All industries have recognized that digital technologies make it possible to provide more-efficient, accurate, and timely information to decision-makers. Industries have gone a long way in the implementation of digital and intelligent technologies and have already realized numerous benefits. However, leaders realize that the full value of any transformation is unlikely to be achieved by implementing strategies of the past. Nor will it be realized by implementing fragmented optimization efforts. The distinguishing factor among the various strategies is a clear demonstration of the difference between those who participate in the future and those who make it.
Although this work focuses on digital oil fields (DOFs), the same philosophy can be applied to any digital-transformational endeavor in any industry. Some of the content is based on actual survey results, field observations, and rational speculation about future trends and advances in DOF technologies and their implementation.
The infusion of digital technologies into hydrocarbon upstream industries has affected the exploration and production business environment significantly. In the new environment, it is imperative for organizations and their leaders to formulate and deploy strategies that strengthen:
- Organizational structure and capabilities to support the use and care of DOF
- Comprehension of business needs and expectations through clear communication
- Competencies of industry professionals to improve collective performance
Pioneers are still exploring venues to create adaptive business environments capable of integrating this technological change into their strategies and business value architecture. Continued improvisation of implementation methods can result in the perception that DOF is just too uncertain and wasteful to warrant significant time, attention, and resources. This article describes a more-ordered and -disciplined implementation method that may be used to facilitate tangible DOF progress, facilitating management of assets more intelligently.
Appropriately applied, digital technology is a game changer. Reality loudly says that applying digital technology is easier said than done, as many companies are finding out.
Most DOF projects have shown good potential but many have seen degraded performance because of both technical and business lack of readiness. In terms of implementation, company approaches to DOF are all over the map, with many approaches developed around existing vendor products rather than around work processes they wish to improve.
The marketplace, in general, has undergone the following five phases of learning about DOF:
- Technology
- Technologies work.
- Technologies alone fail to show expected business results.
- Value realization
- People and technology bring business value even from field trial tests.
- This is an important part of learning curve, demonstrating real benefits.
- The implications of these trial tests are critical to the pursuit.
- People, process, and technologies
- People are not the obstacle, and psychology is not the driver.
- It is a three-part systems problem-driven by processes aligned with business objectives.
- Value realization
- Measuring the value of technology alone is fruitless.
- Measurement of improved processes shows realization of business value.
- Value realization from improved processes can be difficult.
- Business value architecture
- An organization’s moving parts must be re-arranged for DOF.
- Strategic, operations, and technology processes must be in place before DOF can be optimized.
The following section is intended to provide the respected reader with reflections that are based on actual survey results and on field observations, which can be capitalized on to develop a robust program and to ensure continuous improvement.
Lessons Learned About DOF Initiatives
As a part of our pursuit of the DOF, surveys were conducted to evaluate the state of our transition to enhanced work processes digitally. In addition, we wanted to find out what professionals might need for their future development. The survey was conducted in various venues with more than 300 participants including middle managers, project managers, and project professionals from around the world. The results are shown in the following charts followed by a quick interpretation of the results.
Question 1: What are you most expert at?
Question 2: Why is the industry still not getting the maximum value of DOF?
Question 3: How have you observed DOF impacting our business?
Question 4: Which component brings higher value from DOF?
Question 5: For those who have seen great value of DOF, where is the value more pronounced?
Based on the questionnaire results, the following interpretations can be made:
- Most of the available DOF expertise is on technologies (hardware), with fewer experts on strategies, integration, optimization, and implementation.
- Most contributing constraint preventing operators from adapting to DOF are lack of experience and tolerance to change (i.e., people).
- While most of the participants see DOF endeavors as adding great value and creating more opportunities, others see DOF as introducing more complexities and additional expenditure.
- The greatest potential value of intelligent-field implementation is expected to come out of optimization and informed and predictive operations. Less value can be seen from knowledge management or technologies.
- Better integration and optimization is seen as the greatest value earned from implementation of DOF with the least value of it on improving health/safety/environment (HSE).
From the summary, the following realistic conclusions and expectations of an observer to current DOF can be made:
- The industry needs more experts in optimization and predictive and informed operations; however, the industry has more experts in technologies. Ironically, technologies bring the least value.
- DOF added value and created opportunities. The complexity from DOF—perceived by some of the participants—is mainly because of a lack of experience that resulted from the quick implementation of technologies. DOF initiatives can sometimes outstrip the ability of the organization to manage them optimally.
- The understanding of DOF technologies and expertise is still maturing. Companies may be fast at implementation but slower at utilization. DOF only provides the capabilities to manage business better.
- A clearer path to achieve the maximum value of DOF is a result of continuous improvement in combined endeavors that capitalize on the orchestration of technologies, knowledge management, business intelligence, analysis, and optimization; as may be seen in Fig. 1, which shows the five essential progressive steps toward the maximum value of DOF. The central layer consumes the highest investment, and outer layers bring more value.
