Technology – Oil + Gas Monitor http://www.oilgasmonitor.com Your Monitor for the Oil & Gas Industry Mon, 15 Aug 2016 06:57:26 +0000 en-US hourly 1 https://wordpress.org/?v=4.6.9 Electronic Invoicing: What’s in it for Suppliers? http://www.oilgasmonitor.com/electronic-invoicing-whats-suppliers/ Fri, 05 Aug 2016 06:46:46 +0000 http://www.oilgasmonitor.com/?p=11429 Michael Weiss | Oildex Digital transformation. Finance automation. Going digital. Computers and the Internet have revolutionized the way companies communicate and do business. For the most part, it’s the large players, the heavy hitters, those E&P companies that are automating not only their field operations but their office processes to maximize operational efficiencies. How does […]

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August 5, 2016
Michael Weiss | Oildex
Digital transformation. Finance automation. Going digital. Computers and the Internet have revolutionized the way companies communicate and do business. For the most part, it’s the large players, the heavy hitters, those E&P companies that are automating not only their field operations but their office processes to maximize operational efficiencies.

How does finance automation affect suppliers? Suppliers share many of the same challenges as their customers. Maintaining competitiveness, increasing efficiencies, and lowering costs are all important focuses, especially during times of economic volatility. One of the biggest challenges for suppliers, however, is maintaining strong financial health and optimizing cash flow to survive the competitive oilfield services segment.

Unfortunately, 90 days to payment has become a norm in the oil and gas industry while suppliers have to contend with extensive upfront costs including inventory, fuel, vehicle expenses, and labor. Imagine not being able to pay your field staff for three months.

As well, manual processing of paper transactions is a cumbersome, often error-prone process. For suppliers, manually keying information into a system opens the door to errors and costly mistakes that can further delay the approval and payment process.

The first step towards automation for suppliers is electronic invoicing.

The Cost of Doing Business

In oil and gas, buyers often have the power to determine when to pay suppliers. This is highly problematic for suppliers who have reduced cash flow and must contend with many upfront costs. Labor, for instance, is often paid every 14 days while many suppliers wait three months before receiving payment. To be competitive, suppliers need to be ready to go with inventory and prepared to pay transportation costs. Other upfront costs include administration, accounting, and business software.

“Getting paid quickly is not just the cost of capital; it’s the cost of doing business,” says David Yager, principal of Canada-based oilfield services management consultancy Yager Management Ltd. Because producers are essentially “drilling wells on credit”, Yager says suppliers have no choice but to account for risk of fraud and non-payment when determining their prices.

With minimal cash flow, suppliers may become dependent on their line of credit or factoring service. Working capital efficiency is important as debt becomes less attractive with rising interest rates. As opposed to debt, cash extracted from working capital doesn’t have to be repaid and doesn’t add leverage to the balance sheet.

A company’s financial strength is determined by many things including its working capital. Investors will evaluate opportunities based on a supplier’s Days Sales Outstanding (DSO) and cash conversion cycle (CCC) track record. A company with high DSO may be a poor investment choice since work is being performed mostly on credit and cash flow is minimal. Working capital is the most rapid and controllable source of improved shareholder value. Suppliers can work to reduce their DSO by eliminating wasted time in the invoice processing cycle.

Faster Processing and Payments

Electronic invoices are not only quick and easy to submit but also extremely cost effective. Research shows that automated accounts receivables processes result in significant cost savings. Companies can save as much as 80 per cent by eliminating the need for postage, labor, materials, and storage.

An electronic invoicing solution brings many benefits ultimately resulting in faster, more consistent on-time payments and a lower DSO for suppliers.

  • Suppliers see fewer data entry errors and more on-time payments with electronic invoice templates.
  • Electronic invoices are immediately delivered to the appropriate invoice approval staff.
  • Accounts receivable teams no longer need to contact customers about the whereabouts of invoices. Electronic invoices are easily tracked online.
  • Suppliers save time and money with real-time electronic notifications and communications with customers.
  • Dispute notification and resolution is more immediate.
  • Reconciling payments against original invoices is easy with a solution that tracks each invoice’s progress through the system. Some solutions even ensure automatic reconciliation and validation as invoices are submitted and moved through workflow.

Processing efficiencies provide many incremental cost savings, but the benefits of electronic invoicing extend well beyond each transaction. 

Better Forecasting and Improved Relationships

Staying competitive means suppliers require things like access to accurate information as soon as possible, opportunities to optimize working capital, and value-added customer relationships.

With electronic invoicing solutions, companies see increased data visibility for future profitability and planning. Near real-time access to invoice and payment data allows suppliers to more accurately forecast and optimize cash flow.

Increased customer collaboration and communication facilitate better working relationships, ones in which customers may determine electronic suppliers as their suppliers of choice. With less time focused on pushing paper and following-up on payments, the relationship between buyer and supplier becomes more symbiotic with the shared goal of sustaining business and increasing operational performance.

Determining if Electronic Invoicing is Right for Your Company

Investing in technology, specifically during an economic downturn, can be risky, but choosing the right solution can be worth the risk. Suppliers should measure performance and weigh whether processing efficiencies are worth the boost to their bottom line. Some important metrics to consider include Days Sales Outstanding (DSO), Average Days Delinquent (ADD), and Accounts Receivable Turnover Ratio (ART). They should also consider some of the “soft” benefits. For instance, by reducing manual, labor intensive accounts receivable activities, staff will be much happier. As well, audits are much simpler with online document storage and retrieval.

