely on close, long-term partnerships among operators, service companies, and equipment manufacturers to generate economic value; and both envision varying degrees of “unmanned flight” to reduce the margin of error, address safety and cost opportunities, and open additional opportunities to create value.
Aerospace has benefitted from digitization for several decades. The first aspect involved integrating the supply chain. Digitization of scheduling, logistics, inventory tracking, testing, and other functions reduced costs, improved efficiencies, and reduced lead and cycle times. Another area of focus was traceability and visibility of critical parts and components through all tiers and within specified time constraints. Integrating asset records, service bulletins, and safety procedures throughout the supply chain not only simplified traceability and prioritization, but also improved productivity, compliance, the ability to respond when an incident occurred, and the ability to identify where a problem originated and quickly correct it.
The second aspect of aerospace digitization focused on collaboration of engine design. Traditionally, new design cycles could span a decade or longer, plus further time to prove manufacturability and drive down cost. Design took place in isolation until the new engine could perform at certain parameters, and only then did the supply chain become involved. So, an engine may meet certain design and performance criteria, yet still need further modifications to be viable for manufacturing and to meet customer price expectations. To dramatically reduce design time frames, the industry had to embrace a different approach to new product design. The new approach involved forming collaborative design networks across multiple organizations in the value chain for joint development. This was to drive greater customer value, eliminate waste, leverage a wider net of talent (specialists), and, ultimately, lead to better and faster design.
Improved modeling and simulation capabilities, and tapping into a wealth of performance data from histories of in-flight equipment, also contributed to improving design capabilities and shortening lead time. Today’s engine development cycles are dramatically different from before digitization and collaboration, with significantly reduced development time frames.
The third aspect of digitization focused on the life cycle of an asset. The life cycle of an aerospace asset spans more than 25 years and is dependent upon flight hours and conditions. Managing the asset throughout its life cycle can be extremely costly, and airline operators are continually pressed to optimize flight time and reduce on-ground time. Historically, when an engine needed repair or overhaul, the service provider would literally tear it apart to understand the configuration before making the repair. Heavy repairs often required more than 100 days, resulting in millions of dollars in “grounded” costs for a parked asset. Today, integration of digital asset and service record maintenance, remote monitoring and diagnostics, and information mined from in-service equipment has helped to cut repair and maintenance cycle time, minimize time on ground, and provide valuable feedback for future product development.
Advances in remote monitoring and diagnostic capabilities have advanced to the point that we literally have a flying data center that provides more data than we know what to do with. The key is determining what business problem we are trying to solve. With the insight provided by digitally enabled information and analytics, business models in the aerospace industry have evolved and new ones have emerged. Companies that began by selling equipment and parts moved to selling systems and then offering fleet management programs, nose-to-tail management, and power by the hour—all because the wealth of information and the ability to effectively manage it have made it possible to model the cost of operating an asset.
Great Heights to Great Depths
Many of the digitization ideas that have worked for aerospace can also be applied to E&P. For example, a cohesive, integrated supply chain can enable consistent flawless execution with the right people, the right equipment, and the right materials. Automation in the field can drive productivity, visibility, and knowledge capture.
Cross-disciplinary, simultaneous modeling and simulation of discrete products, such as drill bits, and formulated products or systems, such as chemicals or drilling fluids, could dramatically impact the ability to test for variable conditions. For example, in addition to modeling the drill bit and simulating its rotation in a particular formation, applying mud, and simulating under various conditions could not only improve design and test time, but also deliver higher quality, higher performance, and safer products and systems. Collaboration around the interoperability of systems and components through industry standards would support system thinking.
Remote monitoring and diagnostics capabilities offer the same benefits for managing the life cycle of hydrocarbon assets as for managing the lifecycle of aerospace assets. Integrated asset monitoring enables simulation and intervention for reservoir optimization. We can evaluate the impact of variables for desired outcomes, such as maximum extraction of oil, minimal water production, and maximization of net present value. Whereas the variations that exist in aircraft and flight conditions are pretty much known, unpredictability in geology and reservoir development—undeterministic characteristics—limit the ability of the E&P industry to capture meaningful information and, thus, impact the quality of decision making. However, continued advances in technology will improve our ability to capture meaningful information and enable reservoir-specific algorithmic knowledge development.
From Future to Present
Integrated operations are heavily dependent on technology and digitization. Today we can monitor, manage, and optimize specific operations remotely. End-to-end digitization will enable remote operations from seismic to abandonment. Similarly, the ability to integrate disparate data from these operations, make it available in real time, and couple it with collaborative techniques that tap into expertise across disciplines, without geographic bounds, will make it possible to optimize production in real time. Intelligent systems with embedded knowledge learned from humans will be able to observe, evaluate, and make adjustments in advance of changing wellbore and geologic conditions. These achievements will both enable and be predicated upon moving away from silos of information and skills to collaborative, real-time optimization of the entire supply chain and the entire asset life cycle.
Oilfield digitization will accelerate employee productivity. It will enable fewer people to accomplish more and better leverage their expertise. It will help close the labor and skills gaps that threaten to inhibit the oil and gas industry in reaching its full potential for value creation.
While there are challenges that need to be overcome with securing data and communications, changing roles and responsibilities, and changes in workflow, E&P digitization could lead to new, and more productive, business models for the industry.
The E&P industry has been on the path to digitization for a long time but has tremendous opportunities yet to be realized. Many industries that now lead in digitization were driven in their resolve by either great economic pressures or risk of industry destruction or disruption. The E&P industry faces no such immediate risk, but it is not beyond the realm of possibility. The industry stands at a crossroads. It can decide now to make investments and attitudinal changes necessary to break down barriers to digitization and accelerate progress. Or it can risk being forced by external forces to make the same, or tougher, decisions in the future.
Archana (Archie) Deskus is vice president and chief information (CIO) officer at Baker Hughes. She previously served as vice president and CIO for Ingersoll-Rand and has more than 2 decades of experience in the aerospace, industrial, and consumer products industries. Deskus held various positions at United Technologies for 19 years and has been executive director, infrastructure and e-business at Pratt & Whitney, and vice president and CIO at Carrier North America. She also worked as senior vice president and CIO for Timex Corp. She earned a BS degree in business administration/management information systems from Boston University and an MBA degree from Rensselaer Polytechnic Institute.