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Digital oilfield needs investments in modernisation and analytics

Jul 18, 2019
7 min read
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By: Bjorn Ewers, partner and managing director at Boston Consulting Group Middle East and Jean-Christophe Bernardini, associate director at Boston Consulting Group Middle East

What strides does the oil and gas industry need to make the digital oilfield more connected?

To improve connectivity of the digital oil field, oil & gas (O&G) actors need to focus on strategic and tactical elements. With the rise of sensorisation and big data, collection on modern offshore drilling platforms – which contain around 80,000 sensors – that is predicted to generate close to 15 million gigabytes of data during an asset’s lifetime. This requires strides to be taken towards implementing cloud platforms and big data technologies that can handle large volumes of data.

To make the digital oilfield more connected, it becomes a matter of infrastructure. The infrastructure currently deployed, especially in remote locations, may fall short of the challenge. To realise the full benefits of the digital oilfield, the industry needs to invest in safety, legacy system modernisation, and real-time analytic capability.

Acquiring a robust Internet of Things (IoT) infrastructure is important in order to improve and automate data gathering, processing, filtering and transmission. IoT platforms are the backbone to realising the connected things reality. Oil companies need to ensure deployment of IoT solutions across the different layers of the IOT stack, including IoT application and analytics.

What trends and challenges do you see in the region when it comes to the digitalisation of assets?

Local operators are proactively engaged in the digitisation of their assets. At an industry level, we are seeing companies demonstrate this through an increased interest towards the benefits of digitalisation, as well as through gaining proof of concepts internally for many digital solutions.
As for the main challenges, these occur during the scalability phase where operators have to address several imperatives to succeed. These imperatives include building a balanced digital roadmap between big value initiatives and quick wins owned by the business; taking a holistic, pragmatic approach to data and IT; adjusting business processes and methods of working to capture digital value; developing digital capabilities and an ecosystem for the future; and maintaining a relentless focus on value creation and strong governance.

Do you see technology and R&D lagging demand for the digitalisation of fields?

We can look at R&D from three perspectives: the operators, the traditional O&G technology providers, and the new players. Each of these categories commit investment and focus to develop digital oilfield solutions. However, today we are seeing new offerings gain proof of concept at a faster pace than operators can absorb or deploy at a commercial scale. This increases the risk of R&D progressions becoming outdated. It also becomes critical to choose appropriate digital operation solutions, especially since these are likely to evolve more rapidly with the emergence of new technologies.

What do you think can boost the adoption of the digital oilfield?

The oil and gas industry is not an easy place to go digital. Many companies are project-focused and safety conscious, and they value execution excellence and predictability. Without sufficient sponsorship from senior leaders, digital oilfields risk being just another initiative on a long list of pending R&D projects. Going beyond incremental operational improvements, boosting the adoption of digital oilfields requires endorsement from the highest level of leadership. These initiatives also need to be integrated within companies’ strategic directives.

What security concerns does the digital oilfield present and what is being done to mitigate this?

Until recently, the traditional upstream systems in the industry were considered to be relatively safe, as they were, in most instances, isolated. As the industry shifts its scope towards digital oilfields, the growing use of connected industrial systems and networking technology presents a new variety of risks. Along with the ever-increasing need for real-time data and analytics, the use of nonstandard equipment and potentially insecure technologies has increased the sector’s adversity to risk.

New threats related to cyber security have created a need for integrated security mechanisms and a security-oriented mind-set from oil and gas players. As threat actors in the region and across the world continue to target the industry’s cyber security vulnerabilities, developing efficient digital security strategies and partnerships with specialised security solution partners can’t be overlooked.
Are there enough investments going into this area and what impact is the current oil price having on this?

Prior to 2014, technology was available to an extent. However, with oil prices remaining high there was no immediate incentive to invest in digital; instead, the focus was on scaling business to discover more resources. Between 2014 and 2017, digital technologies and new breakthrough industrial applications began to gain momentum, yet oil prices were low. This meant an overall sense of emergency outweighed any focus on digital solutions.

Moving beyond 2017, with all low hanging fruit and drastic measures being exhausted, industry thinking has shifted towards how operations can be optimised and transformed in a sustainable manner. Through cross-industry technology breakthroughs and proof of concepts, digitisation became an accepted solution for the oil and gas sector.

Today, current oil prices are high enough to spare investment for digital, yet not too high to deter the benefits of digital oilfields. Investment in technology and digital are expected to grow 2 to 3 times faster alongside the industry increasing investment in these areas over the next 5 years. This can be seen through a forecast increase in AI Market size of +13 per cent year-on-year, and IoT spend set to reach US$14 billion per year by 2020.

Where do you see the most opportunity for technology providers for the digital oilfield?

We see opportunities in three technologies. These can be illustrated by the acceleration of the development of unmanned assets and objectives to reduce safety risks, decrease costs and improve production performance.

Firstly, IoT will be beneficial in enabling technology providers to facilitate the acquisition and processing of real time data in remote locations, such as oil and gas fields.

Digital twin technology is another strong enabler for better industrial outcomes. This allows for the digitisation of assets and processes. It improves the ability to analyse different scenarios by integrating subsurface and surface constraints, improving work preparation before campaign or project activities.

Lastly, Artificial Intelligence and big data analytics will play a key role in accelerating the time to decision, leveraging lessons learnt from past events in order to plan future interventions that optimise asset performance.

Bjorn Ewers

Jean-Christophe Bernardini