The majority of buyers have figured out how to implement finance automation to not only lower costs and increase processing efficiencies, but also to leverage transactional information for near real-time spend visibility and cost management. The benefits of going digital have been insurmountable to buyers. Why shouldn’t suppliers get a piece of it too?

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Oil Field Automation and Robotics http://www.oilgasmonitor.com/oil-field-automation-robotics/ Wed, 03 Aug 2016 06:51:00 +0000 http://www.oilgasmonitor.com/?p=11433 Chris Niven | Oildex In recent IDC surveys, oil and gas IT professionals reported that the top strategies to cope with low oil prices, with regards to IT investments, are to deploy automation more quickly, complemented by advanced business intelligence and analytics for optimization purposes. IDC Energy Insights believes that robotics and related automation are […]

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August 3, 2016
Chris Niven | Oildex
In recent IDC surveys, oil and gas IT professionals reported that the top strategies to cope with low oil prices, with regards to IT investments, are to deploy automation more quickly, complemented by advanced business intelligence and analytics for optimization purposes. IDC Energy Insights believes that robotics and related automation are integral components of the digital transformation process and need to be included in operational and IT architecture requirements and plans.

Automation of the oil field is rapidly becoming a reality as IT merges with OT and leading manufacturer’s like work closely with communications and network vendors to create an integrated framework environment that supports oil field IoT data. The net objective is to manage the great quantities of oil field data in a platform for purposes of monitoring and managing device operations for improved uptime and also for optimized production.

The oil field environment in onshore shale includes communications in the form of mesh networks such that people, devices, equipment and other resources can be immediately connected to monitor, manage collaborate and perform work as soon as they physically arrive at the site.  Analytics will also play a large part to optimize production as oil field modeling and simulation of key criteria will help determine the best optimization strategies to deploy.

Cognitive computing is one of the rising stars in innovation and a top IT initiative in the industry today.  Cognitive promises the ability to quickly sift through xabytes of oil field-related data to discover a wealth of high-impact opportunities to improve accuracy and performance in the oil field by combining machine-learning with human reasoning and senses of perception. Cognitive processing could very possibly be the foundation of the autonomous robot.

 

Oil and gas technologies will become more ruggedized and costly to operate in the coming future due to hostile, hard-to-reach environments. The offshore oil industry consists of many advanced and complicated equipment, structures, and multi-disciplined work force team members.  With a proper knowledge of oil and gas rig environments, industrial robotics and automation opportunities are less abstract for drilling, and these processes must be analyzed and diligence applied to determine the value of robotics and automation in specific onshore/offshore environments.

Robotics in the onshore oil field is especially valuable when it is a drilling rig capable of moving itself around an oil field from one well location to the next. Here are some of the ways robotics is being used:

  • For drilling, the big opportunity is for entire rigs that can be moved, or move themselves to reduce dramatic costs and increase efficiencies in oil field development. some examples include:
    • A simple implementation is Drilling Structures International uses a John Deere engine in conjunction with a drilling rig to be able to pick itself up and move to the next location.
    • Patterson-UTI has walking rig safety, speed, and efficiency are combined to help our customers execute their multi-well pad drilling programs successfully.
    • At the high-end of capabilities, Robotic Drilling Systems, (RDS) company is developing a drilling rig capable of advanced reasoning, and has signed an information-sharing agreement with NASA to discover how to develop an oil rig to be able to erect itself, drill a well, and then move on to the next well.
    • Shell Oil is leading a new graduate-level engineering program with the University of Texas at Austin on automated drilling

Offshore use of robotics is especially useful for replacing humans to perform tasks at great depths for greater safety, accuracy and efficiencies.  Underwater submersibles are used a great deal for inspection and repair and continue to evolve to be more self-maneuverable and independent to perform a wider range of activities.

  • Robotics are excellent for underwater inspection and repair and some solutions include:
    • RDS has plans to build and leverage a 10 foot, robotic arm with an elbow joint that can perform much of the manual labor of a deckhand and other crew member, with the ability to lift a ton of weight and maneuver it into desired location.
    • MIT is working with oil and gas companies on the next generation of remote underwater vehicles and has created a working prototype of an autonomous underwater vehicles (AUV), with the goal of further developing it into a complete functional ROV, untethered for agility, with advanced functionality, and a complete communication system giving the human operator more data, analytics and greater flexibility and control to go where no man has gone before, and literally do what humans cannot deep below the surface.
    • New robotics solutions will be deployed under the sea as man learns to bring computers and human reasoning closer together to develop new capabilities to solve important offshore problems especially in harsh environments for humans.
    • Statoil has projected that automation may cut in half the number of workers needed on an offshore rig and help complete jobs 25 percent faster.

In addition to the robotics initiatives specific to onshore and offshore, companies are also working on robotics to perform other important tasks.  Some companies are embedding robot-like intelligence into devices and tools to improve accuracies and enable great maneuverability and performance such as sensors and intelligence in a drilling bit to help direct speed, direction and communications with GPS satellites, networks to make real-time decisions about how to get around obstacles and avoid unwanted events.

Robotics-like drones are being deployed along pipelines with cameras and other sensing devices to enable real-time inspection for leaks and other potential security or HSE violations and even disasters that might occur.   Drones and cameras are estimated to generate high volumes of image data that will flow across the oil field to be analyzed especially along pipelines to detect pipe leaks and other security and compliance-related issues preferably before they occur.

