Cost Reduction, Greater Efficiency Focus of Technology in 2017

Cost Reduction, Greater Efficiency Focus of Technology in 2017
Companies will continue focus on technology to keep costs low while enhancing efficiency and safety, industry observers tell Rigzone.

A possible oil price recovery in 2017 won’t change the oil and gas industry’s current focus on easily deployed technologies that reduce costs while boosting productivity and safety from existing assets, industry observers told Rigzone.

Just as they did in 2016, companies will continue to invest in advanced analytics to get more value from their data. The convergence of operational and informational technology is allowing enabling technologies such as the Internet of Things (IoT) to become more affordable and helping companies do more with less, Hege Wroldsen, director of the oil and gas center of excellence for global enterprise applications provider IFS, told Rigzone.

In 2017, companies will focus on smart technology investments as supply and demand becomes more balanced after a long period of volatility. To ensure business continuity and long-term growth, organizations will adopt asset performance management (APM) technology to help engineers, operators and executives alike will develop intelligent asset strategies that directly correspond with key business drivers, Louise Pattison, senior product manager at Meridium from GE Digital, said.

“In our new era of digital industry, data is a powerful tool when managed correctly. A single day of downtime can cost an energy organization millions in lost production, but APM eliminates failures and creates more effective maintenance programs to avoid downtime,” Pattison said.

Breakeven oil prices are the primary driver behind the oil and gas industry’s investment in digital technologies, such as advanced analytics to bring more intelligence from wells to above ground. For years, the oil and gas industry has been plagued with disparate systems and data sources, which added to costs, Peter Bryant, managing partner with business strategy firm Clareo, told Rigzone. This push crosses both international oil companies and national oil companies and conventional and unconventional oil and gas resources.

“It’s definitely not business as usual,” Bryant said of the oil and gas industry in 2017.

Companies Continue to Explore Cloud-Based Infrastructure

Oil and gas companies have also been exploring the potential of cloud-based infrastructure, Wroldsen commented. With a low-entry cost, cloud can speed up value realization and offer more agile, quicker-to-deploy solutions. Companies that survive the downturn “are the ones that know how to leverage enabling technologies like cloud and mobility, to help automate and optimize processes and apply analytics to improve operations out.”

Chris Niven, research director with IDC Energy Insights, also sees oil and gas companies looking at the potential of virtual reality and cloud, particularly private and hybrid cloud. He also sees cognitive opportunities in asset management to monitor field devices such as SCADA systems, compressors and controllers. Technologies such as virtual reality offer the potential for reducing costs and improving safety while ensuring compliance standards.

Cloud technology for oil, gas and petrochemical companies is hitting the mainstream, Laura Rokohl, director of product marketing at AspenTech, told Rigzone. Rokohl notes that more companies are interested in hosting supply chain solutions in the cloud. Cloud hosting services have existed for a number of years, but concerns by process manufacturing customers over security and accessibility kept oil, gas and petrochemical companies from investing.

“Both issues are now being alleviated by advances in technology, bringing the return on investment and innovations available from managed hosting to process manufacturers,” Rokohl stated.

In terms of IT spending, lower oil and gas prices not only have forced oil and gas companies to reduce costs but are also a catalyst for energy companies to streamline operations and develop a solid information technology (IT) environment while moving to cloud, applying mobility applications, and evaluating and running proof of concepts with analytics and other enabling solutions, according to the “IDC Futurescape: Worldwide Oil and Gas 2017 Predictions”, a yearly oil and gas outlook report. Niven said that IDC’s research indicates that oil and gas companies are looking to their strategic vendors to help them evolve their IT systems to improve efficiencies and add new technologies to quickly adapt to change.

Drones Can Help Companies with Safety Inspection

Drones can help oil and gas companies conduct inspections of hard-to-reach equipment and assets. Dick Zhang, CEO of Identified Technologies, told Rigzone that easing Federal Aviation Administration regulations in the United States and fully managed commercial drone solutions could prompt more energy companies to use drones in 2017. RTK, a new technology that will hit the market in 2017, eliminates the need to place ground control points and enable firms to survey large areas more easily and effectively.

“The Holy Grail for oil and gas companies is methane detection,” Zhang told Rigzone. “However, the technology is still in development to fly a drone over a pipeline and have it virtually smell gas without having to replace its battery constantly.”

Technology to detect methane leaks will be key due to the U.S. Environmental Protection Agency’s passage this year of additional regulations for oil and gas methane emissions.

Intelligent Rigs Could Drive Offshore Rig Uptime

Full autonomy for artificial intelligence and machine learning is still in the future, but analytics is still playing a role in driving offshore rig uptime, and enhancing reservoir recovery in onshore shale wells, will be a focus, Bryant said.  