Getting Clear on DOF Objectives
Management of an asset must clarify priorities by structuring how business is run honoring their defined strategy. They must decide how to incorporate DOF to business knowing that DOF comes as a supplement and will not change a strategy nor will it change the fundamentals. Among the goals are
- Reducing operational and capital expenditures
- Maximizing production
- Sustaining production
- Maximizing recovery
- Minimizing operation time
- HSE
Only once these goals are clear do DOF initiatives apply in terms of how to perform the subprocesses for operational work. DOF is not the means of getting this clarity on overriding objectives. The aim of DOF should be to eliminate work duplication not to add to work. Hence, DOF should make things easier, as opposed to making things more complicated.
Our Improvement Imperatives
The answers to one question in the survey of intelligent-field professionals gave us pause. We were just struck by the answers. Why is the industry still not getting the maximum value of DOF? The answers pointed to a “lack of experience and tolerance to change” as the most important reason. What could “lack of experience” mean? Our interpretation was that the respondents were saying they are not getting maximum value from DOF because
- They have not done this before or they have just started doing this.
- They have nothing to fall back on.
- They are not clear on how to proceed.
- They are not sure about the issues that will arise and what they should do about them.
- They have no clear roadmap.
After examining the survey results, studying the journal literature, and using common sense, we identified several actions that could be taken to help DOF professionals with their work. We high-graded our list to the following three critical DOF improvement imperatives:
- Aligning organizational structure for DOF.
- Clarifying business needs and expectations.
- Strengthening people competencies.
Our idea was to focus on only three improvement initiatives to best focus our work and use our available resources.
Imperative One: Aligning Organizational Structure for DOF
Organizational elements (e.g., structure, processes, resources, and technologies) are optimized over time around core work processes. An organization needs to make sure that its structure is built to perform the strategy its management has set out. Some DOF technologies may require reconfigurations to align support and improve capabilities.
Business value architecture (BVA) reconfiguration greases the skids for exploitation of DOF for business value. DOF must be supported by BVA. “Architecture” may be a fancy word, but it is being used today to describe how an organization or an enterprise is put together. Enterprise architecture is a comprehensive description of an organization’s elements (i.e., its moving parts), including enterprise goals, business functions, business processes, organization, roles, business information systems, software applications, and computer systems.
Configuring company architecture for DOF is decided based on management’s accessible knowledge to target specific business gains. DOF BVA can be described as a combination of the following three different structures that must be aligned and integrated to maximize their business potential value:
- Strategic business architecture, including the company’s DOF vision and strategic goals, measures, and incentives
- Work process architecture, including the matrix of technical and business work processes needed to achieve the organization’s strategic goals driven by DOF
- Technical process architecture, including the processes inside the information technology (IT) or research and development organization to manage the digital resources required to enable work processes and enterprise optimization
What comes next is a progressive and continuing development of a clear set of roles and responsibilities for the business with means to communicate them to relevant parties.
Imperative Two: Clarifying Business Needs and Expectations
Ownership in the era of the DOF is required at all levels of the company, with each level having a critical and unique role. Having various DOF project team members involved early in the development of DOF allows ownership over their own DOF segment performance. This, in turn, helps them develop a sense of responsibility and self-motivation. If these roles and responsibilities are not well-defined and performed effectively, the success of the DOF will be in doubt.
These roles and responsibilities can be defined to serve specific business functions/operations or facilitate more-efficient and -effective business work flow. The operator will need to design work flows; identify disciplines involved and the skill set required; and, finally, introduce appropriate roles and responsibilities that shall be an integral part of the business and are fully aligned with company short- and long-term objectives.
Leadership at each level has a critical and unique role. If these roles are not performed effectively, a project’s success will be in doubt. Leadership and management must understand that DOF is not something separate here; it is simply an enabler that should be a normal part of business.
Executive Management. Executive management sets the DOF strategy and balances resources. The primary roles of executive management are twofold. It must run the business well all the time and change the business well every time. Executive management must identify and authorize the DOF strategy and balance resources so that both running the business and changing the business can be successful. Other executive management responsibilities (that cannot be delegated) are as follows:
- Identifying the critical capabilities that will be needed for DOF
- Resourcing the DOF initiative (people, money, time, and focus/energy)
- Devoting equal effort to changing the business to use DOF as to running the business
- Monitoring the progress on the desired change to DOF
- Balancing run-the-business and change-the-business demands for resources
- Participating directly in the DOF initiatives in a variety of roles
Senior Management. Senior management builds DOF and organizational capabilities. The primary role of senior management in the DOF-exploitation process is to translate the executive-selected DOF strategy for future prosperity into initiatives or projects to build and develop the organizational capabilities for DOF success. The development of such capabilities can only be led at the senior management level.
