Rich McAvey, Research Vice President - Oil and Gas at Gartner talks about the importance of digital technologies in the oil and gas industry, the existing challenges and how organisations can continue to remain impactful in the era of big data and constantly evolving IT needs
Digital oilfield technologies have helped in higher production, increased recovery rates and lowered costs. But is there still more work to be done in the middle east?
Digital oilfields are a decade old phenomena, but they have new meaning today and can be thought of in four phases. The first phase is to connect with sensors used the field. The second phase is to build some intelligence into the field by using the data to help make better decisions. And this work is mostly already accomplished.
We are now moving into a new era where we are going to actually call them digital oilfields for the first time. The term has new meaning which encompasses full enablement of digital capabilities. We are talking about remote control and operations; ability to embed algorithms and control activities autonomously in these fields; the use of big data tech analytics to bring in a new class of equipment; and more. So this goes way beyond what we’ve had in the past and enables a lot more to happen digitally.
And then there’s a fourth phase that’s coming - it really hasn’t hit the industry yet. We’ll call it autonomous operations. In the automotive industry we talk about self driving cars, in the oil & gas industry we’ll have self-driving mechanisms in the field as well; not just self-driving but self-operating activities. But that’s probably still a little bit down the road.
What are the challenges faced by the middle east companies in completely implementing the digitizing process?
I think that a lot of the companies have that same first challenge, which is the organisational culture of the oil & gas industry. It is siloed into very small stovepipes. For digital to work, it really has to be integrated at a higher level. Data has to be consolidated and integrated and the ability to optimise and predict requires an enabled core to support all of that. And that’s not consistent with the current organisational structures of the oil & gas companies.
The second challenge is that the vendors which provide software into this industry tend to use older architectures that are not as open, and hence they don’t integrate as well. We need the whole industry platform to come up to speed with modern technology standards or - web standards.
The third challenge has to do with internal management of the information. It’s never been designed to be integrated, and so data from a rig, isn’t compatible with data from the ERP system. It’s not a problem in terms of data quality issue it’s a design issue. So we have to redesign how we govern, store and manage our data so that it can be integrated to support the digital aspect.
How will digitalisation help in middle east oil exploration in remote areas?
The first is that it’s going to help strengthen the decision making in the field, and that’s through things like collaboration centres where people in the field can connect and interact with master engineers and technicians back in headquarters. So we can have a small group of people at headquarters who can support many remote assets. With industries having hard times, 444,000 plus layoffs, there isn’t as much talent to go around as there used to be. So this ability to have the talent you have available to many assets is a big benefit.
Probably the second big area is the ability to reduce the learning curve time. So by being able to collect all the data and carry out analytics we can innovate faster and improve operating practices faster. This is something we’re seeing really beginning to happen - maybe over the last 18 months - and we’re seeing tremendous results.
Implementing real time big data analytics will be the next challenge facing the development of digital oilfields. What progress has been made in that area and the area of data analytics in the middle east?
First, I have to clarify that that big data and analytics are different things. Big data is the volume and type of data. Engineering design data is not new, back office operational data is not new, but it’s the operational technology data that is brand new and hugely valuable. And we’re just learning it’s potential now.
As for the analytics side of it, we’ve been doing analysis since the beginning, but it’s becoming much more sophisticated than ever before. We look at it in two groups, citizen data scientists which comprise engineers, operators and technicians who are just as good with sophisticated analyses. If you can give them the data, the tools and the ability to collaborate, they can make amazing things happen. And that’s how operating cost reduction is happening really quickly in this industry. But some problems are really tough and you need a professional data scientist with very advanced quantitative skills to tackle those. And that tends to be subsurface analysis, or optimization of specialised equipment like refineries and natural gas trends. So it’s a little combination of them all.
With oilfields needing to digitalise various other aspects as well, especially information technology architecture of unconnected nodes, what is being done in that respect here?
The first thing that happens is if you look at the architecture that’s in place today, is that it’s very inefficient. There are multiple channels of operational data competing for the same pipeline of satellite connectivity to remote locations. And they don’t work together, sometimes it’s different vendors owning different channels.
There’s too much overhead, and it’s not optimised. Hence it’s artificially reducing the amount of effective communication capacity you have in the field. That has to all get cleaned up and consolidated into one sized, optimised, connectivity line, back to the headquarters. This is the sort of thing that telecommunications companies have solved years ago, now oil & gas companies have to do it to their sites. But that won’t be enough because we’ve started to generate so much data, that the next thing that’s already starting to happen is the ability to push analytics and autonomous control out into the field. It’s not about trying to bring back all the data but trying to do some of that work out in the field.
That’s sort of new and it’s scary to be honest because you are now trusting things you can’t see what they’re doing all the time. So there’s a risk management aspect of these things and it’s part of a cultural change and we need to have the right governance to control the liabilities over that. But that’s happening very quickly just because the value of that data and the use of it is so high.
How do we make sure that the information we are collecting has visibility across the board of stakeholders and the processes go across organisational boundaries?
We’ve just talked about the stovepipe nature and the silo nature that’s very much the culture of the industry, and information management today reflects that. If you look at a manufacturing company, there’ll be a Chief Operating Officer, who is concerned with how they do their work.
Most oil & gas companies don’t have a CEO, it’s the individual asset owners that control the space. So that’s what is needed: an effective governance model to go over the top of those business assets, which recognises the value of this information integration, has the authority to get work done but at the same time can help sort out the priorities. This will take a long time, and you can’t do it all at once and we need a governance model that can pick which areas to start with and manage progress over time.
What is being done in the middle east to tackle the possible threats and vulnerabilities associated with cyber security?
This is of course a challenge for everybody given the geopolitical importance of oil & gas and national energy policies around the world. And it’s a case where normal businesses have to prepare and defend themselves against very advanced government agencies who are interested in, and have means for, collecting information that are outside the bounds of normal business.
If you step back from it, this isn’t something that is a quick-fix. In fact, this is something you have to continually improve. You need a risk management programme that can identify what are the biggest risks; which are the highest risks you’re exposed to and what are the best technologies and practices for mitigating that risk; and every quarter, you have to re-evaluate what the areas are that you have defended, if you have in-depth defence and are comfortable with the level of risk exposure you have at a particular site (and if not, get that fixed); so on and so forth. You need a risk management programme to identify the priorities.
How far has the digital oilfield market grown - globally or in the middle east - and how much is it predicted to grow in the next five years?
I see more of it as a digital oilfield transformation than growth. That low-level, connected, intelligent oilfield is pretty much most fields today. What is happening is, the level of capability is thickening in all of these fields. As a result, there are more capabilities, automation, etc. However, it requires another good decade of work get the existing problems solved.