IDC forecasts the following for the future with regards to robotics in oil and gas:

  • By 2018, the average selling price of an industrial robot will be one fifth of what it is today, but have 5 times the capability!
  • By 2016, 80% of market potential is untapped due to safety and privacy concerns
  • By 2018, 30% of drones are not owned, but managed by third parties -accelerating deployments
  • By 2018 50% of underwater submersibles will be unattached, self-propelled and with greater maneuverability, dexterity and task-performing capabilities like welding, inspection, and communications.
  • By 2018 autonomous robotics will appear in the oil field leveraging new sensors, tools and capabilities like; machine vision, force sensing, speech recognition, advanced mechanics
  • By 2020, 50% of supply chain jobs will be eliminated through automation, robotics and the use of new technologies like cognitive computing and robotics

 

As technology evolves, and oil and gas companies strive to achieve operational efficiencies, we should expect more innovations, more cost-effective robotic configurations, and more applications as companies learn how to exploit the value of robotics. The potential is dramatic because soon robots will offer not only improved cost-effectiveness, but also advantages and operations capabilities that have never been possible before.

 

There is a clear incentive for oil and gas companies to automate their oil and gas facilities and activities where appropriate. Investing in robotics and IoT technology is an innovative way to complement the digital transformation strategy to achieve: operational efficiencies, reduce safety risk, access more remote areas, and provide more transparency into remote operations.

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Never Let a Serious Crisis Go to Waste: How Technology Can Rejuvenate the Slumping Oil Industry http://www.oilgasmonitor.com/never-let-serious-crisis-go-waste-technology-can-rejuvenate-slumping-oil-industry/ Fri, 11 Mar 2016 14:48:26 +0000 http://www.oilgasmonitor.com/?p=11098 Sampath Kumar| Information Services Group Even in crisis there is opportunity. Nothing more pertinent can be said about the current state of the global oil exploration and production industry. The crisis at hand is a unique opportunity for transformation.   The Crisis: A confluence of political, economic, technological and social factors is creating a perfect […]

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March 11, 2016
Sampath Kumar| Information Services Group
Even in crisis there is opportunity. Nothing more pertinent can be said about the current state of the global oil exploration and production industry. The crisis at hand is a unique opportunity for transformation.
 
The Crisis: A confluence of political, economic, technological and social factors is creating a perfect storm in the oil exploration and production industry. Even with recent increases in crude oil prices, the volatility remains. Analysts estimate that North American oil companies are losing nearly $2 billion a week at current prices. Their long-term debt has soared from $200 billion in 2010 to over $350 billion in 2015. By any measure, the top line and the bottom line of nearly every company across the value chain is under tremendous pressure. This calls for unprecedented interventions: political, economic, and, perhaps most promisingly, technological.

The Real Question: The current crisis may continue for the next 24-36 months until the supply-demand imbalance stabilizes. However, oil will continue to play a major role in satisfying the ever-increasing global demand for energy. In 2014, oil satisfied nearly 32 percent of the world’s energy demand, the largest single source of energy. According to the BP Energy Outlook 2035, oil will remain a major source of energy, with about a 25 percent share through 2035, even as renewables, nuclear and hydro continue to increase their combined share to reach almost a quarter. The real question is not whether oil will survive, but how forward-looking oil companies can use the current crisis to transform themselves into more productive, less costly and more environmentally friendly enterprises.

The Answer: Over the past two decades, major technological advances have affected almost every industry. Take the automotive and personal computing industries. The contemporary smart and connected car offers advanced systems, construction materials and hybrid engines that are vastly different from their predecessors. Similarly, the shrinking size and increasing power of computer processors has turned desktop computers into laptops, tablets, smartphones and, now, wearable devices. Unfortunately, such advances are not as obvious in the oil industry: research and development investments are 8-10 percent of revenues for high-tech companies, 4-6 percent for automotive companies and less than one percent for oil and gas companies.

In the midst of these challenges, some progressive oil firms are beginning to embrace the emerging technologies being used in other industries. These include machine-to-machine communication and networking technologies from telecom; cloud computing and big data-based analytics platforms from software; mobility and social applications from digital; and smart factories (or, in this case, digital oilfields) from manufacturing. This convergence and cross-pollination of technologies may bring a renaissance to those oil companies that can embrace adaptability. The laggards, if they are not careful, may simply perish.

These are four areas where oil companies can make their move:

  1. Converge information technology (IT) and operational technology (OT) to increase efficiency and reduce risks and costs. A fundamental gap that most oil companies suffer, including oil producing and oilfield service (OFS) companies, is the lack of integration between their OT, including MES, SCADA and other control systems, and their IT or enterprise resource planning systems. Different segments of the business use different platforms and technologies, which means they work in complete isolation from one another and enterprise headquarters. Today, there is a vital need to integrate IT and OT by harmonizing processes and technologies and creating a single source of truth accessible to all stakeholders.
     
