HOUSTON—When speaking about digital technologies from a business perspective, Aker BP CEO Karl Johnny Hersvik is reminded of a familiar quote made by former Canadian hockey player and coach Wayne Gretzky: “I skate to where the puck is going to be, not to where it has been.”
The same holds true for the oil and gas industry as it ventures further into the digital technology realm, according to Hersvik, who was among the keynote speakers this week for Halliburton’s LIFE 2018 Forum.
“Make sure that you’re actually choosing technologies that are viable tomorrow,” Hersvik said. “Try to make the difficult choices, try to skate to where the puck is going to be and show some tenacity. Stay in there because the prize is extremely high.”
His words were delivered as the oil and gas industry increasingly turns to digital technologies to help improve efficiency and grow profits. Many companies are bonding with technology powerhouses like Google and Microsoft as well as smaller companies like Cognite to take advantage of digital technologies by putting troves of data to use.
The moves are also being made amid a strategic push for improvement across the entire value chain—something that some say requires sharing data to pinpoint and fix areas where performance is falling short.
Hersvik told the crowd that it is meaningless to talk about digitalization—defined by Aker BP as the “use of digital technology and tools to transform business processes”—without discussing the impact it has on a company’s business strategy. “If you implement a new app and it doesn’t transform your business processes, that is software implementation—not digitalization. That leads you directly into strategy.”
Stated simply, the strategy for the Norwegian Continental Shelf-focused E&P is to execute, improve and grow. If an activity doesn’t fit into one of these boxes, the company won’t do it, he said. Aker BP also won’t work with companies that don’t support an open architecture, or share data, Hersvik added, noting the company has had to close down contracts because of this.
For Hersvik, breaking down silos in order to allow the cross-flow of data within the business and among partners with various software or platforms are key to achieving digital transformation. The company, which operates the Alvheim, Ivar Aasen, Skar, Ula and Valhall fields and is a partner in the Equinor-operated Johan Sverdrup among others, aims to deliver full-cycle breakevens of less than $35 per barrel and produce oil below a total cost per barrel of $7.
Hersvik spoke about the company’s work to reorganize the value chain, considering “95% of all of our costs as an oil and gas company is in some way, shape or form vendor-related,” and creation of an alliance model based on a “one-for-all, all-for-one” concept in which everyone benefits even if the improvement was driven by only one partner.
To facilitate digital transformation, Aker BP has teamed up with several companies including Halliburton and its Decision Space (DS) 365 offering, which is used on Cognite’s platform. “All data on DS 365 are spread throughout the company on an open basis and vice versa. It allows 365 access to all process controls coming out of a rig regardless of who the vendor is,” Hersvik explained. “Logistical data that is in a completely different well stream will now flow directly into 365 and you can actually use that to optimize your on-rig behavior.”
This enables data architecture to be broken down, he added, noting the architecture of “plug and play” becomes evident.
“It will enhance the way we do collaboration throughout the entire value chain. It will make everybody’s performance in the entire value chain instantly visible to everybody else,” he said. “It will transform the way we think about updates because this well plan will be automatically updated.”
Aker BP is not alone in the digital transformation quest. Petrobras is on the journey, too. Augusto Borella, general manager of digital transformation for Petrobras, spoke about the company’s efforts.
Petrobras included some additional digital transformation initiatives in the company’s strategic initiatives last year, he said.
“We are starting to define one of the most difficult steps of the digital transformation: the roadmap,” Borella said, later adding the company’s focus is to treat data as an asset and deliver value through data.
“We need to remember that we are not only in an era of change but in a change of era,” he said.
The industry continues to push the envelope in terms of technology and innovation, according to Eric Carre, executive vice president of Halliburton’s global business lines.
“Today as we come out of one of the deepest downturns that we’ve ever seen in our business, our industry continues to focus relentlessly on returns, cash flows and efficiencies. This is driving an increasingly competitive landscape for both operators and service companies and we have to adapt to that change,” Carre said. “To remain competitive in this environment it is necessary to start thinking beyond traditional engineering improvements. Among others, we have to do a much better job of learning from other industries as well as from emerging digital technologies.”
Velda Addison can be reached at firstname.lastname@example.org.