The digital oilfield – understanding the potential

Nick Kamen, Vodafone, UK, reviews the importance of wireless communications and M2M technology in the ongoing search for oil and gas.

Today’s oil and gas industry is confronting twin pressures. Demand for hydrocarbon fuels continues to rise, but extraction is becoming more and more challenging. While the high cost of energy has enabled the commercial exploitation of shale gas, traditional oil and gas companies are having to go further and deeper to locate new fields.

The global appetite for energy is insatiable, so new sources of oil and gas must be found and tapped. However, today’s operational realities demand that this must be done with greater transparency, greater investment in safety and with greater consideration for the environment and the bottom-line than ever before.

How does the industry square this circle? The answer that is increasingly being offered is: the digital oilfield.

The digital oilfield can improve employee safety by ensuring lone workers can always be located through end-to-end remote tracking. It can increase operational agility by enabling management to make real time decisions based on digitally transmitted data. It can improve the security of physical assets through portable asset tagging that pinpoints parts, tools and equipment in the event of theft. These are transformative new ways of working that can help the industry meet modern challenges.

This is achievable through M2M (machine-to-machine) technology. Popularly called the ‘Internet of Things’, M2M technology allows devices to communicate with each other and transmit and exchange real time data without the need for human intervention.

Wireless communications have a pivotal role to play in the M2M technology that powers the digital oilfield. Already 75% of companies have wireless networks in place, having moved away from high latency and limited bandwidth satellite systems (VSATs), and this infrastructure provides the connectivity the digital oilfield requires to fulfil its potential.

In order to get a clear picture of this ambition and where industry is in terms of adoption, Vodafone Global Enterprise, in conjunction with Huawei Technologies, worked with more than 100 oil and gas leaders to gauge their opinions.

This article will examine the findings from the survey, discuss how wireless digital technologies can solve industry problems and consider how to overcome barriers to adoption.

The oil and gas industry today

The oil and gas industry in 2014 remains confident.¹ However, despite this positive outlook, there are areas of caution with the industry increasingly seeing rising costs as a barrier to growth.²

While the immediate outlook for the industry might be cause for optimism, the longer term is more uncertain.

Resource scarcity is a one-way trend and new reservoirs are increasingly inaccessible. Over time, a higher proportion of reservoirs will require sophisticated enhanced recovery techniques. These techniques will themselves require more accurate information on workflows, effective knowledge management, the elimination of inefficiencies and real time decision-making.

These challenges require technological and cultural innovation. The potential for the digital oilfield to provide them is clear.

Industry perceptions of the digital oilfield

The digital oilfield is not a new concept. In fact, it is an idea that has been around for some time, with various tags such as the ‘smart field’ or the ‘field of the future’.

The longevity of the concept is borne out by the fact that 66% of industry leaders surveyed had carried out some kind of trial or pilot scheme involving digital oilfield technologies.

None of the organisations surveyed had any negative feedback on the adoption of digital oilfield technologies, but 33% remained uncertain over potential benefits. However, these were people without first-hand experience of the technology.

In terms of the benefits, industry leaders cite security of digital and physical assets, along with employee safety and data collection and sharing as the most important areas for the digital oilfield to add value.

This understanding of the potential is driving investment – 25% of individual leaders will be committing substantial investment of more than US$ 30 million into digital oilfields in the next 12 months. Taking into account all the predicted spend from the research the estimated investment will be in the region of US$ 360 million.

Wireless as the way forward

The survey leaves very little doubt that wireless technology will be the prime mover in powering the M2M technology vital for digital oilfield adoption.

Industry leaders accept that new technology will require investment, but with 75% of respondents already having wireless technology, much of the needed infrastructure is in place.

Wireless technology has the potential to solve many of the key issues facing the oil and gas industry today.

Taking the example of the offshore industry, wireless connectivity gives capacity for remote monitoring, control and decision-making through a better-connected workforce.

Oil and gas extraction is a 24/7 industry and can require split-second decisions. On remote platforms, the experts needed to make those decisions are unlikely to be onsite. Wireless connectivity means that vital operational information such as wellhead data and geological survey data can be instantly shared with teams of engineers worldwide, providing the operational agility needed to make crucial decisions.