    An integrated enterprise will gain improved coordination between the business, operations and IT to help planning and decision making, reduce risks and costs, and boost operational efficiencies. Leading service provider Tech Mahindra, for example, has made investments in a cyber security framework and deployed Process Control Network (PCN) security in custom solutions that enable IT-OT convergence for assets spread across operating conditions. They call this their “rig-in-a-box.”
  1. Integrate digital oilfields with real-time data analytics solutions to reap significant productivity gains and cost benefits. Upstream oil operations depend on capital intensive equipment, which is critical to production and extremely expensive to maintain. Any unscheduled breakdown is a substantial hit to production. Combining the power of the Industrial Internet with high-power computing and big data capabilities, companies can now monitor, assess and optimize the performance of critical equipment and other assets in real time. For example, leading IT services provider Infosys has been partnering with upstream companies to maximize drilling efficiency and production. They use remote monitoring of assets in hazardous and remote locations and predictive analytics for optimizing maintenance of equipment and improving availability and uptime.
  1. Accelerate technology adoption and address emerging markets with a Hybrid Global Engineering Center (GEC). Conventionally, the global IT, engineering and research and development centers (also known as captive centers or GECs) in places like India, China and Eastern Europe have been set up by large oil producing and OFS firms to tap technical resources at competitive costs. These GECs are becoming increasingly critical to helping enterprises undertake their digital transformation and respond to business needs in rapidly growing emerging markets. Even medium and small enterprises should consider setting up a GEC-hybrid model, in which they enlist the help of one or more established service providers to achieve faster ramp-ups and lower capital expenditures, and leverage diverse skill sets while they keep the intellectual properties in-house.
     
    The Engineering Services arm of engineering and construction giant L&T Technology Services provides end-to-end engineering design services in an onsite-offshore GEC model. It engages in front-end engineering design work for greenfield, brownfield and sustenance engineering work and reapplication engineering areas like process simulation, engineering data integration, costing engineering and plant remediation programs.
  1. Leverage the investments and domain expertise of engineering services providers to build customized solutions. The current cash-crunch situation has led to major cuts in oil company R&D and capital and operational expenditures. Yet it demands serious investment in next-generation technology solutions. Oil companies can overcome this difficult situation by seeking long-term services agreements with engineering services providers that are building customized solutions in the short-to-medium term and seeking payment only in the long run. These kinds of arrangements with top service providers will result in capital, labor and technology wins that will help oil companies not only survive the crisis but turn it in an opportunity.
     
    IT services provider Wipro, for example, is making proactive investments in HOLMES, an artificial intelligence platform that provides cognitive computing services for the development of digital virtual agents, predictive systems, cognitive process automation, visual computing applications and robotics for addressing specific use cases in the capital project stage and field engineering space of oil companies.

Now is the time to assess your upstream-to-downstream operations, identify the right tools and technologies to help you transform your operations, and ultimately become more sustainable, cost-effective and productive for the long run.

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From Smart to Intelligent (Artificially): A Journey Worth Taking http://www.oilgasmonitor.com/from-smart-to-intelligent-artificially-a-journey-worth-taking/ Mon, 15 Feb 2016 07:28:38 +0000 http://www.oilgasmonitor.com/?p=10973 Alex Blanter & Vivek Chidambaram| A.T. Kearney The Internet of Things (IoT) is here. Everybody knows this by now. Our estimates, recently updated, put the overall impact of IoT at 6% of the total global economy by the year 2020, with more than $370 billion in additional IoT revenues alone. What no one knows, however, […]

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February 15, 2016
Alex Blanter & Vivek Chidambaram| A.T. Kearney
The Internet of Things (IoT) is here. Everybody knows this by now. Our estimates, recently updated, put the overall impact of IoT at 6% of the total global economy by the year 2020, with more than $370 billion in additional IoT revenues alone. What no one knows, however, is how this value is going to be realized and distributed, and where specifically it will come from. While there are many places where IoT can make a real impact, the asset-intensive industries are a prime candidate. O&G, with more than $700 billion in annual capital expenditures, is at the top of the list.

It is not just capital expenditures and capital intensity that make IoT and other digital technologies the true future of the industry. A few other factors play a role. The industry is more and more technologically advanced, yet still informationally poor. With assets distributed remotely and globally, core extraction, distribution, and refining processes highly data dependent, pricing extremely volatile; new sources having fundamentally different business models (shale); and human errors exceedingly costly, only the enterprises that find a systemic way to become smarter in how they operate are going to win.

In fact, the industry has recognized this imperative and has acted on it. The number of M2M-connected devices in the industry has grown close to five-fold in the last five years. Big data, smart machines, advanced analytics, and modeling have become four of the top ten trends, and investments in these digital and IoT technologies are expected to increase by 30% in the next three to five years. Yet, as Cisco recently reported, only half of the companies in the industry leverage data for effective decision making; fewer than one-third can deliver the right information to the right place in a timely manner; fewer than one-fifth are connecting people in more relevant and value-added ways; and only one in 14 companies is integrating the right equipment, devices, and machines to capture materially useful data. While unit costs continue to fall in many industries—by more than 30% in sensors, 25% in bandwidth, 33% in computing, and close to 40% in storage—O&G costs continue to rise, with the real cost of extracting a marginal barrel of oil increasing by 75% in recent years.

One wonders why. Arguments around sources becoming inherently more expensive (deeper, more aggressive environments; more source rock resources) offer only part of the explanation. Investments are not being made effectively and efficiently in terms of tapping into available and emerging IoT and information technologies. The way we see it, the industry has become really smart, but not yet truly intelligent. This is especially true in data usage, as opposed to data gathering.

