Despite energy companies’ efforts to reduce costs and improve efficiency with new technologies, the oil and gas sector historically lags behind in digital transformation efforts. Still, forward-thinking firms in the industry are harnessing the power of digital progress to gain a competitive advantage.
The proliferation of new oil and gas extraction technologies is not limited to the United States. Unconventional hydrocarbon reserves are being exploited in Canada, South America, and Africa, and price signals are pushing oil companies to new limits in search of higher profits.
Technology can profoundly impact the upstream oil and gas segment, also known as the exploration & production (E & E&P) sector, which encompasses crude oil and natural gas exploration, recovery, and production.
The oil and gas industry is one of the most volatile in the world due to social, economic, cultural, and political factors that influence the price of oil. Companies that embrace new technologies (a key hedge against external price pressures) are more likely to move ahead over the next decade.
Innovate to Remain Competitive
As the benefits of efficiency gains, cost savings, improved performance, and safety become apparent, companies investing in new digital solutions will increasingly see business gains.
In this article, we’ll explore three technology categories related to oil and gas:
- Necessary Technology - Essentially “must haves” for the modern energy company.
- Differentiators - Innovative technology proven to make a significant business impact.
- Disruptors - Emerging solutions that may help define the future industry leaders.
Necessary Technology to Stay Competitive in O&G
Every oil and gas company can benefit from a vendor management system (VMS) to augment control and insight within their supplier ecosystem. These platforms are designed to align suppliers with company processes for streamlined management.
For example, VMS software provides time-saving procurement templates which can include approved supplier lists, default letters, terms, and conditions. Also, vendor bidding occurs all in one place for easy comparison. Managers can transition quickly from Request for Quotes (RFQ) to Request for Purchase Order (RFP) and then verify met requirements, confirm delivery schedules, specify milestone payments, and review warranty terms.
Built-in VMS analytics enable companies to detect contract management needs, opportunities, and inefficiencies. More advanced analytics can also help identify emerging markets, new products, and potential projects to explore with high-value suppliers.
Overall, the vendor management software market is predicted to grow by USD 3.96 billion during 2020-2024. Due to increasing interest in VMS, growth momentum is anticipated to accelerate to a CAGR of 14% from 2021-2026.
Onsite real-time data streaming
For oil and gas companies, safety and performance depend on timely, accurate data. Drilling rigs equipped with real-time data streaming sensors can transmit readings, such as well pressure, flow rate, and temperature to detect abnormalities that might signal potential danger to workers or equipment. Everything can be viewed on a central dashboard, and the platform can also send out automated alerts when an anomaly is detected.
These IoT-based solutions can provide a view of both real-time and historical sensor data. With data-based forecasting, the company can be more proactive in decision-making. Offshore oil and gas organizations experience on average $49 million annually in financial impact due to unplanned downtime. For the worst performers, the losses can be upwards of $88 million. Real-time monitoring can contribute significantly to minimizing these costs.
The amount of wellsite data collected can be immense. The trick is how to tap into the data and extract value. This will be further discussed below under preventive and predictive maintenance.
Offset well monitoring
An offset well is an existing wellbore that may be used as a guide for planning a well. In well planning, offsets can identify subsurface geology and pressures. When combined with seismic data, offset well data enables more precise, cost effective well planning and benchmarking.
Real-time monitoring using remote sensor technology allows operators to react quickly to unexpected pressure changes during well development. These measures can satisfy safety and environmental regulations as well as establish wellbore stability. Monitoring offsets provides for operational guidance and legal proof of due diligence.
Enterprise resource planning (ERP) refers to software that energy companies use to manage a wide range of business activities such as accounting, procurement, project management, risk management, compliance, and supply chain operations. An advanced ERP suite may also include enterprise performance management (EPM) which helps plan, budget, forecast, and report on a company’s financial results.
ERP systems bring together many business processes to enable the efficient flow of data. By uniting shared transactional data from multiple sources, ERP systems eliminate data redundancy and siloing with the goal of providing a single source of truth.
Gartner predicts that by 2024, 65% of organizations (vs. 40% in 2019) will consider integration capabilities expenditures as strategic investments.
Technology to Differentiate in O&G
The following technologies can provide a significant outcome advantage, however, they have yet to be fully embraced by the oil and gas industry.
Real-time operations data management
Real-time operations and process management consists of technology that enables well operators to address everyday situations either on-site or at a distance. The scope of use can include well construction, well data governance, and drilling data management integrations.
These cloud connected services optimize wellsite operation by targeting safety, maintenance, and efficiency outcomes. Users access a dashboard that enables process visualization and provides control capability. The result is more agile, informed decision making for directional drilling, well logging, formation testing, and other oil and gas operations. Additionally, workflows can be automated to streamline operations and provide for more consistent performance.
Some cases show a 50% reduction of non-productive time during well construction when implementing real-time process management.
Preventive maintenance includes regular, routine maintenance to help keep oil and gas equipment functioning normally. The goal is to prevent any unplanned downtime and avoid costly repairs. Preventive maintenance requires data-based planning and maintenance schedules with accurate records of past inspections and servicing reports.
Given the vast amount of moving parts on an oil rig, the process requires a high level of planning and record keeping. A software based system keeps everything updated on the same page with the ability to reference maintenance history at a glance. More advanced solutions might integrate maintenance with parts inventory or automated parts procurement in a more comprehensive solution.