One example of how technology could transform operations is intelligent rigs. Companies such as BP plc and Exxon Mobil Corp. are exploring intelligent rigs which, if successful, could boost operational rig capacity while reducing the number of rigs needed. Intelligent rigs – which use advanced weather forecasting and cognitive computing tools – generally imply the integration of IT, microelectronics, robotics, software and communications/networks to enable further industrialization of drilling processes, David Haake, IBM cognitive solutions team leader, chemicals and petroleum industries, told Rigzone.

“The combined effects of the intelligent rig concept include higher production through ‘automated’ best practices’ business processes, enabling drilling in harsher and more remote areas, higher precision drilling, early warning of incidents that can result in downtime, lost wells and lost production,” Haake explained.

It also can result in higher reliability, improved safety, and environmental protection. Costs can also be lowered and number of rig workers reduced, meaning fewer environmental, health and safety incidents can occur, Haake said.

“There is a current focus on advances in downhole sensing and control, but ‘intelligent’ approaches to all aspects of drilling, including rig floor robotics, managing rig moves, and asset management are progressing,” Haake stated.

In the case of intelligent drilling, the explicit goal is to reduce offshore staff, Haake said. Rig floor robotics show great promise not only for automating, but optimizing drilling processes.

“Many of the remaining roles in offshore drilling operations might move to onshore support centers and the roles themselves will change from driller to remote drilling subject matter experts,” Haake said. “This is more about productivity and safety, and the jobs that remain will be higher paid, as they will require higher skills.”

Monitoring Software for Maintenance, Cybersecurity Remain Focus

The oil and gas industry will continue to see the adoption of monitoring and maintenance software in 2017, Tony Gioffredi, CEO of Zahroof Valves Inc., told Rigzone. One important trend will be the update of physical equipment components using advanced technology to improve overall performance. Compressor valves for reciprocating compressors is one example. For years, technology on valves has been stagnant, but new advancements allow end-users of reciprocating compressors to create more value through extended run times, increased operating efficiency, lower repair and maintenance costs and lower inventory.

“Innovation in this and other components will also help the oil and gas industry adhere to tightening environmental and emission control laws, as these new components are engineered to operate with energy efficiency in mind. While Big Data and smart monitoring software can streamline operations in the oil and gas industry, it's the advancements in equipment and component technology that operators will look to enhance shareholder value through increased safety, improved performance and reduced operating costs,” Gioffredi said.

Reliance on emerging technologies such as the Industrial IoT does increase the cybersecurity risk that oil and gas companies face. With the increased presence of cyber threats on network communications throughout 2016, it’s likely oil and gas operators will shift their focus to more secure and reliable data communications solutions in 2017 for both onshore and offshore operations, Stewart Kantor, CEO of Full Spectrum Inc., told Rigzone.

How will technology impact the daily life of oil and gas workers, and change the types of skill sets needed by oil and gas workers? Field workers will still have physical work to do, but will need to learn to use wearable devices. The oil and gas industry still faces a shortage of people who can combine oil and gas industry expertise with new technology, Niven said.


Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

Mike Hall-Gardiner  |  January 26, 2017
It will be interesting to see if any of the “new builds” currently languishing in shipyards will be developed into the “intelligent” rigs of the future that Karen mentions. Automation of the drilling process continues to evolve but in my experience previous systems have all had limitations, requiring a skilled operator to ensure operations are carried out efficiently and safely. As the article states “data is a powerful tool” but only if it is relevant, accurate and correctly analysed. I would envisage that a true “intelligent” rig of the future will require a shore based 24/7 support centre, similar to the “maintenance centre of excellence” (MCOE) that BHP has setup to monitor mining activities within Australia. In the future low profit margin drilling environment asset performance management will certainly be the crucial to ensure that a rig remains both operational and profitable. A complete analysis and rethink of all maintenance tasks is required and where possible a move towards condition based monitoring of major equipment implemented. Resources also needs to be directed to the correct identification of critical spares, which in turn leads onto the benefits of equipment standardisation to allow the pooling of high cost critical spares within a fleet. The big unknown for drilling contractors is when will the price of oil rise to justify the investment in an “intelligent” rig? I believe that we may see more sharing of the financial risk of building and operating a new rig between contractor, oil company, shipyard and equipment OEM. We have already seen partnerships between Transocean and Shell, plus the recent announcement that GE Oil & Gas are to provide condition based monitoring of BOP equipment on 7 of Transocean’s rigs. Maybe the next step is Operator – Transocean, Builder – Samsung, Drilling Package – NOV, with GE O&G supplying the BOP and providing the asset performance management.

Most Popular Articles