What does this mean? Take a look at figure 1.
Fig_1

Figure 1

In taking advantage of IoT and other information technologies, the industry has thus far stayed close to what is comfortable: largely standard capabilities within individual functional domains. It is certainly easier to implement within the regular organizational and budgetary constraints, and there is no question that such an approach has delivered value. However, the real value resides outside of that space, in using more intelligent, connected systems that cover a broader scope of activities and decisions, and tap into and use more granular, more frequent, higher-velocity data.

Why hasn’t the industry moved faster or more aggressively in that direction? We think there are two reasons. First, there is a real inherent technological and business complexity that needs to be addressed. The volumes, variety, and velocity of data that need to be pulled together to enable such an intelligence is not a trivial challenge to overcome. But there is a second, more important reason: the inherent risk aversion that drives decisions and actions within most of the industry. The real barrier is the inherent belief that nothing beats human experience, wisdom, and judgement for dealing with both real and perceived risks—which leads to a reluctance to embrace more automated, intelligent, solutions.

While this risk aversion is understandable, it is unfortunate. It stands in the way of innovation, experimentation, and advancement. As many industries are embracing IoT, connectivity, data, analytics, and artificial intelligence (AI) in comprehensive and novel ways, they are changing the way they do business. There is a reason that most major enterprises are investing in IoT and that a group of technology luminaries recently invested $1 billion in AI. From autonomous cars to smart cities to digital manufacturing, the strides made in just the last couple of years in other industries are transformational. Even the national pastime, football, is starting to experiment with AI. Just recently, on Nov 8, as described in the Sports Illustrated magazine, an AI engine was able to perfectly forecast the next play in a Falcons game. When fully deployed such a capability will fundamentally change the game. While O&G is no football, the same opportunity to fundamentally change the game exists in O&G, to marry expanding IoT technologies and emerging AI for real breakthroughs in costs, performance, and risks.

Figure 2 shows several examples; with imagination and intelligent risk-taking, this list of opportunities could be expanded exponentially.

Fig_2

Figure 2

We understand that this journey will require a different mentality, a different approach to innovation, and different tolerance for risk. Regardless, we are convinced it is a journey worth taking. Or, put another way, it is a journey that will separate the winners from the rest. Which camp would you rather be in?

 

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Five Ways Technology and Data are Changing the Oil Patch http://www.oilgasmonitor.com/five-ways-technology-and-data-are-changing-the-oil-patch/ Mon, 08 Feb 2016 07:32:20 +0000 http://www.oilgasmonitor.com/?p=10908 David Niles|SSA & Company The oil and gas industry is operating under unprecedented pricing pressures. Recent drops in crude prices to below $30 a barrel for the first time in 12 years have prompted fears of bankruptcy among some companies. Fortunately, this pressure arrives at a time when companies can use digital, mobile, and advanced […]

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February 8, 2016
David Niles|SSA & Company
The oil and gas industry is operating under unprecedented pricing pressures. Recent drops in crude prices to below $30 a barrel for the first time in 12 years have prompted fears of bankruptcy among some companies. Fortunately, this pressure arrives at a time when companies can use digital, mobile, and advanced analytics to cut costs, maximize production and find new areas of growth. Used effectively, data reduces the need for layoffs and other drastic, firm-wide changes.

The best companies that SSA is working with are taking aggressive looks at their budgets and quickly moving dollars from exploration to efficiency investments. As they have done in the past, the leaders of tomorrow will start to reshape their operations today, balancing immediate cash needs with investments for the future. In addition, many of the ideas below can be implemented as part of ongoing operations so as to not add significant cost or complexity to what businesses are currently doing.

Here are five important ways that new and recent technology solutions can make a difference.

  1. Maximize exploration and production, and increase efficiency

Companies can use new sources of data, including weather patterns and infrared technology, to identify drill sites and reduce the business risk of unproductive drilling. Using remote sensors, firms can collect surveillance data to forecast and predict previously unknown conditions that can lead to unplanned equipment downtime, thereby improving preventative maintenance.

Additionally, companies can use remote sensors for Exception-Based Surveillance (EBS) to help reduce cost from exploration to export. This system utilizes supervisory control and data acquisition systems to monitor performance according to established parameters. Highlighting situations that are outside normal operating conditions helps to:

  • Reduce repeated manual activities.
  • Accelerate speed-to-decision by making large amounts of data accessible in real time.
  • Improve quality of data used for decision-making and big data applications.
  • Enable the use of ‘agreed to’ and ‘validated Standard Operating Procedures’ to assist operators in their decision-making.
  1. Optimize labor and productivity

New advances in aerial drones and robotic technology allow companies to efficiently inspect and work in pipelines, flare stacks, and other environments that are hazardous and were previously inoperable for humans. This enables them to develop and run advanced remote operating centers.

Wearable technology can enhance worker performance as a source of real-time information to execute tasks and as a platform for collaboration and support.

Automation can also eliminate some manual operations and interventions, improving productivity.

Increasing use of integrated smart mobile devices lets employees quickly communicate equipment breakdowns and track inventory so they have rapid and constant access to the resources they need. Companies can also use track-and-trace technology to monitor onsite labor and gain understanding of value added vs. non-value added activity.

  1. Improve training and worker safety

Optimized training reduces the need for dangerous on-site instruction. With 3D scanning technology, companies can create “fly-through” simulation learning, thereby eliminating the risks associated with on-site training and making onboarding processes more efficient. Giving workers an environment to safely learn from mistakes prepares them for facing actual emergency situations. In addition, mobile devices provide quick and convenient access to training and response protocols when field workers need those most.

