Harnessing Data To Overcome the Barriers of Digital Adoption
Digitalization in the oil and gas industry has been the focus of much discussion, but little has been written on the slow rate of adoption. This paper outlines some of the barriers the industry faces as it assimilates into Industry 4.0—automation and data integration in manufacturing.
In recent years, the benefits and opportunities presented by digitalization in the oil and gas industry have been the focus of much discussion. However, little has been written on the slow rate of adoption of digital solutions in the industry and some of the challenges facing operators. This paper aims to address these topics by outlining some of the primary barriers the industry faces as it assimilates into Industry 4.0—the current push toward automation and data integration in manufacturing.
Digitalization Value and Drivers
Over the past decade, Industry 4.0, the Internet of Things, and the wave of digital solutions they encompass have affected nearly every aspect of life. The declining cost of smart sensors and data storage, coupled with an increase in the reliability of communication networks and advances in data analytics, has driven a rapid pace of digital adoption across all industries.
Despite these advances, oil and gas operators have been slow to adopt new digital solutions. More importantly, they have been reluctant to adopt new internal operating and business models, thus inhibiting their ability to fully realize the savings and efficiency gains that can be generated through digital transformation.
This has not been the case in other industries. Many have experienced the quantifiable value that can be generated by leveraging the capabilities of advanced digital solutions. A few real-world examples are outlined in Fig. 1.
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Why Has the Industry Been Slow To Digitize?
Safety Risk. The inherent safety risk posed by oil and gas operations has meant that the industry has had to remain conservative in its adoption of new technologies. Any solution that has the potential to change a process must be well proven before it is deployed.
Cost of Unplanned Downtime. Another driving force behind the industry’s conservative nature is that most facilities and processing plants are designed for continuous operation with minimal scheduled downtime. This is in stark contrast with other discrete process facilities, such as automotive plants, where work cells can be removed and retooled for new car models, or the rail industry, which can introduce new rolling stock or take equipment out of service for refurbishment.
Cybersecurity. By far, the most cited concern regarding the adoption of digital solutions in the industry is cybersecurity. The industry has always been secretive with any information relating to operational performance and the simplest approach to maintain that secrecy is not to share any data. While no industry is safe from cyberattack, the energy sector presents an especially attractive target because of both the high value and vulnerability of the operational data, as well as the effect that can be created from successfully executing an attack.
Two of the primary cybersecurity trends that need to be addressed in the industry include:
The shift of cyber threats from IT to OT infrastructures. One of the major shifts industrial companies are seeing in cybersecurity is that attackers have begun to move their attacks from traditional IT (information technology) infrastructure to OT (operational technology) targets, which are the machines, systems, and networks that are directly used at plants and in operations. OT systems are often decades old and, thus, far less protected than IT networks. As a result, attackers target OT not only to steal and destroy data, but also to affect critical operations and safety. This inevitably raises the profile and profitability of their attacks.
Cyber risks across the supply chain. While an increasing number of oil and gas companies are taking proactive measures to protect their assets from cyber threats, many are still reluctant to embrace digitalization because of uncertainty about the cybersecurity practices of partners in the supply chain.
What Can Be Done To Facilitate Digital Adoption?
Embrace Digitalization. In order to realize the full potential of Industry 4.0, the industry will have to become more open to embracing digitalization and being more digitally integrated across the entire supply chain. In addition to its inherent conservatism, another philosophy of the industry culture that operators must reevaluate is their sensitivity to sharing data. This makes it virtually impossible to leverage data and connect information flows in ways that will tangibly improve how the business operates. Although the status of some equipment can be used to infer production performance, there is a large volume of data that can be shared without the risk of divulging sensitive information.
