After a false start in the 1990s, when digitalization first became an industry buzz word, the upstream oil and gas industry now appears to be truly ready to embrace what some have called the 4th Industrial Revolution.
Early March, Norwegian oil and gas firm Statoil announced it will be opening an integrated operations support center and a drilling operations center in Bergen, Norway, to support the firm’s offshore operations on the Norwegian Continental Shelf (NCS).
Statoil says that the two new facilities will help improve production efficiency and the production potential at its facilities offshore Norway. Statoil’s longer-term vision is to roll out support to its onshore facilities and international offshore operations. This is not new to Statoil. Last year, it opened an operations support center in Austin, Texas, that currently monitors the company’s 1,100 onshore wells in the Bakken and Eagle Ford areas.
Statoil is not alone. All oil and gas majors have been staking out their digital ground in recent years. In 2016, Total announced it had the industry’s most powerful super computer, only to have BP lay claim to the “most powerful (computer) for commercial research”, in 2017, with 9 petaflops processing speed. In January this year, ENI said its HPC4 systems was now the industry’s most powerful computing system, giving the company a combined computational peak capacity of 22.4 Petaflops.
So what has changed in the past couple of years to finally make the oil and gas industry see the digital light? After nearly four years’ work cutting costs to regain profitability at US$40 a barrel, the industry is looking for radical changes to further transform its margins and safety. There’s only so long they can squeeze suppliers and defer costs.
Going digital, using big data, machine learning, etc., could help them drive long-term productivity gains and efficiencies. The World Economic Forum (WEF) estimated in a white paper with Accenture that digitalization has the potential to create around $1 trillion of value for oil and gas firms.
At the same time, the cost of these technologies, from sensors to cloud computing, is declining, while the communications capabilities, i.e. connectivity, is ever increasing, making their adoption more economically feasible than ever before.
The move towards digitalization has not bypassed the authorities, however, at least not in Norway. The same day that Statoil announced its plans to open its two onshore support centres in Bergen, Norway’s Petroleum Safety Authority (PSA) issued a report into the health, safety and environmental (HSE) effects of adopting digitalization, produced by Norway’s IRIS Research Institute.
It points out that the industry is in a complex position: it has a lot of existing, mature technology, but also a high pressure on improving efficiency and reducing costs and therefore an increased focus on the development and use of new technology—all while still operating with traditional systems and work processes. Managing this process and the interaction of mature and new technologies will need attention.
The PSA is not against digitalization, however. It says that use of integrated operations, remote operations, atomisation, robotics, artificial intelligence, etc., can produce more efficient work processes, replace manual labor, and yield better analyses and improved decision-making. But, using these technologies could also bring challenges, “notably concerning situational awareness, information security, human error and sabotage,” says the PSA. “The industry must therefore actively monitor changes related to risk resulting from digitalization.”
The perceived threat to the workforce from digitalization or use of robotics is a concern for some. In February, in the UK, the workers’ union Unite launched a campaign to “protect workers’ jobs as the energy sector starts to reply more heavily on robotics.” The union says that the trend towards full automation poses a risk to the workforce and it has developed a strategy to identify new technologies which could threaten employment.
Others don’t see it as a threat to jobs, more a change in the type of job people do and where they work. While there has been a lot of focus on robotics, the IRIS report says the industry’s main focus is on the development and use of tools and processes to improve decision-making, collaboration and automation.
Statoil says its integrated operations support center, which is due to open in summer, will enable more pro-active decision-making support to all Statoil-operated fields and installations on the NCS. Meanwhile, the drilling operations center will see monitoring and control of offshore well path drilling moved from offshore to a joint geoscience operations center.
The integrated operations support center will be connected to the Gina Krog and Grane installations, in the North Sea, and Asgard, in the Norwegian Sea initially, with roll out to the rest of the firm’s operated NCS facilities after that. The drilling operations centre will be ready to support its first operations this autumn, says Statoil.
Digitalization is coming and it’s coming fast. The PSA is looking to be ahead of the game. As part of its work, it is going to focus specifically on digital technology and ICT security in the industry, especially around operational technology, infrastructure and the HSE consequences of remote operations.
The industry too needs to be cognisant of how changes in the way it operates, through digitalization, impact the way it works and the safety of its staff. Longer-term, these changes might also require changes in regulations.