The Industrial Safety and Security Source (ISSS) found that workers retain more information when onboarding training incorporates virtual technology. The imaging provides a better way to impart knowledge and allows workers to understand where technology fits into their operations.

  1. Increase visibility and speed of decision-making

Cloud mobility and advanced analytics offer opportunities for companies to create digital platforms that manage capital projects, plans, engineering data, and documents, and to share this information with all on-site contractors and employees.

BP is currently working with GE software PREDIX to make BP oil wells smarter. By next year, they expect to have 650 wells connected using the software. Each will deliver massive amounts of real-time data, according to a report in Fortune.

Analyzing real-time data helps to establish delivery routes with the least traffic and even the fewest accidents for oil trucks that transport product from storage tanks. New modeling capabilities that incorporate real-time demand, weather, and sea conditions also allow O&G companies with offshore operations to efficiently flex the size of their marine fleet as needed.

As O&G companies evolve their organizations from regional to global, they can enhance their real-time collaborative sharing of information by shifting from independent, siloed applications to cloud-based, user-friendly applications.

By coupling standard industry models of GPS with passive and active radio frequency identification (commonly known as RFID) including barcode labeling, companies can improve delivery quality and achieve greater transparency for integrated planning.

  1. Effectively communicate the brand, externally and internally

Unlike in many other industries, oil and gas companies are limited to marketing a single commodity. Social media provides a platform for a consistent flow of creative content to engage customers and investors. Companies can use social listening analytics (quantify relevant tweets, Facebook posts, etc.) to monitor digital channels, influence consumers, and improve their public image. Organizations can also engage more directly with their communities through social media platforms. For example, rather than having one centralized message/campaign, Chesapeake Energy uses Facebook, Twitter, and LinkedIn to create hyper-localized campaigns that engage individual communities.

Social media is also a great way to promote a company’s corporate social responsibility messages and broadcast community engagement to enhance public perception. Industry newcomers can use technology to grow their brand presence in their quest to become a household name. Payson engages on social media through interview-style YouTube videos. Additionally, the company uses an iPhone app to impress potential investors.

Finally, companies also increasingly rely on social media and technology for connecting with and recruiting future employees and leaders. France-based Total SA and its U.S. affiliate use social media and videos to promote the Total Summer School, an annual event bringing students around the world to Paris to learn about the industry. Participation in the program is enhanced with a four-week massive online open course on oil and gas exploration.

Of course, identifying the ways advanced analytics can drive competitiveness within your firm is only the first challenge. The second – and sometimes harder – task is figuring out how to implement new ideas quickly, efficiently, and with immediate impact. Leadership must ensure they effectively communicate the brand and that their organizations have the right alignment, execution infrastructure, skills, capabilities, and culture to leverage these advances for transformation. Technology and data analytics implemented across the enterprise – coupled with action – will characterize the relevant companies in this fast-evolving space.

 

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Matching People to the New Oil Reality http://www.oilgasmonitor.com/10843-2/ Mon, 01 Feb 2016 12:00:58 +0000 http://www.oilgasmonitor.com/?p=10843 Marne Martin | ServicePower Technology PLC To achieve business goals safely, and effectively extract reserves as quickly as possible, people, assets, oil and gas organisations and third-party contractors need to pull together. It is of course the people that are most important to achieving these aims, and it is the people that present maybe the […]

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February 1, 2016
Marne Martin | ServicePower Technology PLC

To achieve business goals safely, and effectively extract reserves as quickly as possible, people, assets, oil and gas organisations and third-party contractors need to pull together. It is of course the people that are most important to achieving these aims, and it is the people that present maybe the biggest challenge. There has been rapid industry expansion and now, with the drop in oil prices, rapid contraction of employee numbers. Firstly there was a skills shortage, and now, with the pressing need to cut expenses in the face of dropping commodity prices, the industry cannot seem to offload its employees fast enough.

Although it is unlikely that we are going to see a price rise on the barrel before the second half of the year, most commentators do not believe that the bust is going to last forever. The demand for oil could also boom in the wake of a major geopolitical event. The industry has to be ready for this and future fluctuations in demand. This is also impacted by the reality that, with an ageing workforce, the sector still faces a skills shortage. This article will focus on how technology can help overcome these challenges.

The digitization of data with new technologies such as optimized scheduling, enterprise mobility, Internet of Things (IoT) and Machine to Machine (M2M), provides the opportunity for the oil and gas industry to increasingly collect data from across multiple time zones and geographies to drive operational improvements and real time decision making, while also facilitating a completely new HR model for employees.

Via a mobile device workflow can guide less experienced engineers, geoscientists, field technicians and riggers through a sequence of processes via their mobile devices from initiation to completion.  Workflow can support training in just about any scenario in any environment, from the scheduled inspection of reservoirs, to wells, or surface production facilities. Crews and individuals can be deployed in sequence according to project requirements and useful content about how to handle assets ‘served-up’ to complement training and minimize potential errors – field engineers can be ‘walked through’ the most efficient and safest process.

It’s no secret that historically the sector has found the shift towards a more technology supported model difficult with constant administration cited as a distraction from the ‘real job’. Workflow done right can help with this. By automating and linking processes across functions petroleum engineers will actually find they spend more time extracting hydrocarbons and less time filling out timesheets or signing health and safety forms.