Technology to Disrupt the O&G Industry
These technologies represent the cutting edge. Early adopters may see significant advantages as disruptor technology can open up a wide performance gap.
Predictive maintenance technology helps determine the condition of in-service oil and gas equipment to more accurately time maintenance activity. This process promises cost savings superior to routine or time-based preventive maintenance. With predictive technology, unnecessary maintenance can be avoided, and imminent breakdown can be detected beforehand. Therefore, maintenance is performed only when warranted, rather than by a rigid schedule.
Predictive maintenance utilizes remote sensors to detect variables such as vibration, oil analysis, thermography, acoustic ultrasound, and other factors that influence equipment performance and longevity. We Energies (the trade name of Wisconsin Electric Power Company and Wisconsin Gas LLC, an entity whose 26 power plants have a peak generation capability of 5,676 megawatts) implemented a condition based maintenance approach and saved $1 million per year in maintenance costs.
Automated Drilling Techniques
Through sensors mounted on the drill bit, automated drilling technology monitors the drill’s trajectory and performance as it travels through the site geology. Software controls the drill path to ensure that it meets the top hole precisely.
Automating drilling requires:
- Equipment mechanization, such as the machinery which connects lengths of drill pipe.
- Monitoring torque and weight on the drill bit via remote sensors to achieve optimum rate of penetration and bore-hole routing.
- End-to-end process automation with specialized software.
Monitored parameters serve as the feedback control for the rig machines. During drilling, the borehole is constantly monitored and adjusted for optimal efficiency and top hole acquisition, all without human control.
In automated drilling case studies, the system starts off with an initial well, and by the second well the weight-to-weight time was decreased by 26% and then by 31% on the third well.
Drones / UAVs
With increasing safety concerns and cost pressures, unmanned aerial vehicles (UAVs) enable companies to improve inspection speed and quality especially in hard to reach areas and exclusion zones. Plus, a digital register of inspections can be achieved for easy comparison. Expensive helicopter surveillance has been replaced by drones that also implement advanced sensor methodology, such as thermal imaging, ultrasound testing, and laser based methane detection.
This approach is proving to be highly efficient in the evaluation of pipelines, exterior surfaces, sub-surfaces of storage tanks, and marine vessels. Merging drone data with advanced data analytics also enables companies to evaluate the current health of equipment and assist with predictive maintenance.
Drones are especially useful for fire and accident scenarios where crisis resolution depends on a rapid evaluation and response. A drone can be quickly deployed and capture images of dangerous areas without risk to employees.
AI and Machine Learning
While a wide range of possibilities exist for the implementation of AI technology for the oil and gas sector, drill bit performance is of particular interest.
An intelligent drilling optimizer employs artificial intelligence (AI) to mitigate drill dysfunction and improve performance. With sensor detection, the system can provide optimal weight-on-bit and RPM setpoints. Additionally, automated vibration dampening minimizes torsional vibration and reduces stick-slip oscillations during drilling to optimize efficiency and reduce equipment wear and tear.
The power behind AI and machine learning algorithms is that they can process and learn from massive data sets. This means an entire history of drilling data can be leveraged as a continuous source of data backed improvement.
Weight-to-weight times can be broken down and optimized, including incremental activity subphases. For example, slips-to-bottom time can be broken down into sub-activities, such as fill pipe, gel breaking, survey, tagging bottom, and the corresponding configurations for each of those activities. Optimization engineers can then tweak specific configurations to achieve targeted efficiencies.
The Digital Oilfield
Upstream oil and gas can implement a digital oilfield or “digital twin” which is a software- generated replica of an oilfield. By converging operational technology with information technology, this could translate into a major advantage for early adopters.
Digital oilfields can assist oil and gas companies to boost operational efficiency, production optimization, collaboration, data integration, decision support, and workflow automation. Additionally, the technology can achieve productivity gains through enhanced reservoir understanding, remote drilling monitoring, and improved logistics and supply chain flow.
Digital twins enable the visualization of real-world sites and logistic process flows. As virtual replicas, digital twin software can run project simulations before actual deployment. Digital oilfields actually involve a cluster of technology, including big data capture, IoT, and AI/ML. Digital twins can simulate drill sites, spot potential problems, minimize downtime, test new process flows, and even predict future scenarios. GE is using digital twinning to gain an edge in the manufacturing sector.
BP, Shell, Chevron and Equinor are all exploring the digital oilfield possibilities. Oilfield service providers, such as Schlumberger, Halliburton, Baker Hughes, and Weatherford are also leading the interest in this innovative technology.
Robotics & Automation
Safety and cost pressures for oil and gas drive development that encompasses solutions such as autonomous underwater repair vehicles that inspect, service, and clean offshore rigs. There are also robotic pipe handlers seeing action now. Robots can save companies millions of dollars a day as they can do jobs that enable refineries to stay online, such as testing the steel thickness of flare stacks. In the past, this required plant shutdown and cooling for manual measurement.
Robots are actually a collection of technologies including electronics, mechanical engineering, AI, navigation, and IoT, and the use cases continue to grow every day.
Move Quickly Along the Tech Curve
To advance rapidly along the oil and gas technology curve, you need a partner with advanced knowledge and experience in sensor, IoT, DevOps, machine learning, and cloud technologies. Xerris has been enabling oil and gas companies to move forward on the tech curve to achieve higher safety standards, enhanced operational efficiency, and improved financial outcomes.
Reach out and discover how we can propel your energy company forward on the tech curve.