As the price of oil has fallen, the need for operational efficiency has heightened.

With layoffs, company consolidations and delayed or canceled projects, the need for operational efficiency has never been more urgent, said Jeff Jensen, an oil and gas application engineer for Siemens Industry.

“We’re all kind of in a place where we are battening down the hatches and trying to weather the storm,” Jensen said during a Hart Energy webinar on increasing efficiency and reliability in oil and gas production. “Even though automation can’t bring the price of a barrel back up, it can definitely help lower some of the operational costs.”

His words came as production in the U.S. remained at a high thanks to technology such as horizontal drilling along with other techniques that include multi-well pads, closer wellhead spacing and longer lateral lengths, which combined have made extracting hydrocarbons from shale technically and economically possible. But the drop in oil prices has put more emphasis on improving operations and profitability.

Added challenges, according to Jensen, are regulatory compliance—with methane emissions, arctic drilling and offshore BOPs regulations on the horizon—and operational reliability, which if lacking can run up costs when it comes to equipment failures, repairs and resulting downtime. Downtime at an FPSO unit of one of the majors caused a tanker miss an offload, costing the producer $47 million, Jensen said.

But advanced automation can help manage these challenges, he said.

“For visibility, we need to simplify the complexity of our service densities, and for operational reliability we need to improve the total cost of ownership performance, comply with the regulations and reduce the accidents through safety,” Jensen said.

How can companies accomplish these tasks? Jensen narrowed the path to four steps.

Eliminate: Map out processes in detail, identify areas needing better operational efficiency and visibility, and get rid of unnecessary steps. “Advanced automation technologies can help render many process steps superfluous whether it’s manpower or lack of data resources,” he said. “If a step doesn’t add value, it’s probably best to cut it out… This is the time to look at the process and decide what is there to eliminate.”

Simplify: Referring to the saying that “80% of your output often comes from 20% of your input,” he encouraged oil and gas companies to think about simplifying processes. Among the solutions is moving away from custom-built solutions and to off-the-shelf hardware and software, he said.

Standardize: Standardizing equipment allows companies to simplify processes. Jensen used maintenance operations, for example, saying if a company utilizes a particular brand of equipment—such as Siemens or Rockwell—then hiring an employee who has knowledge of that brand will eliminate the need to hire multiple people versed in several brands.

Virtualize: Hardware-based functions, including relays, switches and terminals, can be moved to software and reprogrammed as needed. “The virtualization of both hardware and software has been tremendous. You can have several different images of your operational equipment; you can have different libraries [for storage of software code],” Jensen continued. “By enabling your solutions through the cloud or remote access you’re able to simplify and standardize your equipment and use it … through virtualization.”

Siemens has used these steps in not only the oil and gas sector, but also in the auto, food and beverage, and chemical sectors, he said, adding, “We found that these four steps are broad yet comprehensive in terms of implementing automation.”

To help ensure greater performance reliability for equipment, he suggested companies:

  • Start with components, systems and solutions with ruggedness designed, engineered and built-in, and proven in use. “You don’t want a component that is designed for one operating environment. There is oil and gas in the Arctic as well as in West Texas, where it gets well over 100 degrees,” he said. Companies should also make acceptance testing mandatory for equipment such as top drives and mud shakers to maximize uptime before they are installed.
  • During the useful life stage, preventive and predictive maintenance should be the focus, he said. But “try to minimize technician troubleshooting via self-diagnostics and service time via plug-and-play modularity and self-configuring replacement parts.”
  • During the wear-out phase for equipment, he suggested maximizing uptime via long-term supplier spares, service and support. So it is critical when initially purchasing parts to think about how and whether the supplier will be around in the next 20 or so years and how the supplier will help migrate to the latest technology, Jensen said.

“Efficiency was an issue as well when oil was $100-plus a barrel,” he said, noting it was easier for some to buy more parts to replace broken ones instead of doing a root-cause analysis to avoid downtime. However, now operating efficiency is more urgent because of the need to increase margins despite the price of the barrel falling. “Automation can’t drive the cost of the barrel back up to $100 but [it] can help improve the operating costs and efficiencies.”

Contact the author, Velda Addison, at vaddison@hartenergy.com.