The same device and software application that delivers workflow can also be used to intelligently provide a training course based on the specific worker’s HR profile which can be conducted on a rig, in a vehicle, at home or while in an office setting. The results can be delivered via the cloud back to HR and the next set of tutorials intelligently delivered based on the training results.

Additionally by storing data in one place engineers and other professionals can share their experiences on particular jobs or even individual assets. Collaboration can help a less experienced workforce operate in a manner that is greater than the sum of its parts.

Smart mobile forms and rules which support worker by worker, and even job by job training and information delivery, are revolutionizing the way that service and training is delivered to field based employees.

Additionally consider the emergence of IoT. Sensors in assets, wells and pumps can capture information such as temperature, air pressure, humidity, utilization or failing parts. This information can be used to direct human activity so that the assets sweat even harder– like sending a team out to proactively fix a failing pump before it becomes a problem and halts extraction.

The wealth of data collected by digital technologies can be used to address training needs at an individual and organisation-wide level. Historical analysis can be used to, for instance, identify where the biggest demand is on the company by geography, skill set or work load and then to forecast where likely future demand will be given future projects. This will give the board and human resources experts an accurate picture of where new entrants or re-skilling will be required, or where operations should be cut back. The rich information captured in the digital oilfield can also be used can also be used to provide a detailed audit trail of any potential problems, like for instance spillages or other environmental problems caused by assets or employees’ actions.

It is important to point out that these technologies need not work in isolation, there are ‘workforce management platforms’ that link the key technologies (IoT, mobile, scheduling engines, analytics etc) to make sure that companies can forecast future requirements (whether demand increases or falls), hire the right candidates, re-skill where necessary via mobile devices, all the while analyzing real time people optimization so that resource deployment becomes more accurate.

So while there are challenges there are also opportunities to extract hydrocarbons more effectively in line with demand for oil. With superior visibility of the movement and demand on people across operations, early adopters of digital technology will have the opportunity to outmaneuver the competition with better trained, and better prepared employees. What’s more, workforces will become more reactive so that companies can scale up or down in the face of fluctuating demand.

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Leaving the Digital Brownfield: Aligning Data and Business for Better Results http://www.oilgasmonitor.com/leaving-the-digital-brownfield-aligning-data-and-business-for-better-results/ Mon, 18 Jan 2016 07:36:12 +0000 http://www.oilgasmonitor.com/?p=10740 Shefali Patel | GE Digital The industrial network of connected machines with data analytics is creating a new frontier of competitiveness for information-centric, modern organizations. The concept of a digital oil field is hardly new.  Oil and Gas companies have been on an exciting digital journey for some years now, but the race to keep […]

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January 18, 2016
Shefali Patel | GE Digital
The industrial network of connected machines with data analytics is creating a new frontier of competitiveness for information-centric, modern organizations. The concept of a digital oil field is hardly new.  Oil and Gas companies have been on an exciting digital journey for some years now, but the race to keep up with digitization technology and optimizing it for business advantage is reaching new levels of competition.
 
At the heart of this Industrial Internet revolution is the promise of big data; data that can be converted rapidly into insights, leading to smarter business decisions and increased automation.   Per the Center of Digital Business at MIT Sloan School of Management, data-driven decision makers generate 4% higher productivity, 6% greater profitability and 50% higher market value from IT.  They also see a higher return on asset investment, return on equity, asset utilization (output per total assets) and market value (market-to-book ratio).

However, despite the potential of big data, companies continue to struggle to exploit its value. They are operating in a digital brownfield, where their data is not aligned to their business, limiting the value operators can derive from it.  Why?

Abundant data by itself solves nothing. Its sheer volume and variety exceeds the human capacity to configure it efficiently.  Inherent challenges tied to the evolution and integration of information and operation technology make it difficult to leave the digital brownfield and glean intelligence from unorganized data, compromising digital literacy and limiting its benefit to the business.

Per a recent McKinsey report, the Oil and Gas industry has the highest potential within the industrial sectors to further digitize their assets.   There are however, inherent challenges associated with digitization, starting with data islands.

What causes islands of disparate data?

Keeping up with a flood of information is difficult. Most companies struggle with a data deluge driven by lower cost storage, sensing and communications technologies. Big data that is neither structured nor contextualized is strenuous to cost-effectively store and analyze in its entirety through traditional computing approaches.

In addition, data islands are created as a byproduct of operational and project-based moment-in-time decisions not made in the context of a larger data strategy. Data gets siloed, whether it is enterprise data, equipment data inside an organization, or data across different organizations. Layering of legacy systems, conjoined with newer technologies and a lack of governance for data systems also result in data islands within internal departments and work groups, limiting purview and inhibiting collaboration.

This fragmentation makes data discovery difficult and presents complex technical and organizational challenges. When the data is scattered throughout plant and the enterprise, integrating and analyzing it manually becomes resource intensive and tedious. By the time data is organized, its value may have been lost and the personnel too fatigued to derive any insights.

New sources of revenue and profitability

With a highly volatile market environment and costs of maintaining aging infrastructure, oil and gas companies are continually challenged to sustain their profitability by finding new sources of revenue from existing wells. They are seeking ways to lower capital expenditures, and need a single source of the truth to help make the right decisions for improved performance, while mitigating risk from unexpected incidents.

