While we’re only a little over half the way through 2020, the year is already set to be recorded as one of the most turbulent in recent political and economic history. For the oil and gas sector, volatility is broadly considered the norm rather than the exception. Yet, even for those of us that have endured past periods of turmoil, the current combination of demand- and supply-side shocks have still taken us by surprise.
The current issues with COVID-19, while they present great uncertainty, will be resolved in time, and demand for oil and gas products will return. The industry will however be profoundly changed, and the lessons learned from recent months will be incredibly valuable in understanding the operating models that leaders can adopt to gain the resiliency, adaptability and leaner cost structures needed to be ready for whatever comes next.
Underlying the sector’s fluctuating economics, there’s another gravitational force at play – the urgent need to maximise the efficiency of existing production. For the past five years, the focus for producers has been to adopt new and often radical measures to lower the cost of supply. As ambiguity surrounds market demand for the years to come, finding and acting upon these efficiencies becomes an even more critical focus.
Rising to the Challenge
In order to be ready for what comes next, businesses are mandated to face up to the most pressing common challenges. Firstly, there’s the need to cut costs in order to relieve some of the pressures resulting from the lower commodity prices. Then, there’s the need to protect the safety of personnel on site, seeking out ways to reduce exposure to potentially dangerous situations. Finally, there’s the need to preserve and expand intellectual property. This is done through both shorter-term training and upskilling and, in the longer term, building up the company’s knowledge base and avoiding the risk of brain drain.
Digital transformation presents an attractive, yet largely untapped opportunity to address all three of these challenges. A dedicated digital strategy can help to adopt, coordinate and control everything from the infrastructure that underpins on-site operations through to the remote technologies that facilitate greater process efficiency. So, producers can explore new opportunities to protect rapidly diminishing margins for the years to come.
There are three specific areas where technology can help drive improvements to production processes.
1. Getting More Out of Your Resources
In the continued absence of demand from industries such as air travel and plastic-based consumer products, the focus of producers must be on reducing the cost of supply. This objective can be pursued through a holistic approach to running and optimising all productive assets through one single, unified platform.
By integrating all controls into a single solution, the company can explore the efficiency of Industrial IoT infrastructure combined with connected hardware components and software applications for addressing specific tasks and processes. This connected production environment makes a deeper level of analysis possible, helping to identify where significant improvements can be made, across all assets, human and technical.
2. Reducing the Need for Boots on the Ground (or on the Platform)
Worker safety has been an increasingly high priority for the industry over recent decades. The best way to keep workers safe is to have them as far from danger as possible. This has gained greater emphasis with the need for social distancing due to COVID-19.
Consequently, producers are keen to understand how they can manage production at a distance. Remote assistance offers a way for skilled workers to manage operations from the safety of the command centre, using automation to control activities on site. Through IoT capabilities, producers can monitor at a distance anything that's occurring across their sites. This approach has the further benefit of minimising the costs associated with sending people to these oil wells, which can often be in hard-to-reach places.
To this end, Rockwell Automation offers PTC’s ThingWorx and Sensia’s Connected Production to provide connected worker solutions and remote management of assets.
3. Preserving What’s Most Valuable
Oil and gas is a highly skilled industry, and it’s those skills that stand to deliver value long into the future. Until now, there has been no reliable way of collecting, cataloguing and delivering those skills to where they’re most needed.
Augmented Reality (AR) offers an attractive way to share knowledge among staff and to store knowledge for the future, with massive potential cost savings. Using solutions such as Vuforia Expert Capture, producers can create a more efficient way of delivering IT/OT data to operators and improve workforce safety using step-by-step AR work instructions and remote guidance.
Amid great uncertainty, we can expect the coming years to be a trying time for the sector. Some businesses will struggle to defeat the negative feedback loops emanating from dissipating market demand.
While producers have likely expanded their familiarity with digitisation, developing a holistic solution requires access to consultancy to make sure everything fits together and offers the operational and cost efficiencies required.
Working with a company, such as Rockwell Automation, that understands the pressures your business is under can help you to navigate this shifting landscape. We can help you define your more urgent needs and identify potential efficiencies, bringing the best-in-class solutions to set your business up to handle volatile environments. Moreover, we bring together our network of partners, including Schlumberger and PTC, to help implement the latest capabilities and set up instrumentation suited to your needs.
By bringing us in at the planning stage of a digital strategy, we can look at the entire picture to capture short-term wins and longer-term aspirations. Working together, we can help shape how your company operates in the next market cycle of oil and gas production.
Visit the Rockwell Automation Oil & Gas hub page to learn more about the solutions that could help you reduce costs while building for a brighter future.
Published August 2, 2020