Middle Management. Middle management validates new DOF capabilities while running the business. Middle management plays two critical roles during an organizational change. First, middle management’s critical and often overlooked role in organizational change is to lead the run-the-business approach on a day-to-day basis while the organizational change to DOF is being designed, developed, and implemented. Second, middle managers are key in both validating the design of the new DOF capabilities that are being put into place and working out the details of implementing those new capabilities at the supervisor level.
Supervisors. Supervisors lead employees to be ready, willing, and able for DOF performance. Supervisors are indisputably the indispensable critical link between management and employees. Like middle managers, supervisors have dual responsibilities: managing the organization’s day-to-day business while leading employees to be ready, willing, and able to perform tomorrow’s way of doing business with DOF in use.
Imperative Three: Strengthen the Competencies of Industry Professionals
The fundamentals of the petroleum industry have not changed much; however, the evolution of the various technologies has called for a new set of expertise, knowledge, and competencies. Any DOF training or development program must be fine-tuned to avoid dilution of the current skills base, whether petroleum engineering or IT. In the new business environment, petroleum engineers need to know more about DOF technologies and IT and vice versa. If the work domain of the digital engineer is as described, the needed competencies that jump out are as shown in Fig. 2.
What’s new in this figure is the addition of business principles to the known mix of petroleum engineering and IT. This business addition has to do with principles associated with work-process design and engineering along with program and project management.
Competencies Required for DOF
While the three competencies are obviously all needed to work the kind of process improvement described, all three do not have to reside in a single person. A three-person team might be able to pool resources and have what it takes for the job. On the other hand, two people might be an ideal fit as long as both have deep technical expertise in either petroleum engineering or IT and at least one has expertise in the business principles (i.e., process architecture and engineering as well as program management). The key to achieve the maximum value is ownership and collaboration. The following is a reasonable scenario for DOF engineers:
- Petroleum engineers using physics and engineering to identify core work processes that could be improved with digital technology
- IT its knowledge and skill to improve core business processes by enabling them with digital technology
- Business using business principles to make improved processes a part of day-to-day operations to gain organizational support for the operation of those processes to create business value.
A DOF team serves as the connector between engineering and IT and ensures that the company’s objectives for DOF vision and mission are executed and met across the entire asset value chain. This objective is accomplished by use of appropriate DOF technologies. Among the essentials that DOF teams must know
Work-process architecture—The operations side of the upstream business can be described as an organized set of work processes (architecture) that show the day-to-day work of the organization and its employees. A work-process architect would be an expert on the work-process architecture, knowing interdependencies, recognizing strong and weak points, and being able to identify the leverage points in the architecture that have the highest potential for improvement with better design or information technology.
Work-process engineering—Work-process engineering includes expertise in identifying, improving, and streamlining work flow as well as identifying the needed interfaces with digital technology to produce additional business value.
Program management—Program and project management provide the needed techniques, tools, and discipline to direct a program of work that includes process redesign, selection of technology, and both the readying of the technology for the organization and the readying of the organization for the technology.
One of the main functions of the DOF team is to create business environments driven by and aligned with the advancements and integration of DOF. The DOF team focus areas are shown in Fig. 3.
An ideal intelligent-field team consist of both strategy and tasks disciplines that have the expertise and horsepower necessary to properly embed initiatives across the design, installation, and operation phases of the intelligent fields. While the strategy team applies a top-down approach, the tasks team adopts a bottom-up approach. The strategy team consists of subject-matter experts whose responsibilities include but are not limited to defining a vision and a mission for intelligent field; setting standards; defining roles and responsibilities; and developing solutions, work flows, and educational programs. On the other hand, the tasks team focuses on end-users who use and operate the intelligent fields from the various petroleum engineering disciplines including reservoir, production and facilities, functional intelligent field teams, and IT. Given the cross-functional and lifecycle nature of intelligent fields, it is assumed that DOF initiatives have to be embedded in the appropriate departments, with proper processes (roles and responsibilities) and work flows (technical procedures). This requires the DOF team to be sufficiently resourced in order to maintain a permanent and visible DOF capability within standard work practices.
Next Steps for Getting—and Staying—Clear on DOF
It is both ideal and obvious for DOF to be embedded in the company strategies, structure, and roles and responsibilities. What is not obvious (to some) is the importance of maintaining a DOF corporate team with specific focus and responsibilities to ensure high-quality and consistent practice of DOF within an organization.
Why is that so important?
Old habits die hard. Organizations are hard to change—on purpose. Mature organizations are designed as stability structures that maximize efficiency and limit variation (i.e., change). Organization members must be engaged to plan changes in the way of doing business. Organizational change must be planned, authorized, and led for business value.
Actual DOF company structure is most likely to be the original company structure overlaid with DOF initiatives. The inertia tends toward the original company structure unless it is worked hard by a dedicated program that is maintained.
We must continue to pursue DOF but use an orderly and disciplined process. There is no need to reinvent the wheel for implementation.
We must continue to build capabilities: people, management, and organizational support capabilities.
We must concentrate on working top-down, bottom-up, and sideways. And we will remember that patience is a virtue.
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