The price crash has made Digitalisation an appealing option to keep down costs and enhance efficiencies for operators in the North Sea, Jeremy Bowden writes
Digitalisation has been a while in coming to the oil and gas sector, but now it is becoming a key feature in the industry. The weak oil price has forced operators to re-evaluate their spending and digitalisation has proved itself to be an important factor in driving down costs.
Digitalisation involves the conversion of text, pictures or sound into a digital form that can be processed and analysed by a computer. Digital oilfield technologies enable companies to capture more data, at high frequency, from smart sensors and analyse it in real time, or near real time.
Globally, annual offshore spending in the sector is forecast to reach US$17.8 billion by 2022, and overall – including onshore and shale – the digital oilfield market is poised to surpass US$30.7 billion by 2020. But these spending figures are trivial compared to the potential upside.
According to a recent report from the World Economic Forum, a full digital transformation in the oil and gas sector could eventually unlock about US$1.6 trillion of value globally for the industry, its customers and wider society. Oxford Economics, on the other hand, puts the added value at US$816 billion, or 0.8% of global GDP by 2025.
This value comes from the optimisation of reservoir, well and facility development and performance, based on analysis of data from a fully digitised system. Further value is realised by using virtual models generated from the data, which enables testing and assessing the lowest cost development options.
Similarly, models can be used to predict maintenance, cutting unplanned outages, while operational lessons learned can easily be shared for mutual benefit. However, wiring up systems also requires the installation of measures to ensure cybersecurity.
North Sea retrofit
In the North Sea, digitalisation has contributed to the recent sharp cost cutting, and is making development of brownfield projects much easier, as options can easily be evaluated using accurate modelling.
“Digitalisation of industrial processes that give you those incremental gains have undoubtedly contributed to the 40% cost reductions in the North Sea since the oil price downturn,” Graeme Gordon, CEO of IFB and head of Scotland’s digital federation, Scotland IS, told InnovOil. However, with most of the assets already in place the job is not straight forward and involves a lot of retrofitting to unsuitable old equipment.
“We are in a brownfield environment, so there are few fully fledged digital oilfields [DOFs]. An exception is Maersk’s Culzean platform, which is a relatively advanced digital platform that can collect and flow terabytes of data on and off the platform. By introducing core infrastructure upfront, as they have done, operating costs can be reduced by US$10 million per year.”
Once the data is collected, it must be decided which bits are useful. “The average [North Sea] oil rig now produces about a terabyte per day of data. Around 90% of that is read-only, and is irrelevant so just passes through – it’s the 10% that is significant that you want. Then you turn that into intelligence using data analytics,” said Gordon.
For example, digitalisation can separately analyse production and choke points at hundreds of wells, accurately dis-aggregating production data so that conditions can be adjusted to optimise output at each well – increasing asset production efficiency in existing oilfields as a result. In a fully “connected enterprise”, assets can be monitored and optimised from anywhere in real time.
“The pace of change in the oil and gas sector has never been faster and to thrive, companies must become more efficient,” said Macario Namie, head of IoT strategy at Cisco, told InnovOil. “And like most industries, the oil and gas sector is creating a huge amount of data. In order to derive value from all the connected ‘things,’ this data must be extracted from its disparate sources and moved to applications that create business value.”
One way of creating value with the data is machine learning – a process in which software is used to search data, detect patterns and assess the likelihood of future failures. The software uses algorithms – a series of calculations and automated reasoning tasks – to help overcome potentially troublesome equipment, and predict failures so preventive maintenance can be carried out. The data can also be used to create a virtual ‘twin’ that can be used to simulate different field development options, helping work out the cheapest and most effective course of action.
From warehouses to libraries
And it is not just a company’s own data that are available. Much of the data is accumulated by third parties and can be offered to the wider industry.
“Cognitive learning can take in mistakes from all 450 platforms in the North Sea. We can all learn from each other and all the other rigs worldwide too. When something happens, all other installations learn from it instantly – in the same way that Google search learns every day from every search,” said Gordon. “It’s now possible to turn data warehouses into libraries, which can be a relevant source for many people, helped by automated systems,” he added.
Namie said the flow of data needed to be flexible and handled carefully: “An oil company with rigs pulling in terabytes of data might not want to send it all back to the datacentre – some needs to be kept local and processed at the edge. Some can be shared with other stakeholders or third parties. As data is moved around to ensure it gets to the right applications at the right time, there is also a necessity to enforce policies around data ownership, privacy and cybersecurity.”
While cybersecurity concerns may be a rising consequence of the digital transition, utilising advanced analytics and simulation tools to optimise assets and operations has become one of the few ways to succeed in today’s low-price environment.
Looking ahead, continued technological progress, particularly in big-data analytics, is expected to keep driving efficiency in the US shale industry, as well as in offshore provinces such as the North Sea.