Meet Maverick NextGen Energies, an energy producer whose savvy end-to-end use of data and digital tools sets a shining example for how E&P companies can evolve to meet the new demands of today’s marketplace.
Maverick epitomizes the digital era definition of “intelligent enterprise.” It leans heavily on tools like machine learning, artificial intelligence and predictive analytics to leverage the huge amounts of data it culls from connected assets across a vast and diverse portfolio of energy businesses. To reinforce the use of best practices across the enterprise and optimize its assets, it houses most of its software-based systems and processes in the Cloud, so as big as Maverick is, it stays lean and agile enough to consistently uncover new opportunities and pounce on them ahead of the competition.
These kinds of bold strategic maneuvers would make Maverick a role model to even the most forward-thinking of energy companies. If Maverick were a real company, that is.
In fact, Maverick is a digital figment of the imagination, a model of what an intelligent E&P enterprise could and perhaps should look like, developed over the past couple years by Shell, with the help of PwC and SAP, to provide the company with a guiding vision for staying competitive using the latest generation of digital solutions. “It’s really going to be an effective change tool to help change the mindset of what the art of the possible is,” said Shell CIO Jay Crotts of Maverick.
Using learning from the Maverick exercise, Shell is discovering what’s possible as an intelligent enterprise. And it is not alone. E&P companies around the globe are exploring ways to deliver more value to customers, enabled in large part by data and digital tools that are widely available to E&P companies today. But successfully evolving into an intelligent enterprise entails not only investments in the right tools but a commitment to follow several key fundamentals:
1. Embrace end-to-end processes. To find new ways to be agile and innovative, even when commodity prices are low for extended periods, energy companies are shedding complex, siloed custom IT solutions and processes in favor of simplified, end-to-end business processes and connected ecosystems where data, learning and best practices flow freely but securely across the enterprise. They’re doing so by implementing comprehensive, real-time planning, forecasting and modelling, and by creating scalable processes and systems through automation, AI and machine learning.
On one level, digitization serves as a lever for automating day-to-day business process to improved productivity and efficiency in the field and back office. By connecting assets across plants and fields to a central digital core using IoT sensors, companies have the means to collect and analyze data in real time to see the Big Picture, so:
• The condition and performance of assets can be monitored, managed and maintained centrally to maximize equipment uptime. With a pump in the field, for example, sensors monitor pressure, temperature, vibration, etc. Machine learning tools in the Cloud define what’s normal and what’s anomalous behavior for that asset, so a predictive maintenance program can be tailored to that asset. From there, the system can issue a maintenance work order, source a replacement part, and even identify the most appropriate contractor from the company’s contingent work force to perform the maintenance; and
• If an issue is encountered with a field asset, digital tools can use sensor data to reproduce that asset’s behavior in the lab to diagnose a cause. The system then can arm field workers with all the information they need (work order, up-to-the-moment reports on conditions around the failure site, manufacturer disassembly and repair specs, etc.) to address the issue.
This simplified, end-to-end approach helps to optimize an E&P operation, freeing a company and its employees to focus on higher value pursuits and innovation. It becomes a strategic enabler for companies to pursue new business models that leverage suppliers and customers and focus on value-creation for the customer (via new outcome-based offerings).
2. Embrace market-standard IT approaches. As they worked to become leaner in the low-commodity-price environment that prevailed a couple years ago, energy companies realized they could run more efficiently and innovate more effectively by replacing complex, siloed IT solutions and processes with simplified market-standard digital approaches.
Shell, for example, has committed to follow an 85/15 rule with its digital strategy, whereby 85% of the IT solutions on which it relies are market-standard and the remaining 15% are proprietary solutions, Frank Westerhof, the company’s enterprise platform manager, explained at the Best Practices for Oil and Gas Conference in September 2018. That 15% is the “special sauce”: custom digital processes and solutions the company can leverage to distinguish its brand and to explore and build out new products, services and business models.
Such an approach could start with an intelligent, Cloud-based digital solution for collecting, analyzing and acting upon the data that fuels the intelligent enterprise. “Data, I think, is the new oil,” said Shell’s Crotts.
3. Embrace the public Cloud. Energy companies are fast realizing that moving key business processes to the public Cloud and embracing SaaS solutions give them the means to optimize and innovate on the fly. To that end, a consortium of leading E&P companies, including BP, Devon Energy, Apache, ConocoPhillips, Chevron, Equinor (formerly Statoil) and Shell have joined forces to develop parameters for market-standard upstream digital solutions housed in the Cloud.
“For us it’s important that as an industry we define the right sort of processes and standards for oil and gas,” said BP’s Dan Smith. “We want to collaborate with other operators and other industry players to do that definition…At end of the day this is about removing complexity…from our landscape.”
When new U.K. E&P company Assala Energy launched its African operations using assets purchased from Shell Gabon, it relied on digital tools in the Cloud, as well as industry templates, to become operational in a mere six months.
Besides rapid implementation, digital systems and processes housed in the public Cloud bring a new level of standardization to IT, along with lower total cost of ownership and ease of scalability. Unlike Maverick, these benefits are real, not just hypothetical.
Brent Potts is senior director of global marketing, oil and gas, at SAP.