Owner/operators pay a tremendous cost for poor management of processes related to the creation, use, and care of their assets.

According to ARC Advisory Group, a research and advisory firm focusing on manufacturing, energy, and supply chain solutions, a root cause for much of this cost burden is poor communication among stakeholders who are responsible for the following business processes: 1) design and build, 2) operate and optimize, and 3) maintain and improve.

While these challenges span a range of industrial sectors, they may be especially acute in the upstream oil and gas industry, given its globally dispersed nature and heritage of asset independence.

In two recent reports, ARC has identified attempts to quantify costs related to poor process integration, put forward an asset management model that addresses past inadequacies, and suggested that a technology infrastructure is emerging that is more propitious to the job at hand.

Another perspective

In today’s world of constrained human resources supported by productivity-enhancing computers, the traditional asset-management model represents a limited view of what constitutes a capital asset. According to ARC, human and “virtual” assets now must be taken into account in addition to physical assets.

Though human assets have always been a part of the picture, these assets are not always used to the greatest advantage. To ensure that human assets optimize investments in physical assets, hiring and training must be synchronized with acquisition and startup of associated physical facilities. The other piece of the equation is virtual assets, which include information such as IT solutions used to create, use, and care for physical assets. An interesting fact is that for many people, the virtual asset is their only interaction with the physical asset. Virtual assets, therefore, are of great value to asset-intensive organizations, “Yet it is the least appreciated ‘thing’ in most asset management programs,” according to ARC.

Without considering all of the assets, design decisions that look good from a capital investment perspective can increase operating costs. To avoid those potential pitfalls, says ARC, “Recent developments in analytics, modeling, and simulation make it possible for anyone associated with any asset lifecycle stage to measure performance, analyze it for the cause of performance constraints, and identify the best improvement alternatives.”

The oil and gas industry is familiar with the mix of models, real-time sensing and monitoring systems, and analytic tools central to the production process. It probably is not a stretch to say that interoperability among these platforms may be what matters most.

A practical solution

To bring this conceptual discussion down to earth, the fact is that using emerging technologies such as services oriented architectures can achieve interoperability across platforms relevant to design, operate, and maintain.

Proprietary technologies can be used to achieve one-off integrations that deliver benefits. It is more likely, though, that what are really needed are the services of major enterprise vendors. Working in partnership with oil and gas industry partners, these multibillion-dollar software vendors have the deep pockets and development capabilities needed to address the industry’s most compelling virtual asset challenges.

For the upstream oil and gas industry, the answer is not found necessarily in the enterprise vendors’ core enterprise resources planning (ERP) solution, even though ERP is the system of record in most other industrial and commercial sectors. But solutions are available.

Oracle Corp., one of the leading enterprise vendors, describes its upstream oil and gas industry solution as follows:
• Data management using business intelligence, data warehousing, and the PPDM (Public Petroleum Data Model);
• Integration of 3-D geospatial visualization with structured and unstructured operational data;
• The enterprise upstream solution from Oracle and P2 Energy Solutions; and
• Integrated customer resources, order, and field service management.

Undoubtedly, this approach to managing business practices is somewhat off the beaten path for the oil and gas industry, but it might be worthwhile to consider the potential benefit from enterprise vendors’ offerings to assets across the board. The options and opportunities presented by a different approach could open the door to greater productivity and profitability.