The industry is also facing a crisis in manpower. A recent report by IHS suggested that oil and gas extraction will need three million workers by 2020, an increase of 1.7 million on today’s figures.

Given that, even today, the industry is struggling to recruit and retain skilled workers, this is a challenge that needs to be addressed.⁴

Put simply, wirelessly connected offshore platforms need fewer personnel on them. M2M devices can remotely monitor key functions and transmit data to onshore control centres meaning that fewer workers are needed on the offshore platforms. At a stroke, wireless connectivity can start to solve one of the most pressing issues the industry faces.

Wireless connectivity also means better safety. It allows automated monitoring of data and processes and the potential for predictive maintenance leading to safer platforms. Equally, workers can be equipped with M2M devices that automatically call for help in case of an accident or emergency. And, of course, fewer workers on offshore platforms means fewer helicopter trips, further improving safety.

Solving the barriers to adoption

There is no question that the technology is in place to enable the digital oilfield. Equally, to those who have piloted schemes, the benefits are clear.

But two key barriers to adoption exist: culture and security concerns.

Security concerns are, arguably, the easier to address. While many respondents see the potential for the digital oilfield to improve security, others have reservations.

Half of the respondents to the survey cited inadequate data security as a concern, and these concerns are understandable.

One of the promises of the wireless digital oilfield is an open framework sharing model for data. This will allow faster, real time decision-making but it does increase security risk. And this is something that digital and wireless technology suppliers must be aware of.

Solving this issue is going to need close collaboration between the technology providers and the oil and gas companies. There is never going to be a one-size-fits-all answer to security concerns. Each company will have its own security risk concerns and its own approach to dealing with them. So, the technology providers will have to work alongside them to deliver a bespoke technology to meet security requirements.

Cultural barriers could be more challenging but they can still be overcome. Three quarters of survey respondents acknowledged that cultural concerns were hugely important issues.

Many of the leaders surveyed are aware of the potential for the digital oilfield to revolutionise the industry. But, they also know that this will mean a fundamental change in working practices throughout their companies. No matter how forward-looking a company is, there will always be internal resistance to change.

There are ways to address this. Just under two-thirds of those the survey spoke to agreed that a lack of knowledge or awareness of the digital oilfield is hindering cross-industry adoption.

The challenge, then, will lie with the digital and wireless technology providers to make the case.

This means communicating with the industry as a whole. During the survey process, several of those questioned raised concerns that the benefits of the digital oilfield were not being heard at the most senior levels. It was felt that this was leading to a lack of commitment and leadership.

Cultural change, though, cannot always be top-down. From the derrickhand to the data analyst, the digital oilfield has the potential to change everyone’s job and change it for the better.

Vodafone’s research shows that the IT departments are signed up to the benefits. The role for the technology providers is to make sure everyone else in the industry is too.

Making the potential a reality

This research demonstrates that, by and large, the industry is aware of the potential of the digital oilfield and, for those who have had trials, the results have been positive.

However, the adoption of digital oilfield technology is happening at a slow pace. Just over 33% of companies surveyed felt that adoption would be a broad, strategic move, involving all parts of the organisation. Others saw it more as a step-by-step, pragmatic approach.

A staggered approach could be what the industry needs to address the adoption barriers discussed above. As organisations slowly move towards the wireless digital oilfield, they can learn from experiences and gradually change the corporate culture to reflect new ways of working.

As the oil and gas industry faces challenges from all sides there has never been a greater imperative to change outmoded practises. The modern world needs efficient, safe, clean and innovative suppliers of oil and gas. The digital oilfield has the potential to make this a reality.

References

1. ‘Changing Climates – An outlook for the oil and gas industry in 2014’, DNV GL, (2014).
2. Ibid.
3. Houston Chronicle, (26 March, 2014).
4. Ibid.

Adapted by David Bizley

Read the article online at: https://www.hydrocarbonengineering.com/special-reports/01072014/the_digital_oilfield_understanding_the_potential/