Adopt a Holistic Cybersecurity Approach. While many advanced technologies and methodologies exist today that can help operators secure their operating environment (i.e., unidirectional gateways), the industry must work in unison if it is to keep pace with evolving cyber threats. Additionally, companies must dedicate commensurate financial resources to integrate cyber vigilance at every level of their enterprise. A number of oil and gas companies with a shared concern over the current lack of industry preparedness are showing leadership on this front. In the US, the Oil and Gas Information Sharing and Analysis Center collects information provided by companies, synthesizes this information, and turns it into actionable data about common threats. More companies are also working with regulatory leaders to develop effective national cybersecurity policies for critical infrastructure. These collective actions are important but not sufficient. Companies must adopt a proactive approach to protecting their own critical assets.
Reevaluate Talent Acquisition and Human Resourcing Strategies. Attracting and retaining talent is a challenge that the oil and gas industry has been dealing with for quite some time. While many companies and trade associations have taken measures to help fill the void caused by the Great Crew Change, the wave of digital technologies sweeping over the industry is giving rise to a new environment where operators are being forced to compete for talent with the likes of Google, Alphabet, Apple, and many others. There is immense competition across industries, from finance, to healthcare, to technology, for young data scientists, programmers, software engineers, and experts in artificial intelligence and robotics. Labor market research shows that these positions are at an above-average difficulty to fill than other positions in the US. There is a very low candidate supply and high competition from highly dispersed organizations. More often than not, these professionals gravitate toward more-attractive career paths where they can work in a millennial-driven environment with their peers. Right now, the oil and gas industry is at a significant disadvantage, as it simply does not fit that bill. Companies will need to approach recruiting on a more strategic level. They will need to find new and innovative ways to engage young professionals and be open to creating more-collaborative work environments that allow them to compete and attract talent on a global scale. Capitalizing on digitalization will also require companies to invest in training their existing workforce.
Initiate Cultural Transformation. Experience implementing digital solutions across multiple industries has shown that the benefits of embracing digitalization increase greatly when there is collaboration and shared data between stakeholders. The oil and gas industry is no different and can benefit by embracing a more open ecosystem, where vendors across the supply chain can work together to deliver projects jointly with their suppliers. Reaching the point at which companies feel comfortable sharing data in a secure but open environment will be critical as the industry forges ahead. Achieving this will require a commitment and willingness from individuals at the top of the organizational hierarchy to create a corporate environment that prioritizes innovation and technology adoption. Overall, operators must begin to embrace the notion that capitalizing on Industry 4.0 is not something they can achieve on their own.
Where Is Digitalization Heading?
While big data and the cloud have been the subject of much attention in recent years, the trend in the future will be for artificial intelligence (AI) to be pushed into edge computing. The advantage of edge computing is that decisions and actions are real-time, independent of Internet connection, and can be based on large volumes of high-frequency data. This development will be made possible by the rapid development of edge-processing capability and cooperation across other real-time-based industries.
Drones equipped with sensors can serve as a vehicle for inspection and are far more accurate and reliable than humans. In addition, replacing humans with drones or other technologies for inspection purposes improves safety greatly by eliminating the need for personnel to enter hazardous locations.
Another area where AI will develop is the capability for edge-computing devices to collaborate with each other. The increasing low cost of processing capability, coupled with advances in analytics, will allow the sensor itself to become the edge device and perform its own measurement validation. This would not be restricted to analyzing direct data, such as signal-to-noise ratio, but having an awareness of the environment around the sensor.
In the coming years, AI will replace much of the diagnostics that are currently being performed by the operator and will be used to provide operator guidance and assistance. Once the assistance or decision support becomes reliable, the loop will be closed with automated actions and the result will be autonomous operations.
This article, written by JPT Technology Editor Chris Carpenter, contains highlights of paper OTC 28699, “Effectively Harnessing Data To Navigate the New Normal: Overcoming the Barriers of Digital Adoption,” by Bruce Bailie and Matthew Chinn, Siemens, prepared for the 2018 Offshore Technology Conference, Houston, 30 April–4 May. The paper has not been peer reviewed. A video of the presentation of this paper can be found here.