Yet today, most business analytics do not support any connection back to the originating systems of the data. Analytics, just like data, are on an island, inhibiting the ability to take action in a reliable and effective way due to the onus on the individual to manually connect disparate systems and workflows. There is a defined need to link analytical systems to operational systems in order to enable the data to provide more insights and therefore, more value.

Technology integration

The management of industrial technology has traditionally been split between two separate fields: information technology (IT) and operations technology (OT). IT worked from the top down, deploying and maintaining data-driven infrastructure largely to the management side of business. OT built from the ground up, starting with machinery, equipment and assets and moving up to monitoring and industrial control systems.

With smarter machines, big data and the Industrial Internet, the worlds of IT and OT are converging. Traditional enterprise data management, such as ERP or CRM, is being dwarfed by operations data due to sheer volume and variety. But most of this data is still in the dark. With the total oil and gas data management market estimated to grow at a 28.4 percent compound annual growth rate from 2015 to 2020, this needs to be addressed. IT and OT, developed separately with independent systems architectures, need to come together and develop a new infrastructure on common ground. Otherwise, the data remains dark and an organization cannot benefit from the insights it provides.

Asset level visibility

Improved capacity utilization is one of the great benefits of state of the art information systems. To achieve production targets, operators need to be able to monitor assets in real time and ensure that all assets (across fields) are performing at optimal level. They need increased visibility and better insights that can be acted upon. This enables them to detect anomalies and fix issues before they occur, yielding “no unplanned downtime.”

Putting Theory to Work

Industrial Internet technologies can turn these challenges into opportunities for improved productivity. Reaching industrial internet maturity involves five stages with corresponding technology components that allow an enterprise to connect, monitor, analyze, predict and optimize their assets and operations.

The foundation of this roadmap starts with industrial data management technologies.

For example, one of the world’s largest independent oil and natural gas exploration and production companies was challenged with disparate islands of information. They had grown rapidly through acquisition, which resulted in no central data source or a way to collect and report this data.

They invested in a historian technology for their central data store and now collect information from over 20,000 wells. They are able to generate daily operating reports from the information received into this single trusted data store. They worked as a complete team to create custom collectors from different SCADA systems. They are also automating the modeling required to add a new asset to the Historian database in watch time, not calendar time, saving hundreds of man-hours in labor per year.

Conclusion

Industrial companies have begun an exciting digital journey. At the heart of this transformation is the power of data analytics to unlock new sources of value. However, the challenges of big data, threat of digital disruption and changing workforce dynamics are real. In order to exploit the fast-moving technology wave of the Industrial Internet, companies need to think strategically and holistically about the foundational elements of their data architecture, starting with industrial data management. On-ramping with cost-effective data management technologies that can aggregate, store, analyze and visualize terabytes of data pulsing through assets and systems across the enterprise is a critical foundational step.  They give business leaders and operators a single source of truth to improve asset-level visibility, cross-operation performance, knowledge capture and employee collaboration.

Having these capabilities in the field and in the cloud sets up Oil and Gas companies to leave behind the digital brownfield and extract value from insights that would have otherwise remained hidden within islands of disparate data.  The right combination of data management, predictive analytics and advanced control systems can yield operational improvements and increased productivity for these Oil and Gas companies that moves them beyond the digital brownfield and into real business benefits for their organizations.

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Industrial IoT Applications: The Benefits and Challenges of Using 4G LTE to Connect Critical Infrastructure http://www.oilgasmonitor.com/industrial-iot-applications-the-benefits-and-challenges-of-using-4g-lte-to-connect-critical-infrastructure/ Fri, 08 Jan 2016 07:27:17 +0000 http://www.oilgasmonitor.com/?p=10659 David Markland | Sierra Wireless Industrial Internet of Things (IoT) applications in the oil and gas industry require highly reliable, robust and high performing communications infrastructure that can maintain optimal performance and constant connectivity under severe conditions and in remote locations. Decision makers must harness viable, and future-proof industrial IoT solutions that meet their current […]

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January 8, 2016
David Markland | Sierra Wireless
Industrial Internet of Things (IoT) applications in the oil and gas industry require highly reliable, robust and high performing communications infrastructure that can maintain optimal performance and constant connectivity under severe conditions and in remote locations. Decision makers must harness viable, and future-proof industrial IoT solutions that meet their current needs and protect their investment.

In the coming years, many 2G cellular networks will be decommissioned as spectrum gets reallocated to provide more advanced 4G LTE services—for example, AT&T has confirmed that it will be decommissioning its 2G network towards the end of 2016. Service providers must now look to alternative cellular technologies to ensure that their 2G infrastructure remains operational when these networks are shut off. LTE solutions are the intuitive migration path for industrial IoT applications that are currently using 2G, as they provide longevity and protect investment while broadband networks continue to evolve.

The capacity inherent in LTE allows for added functionality in addition to existing applications like SCADA, distribution management and metering. For example, industrial LTE IoT solutions can support video surveillance, which increases security and helps to identify problems faster, optimising infrastructure management for service providers.

LTE was traditionally developed for high bandwidth applications such as consumer mobile broadband. While a wide variety of LTE consumer and enterprise grade devices have been available for several years, the selection of LTE industrial grade IoT equipment has been limited. Vendors have been migrating their product lines to LTE, but still today there are few solutions available that meet the needs of an industrial environment.

Critical features to consider when architecting a best-in-class industrial LTE IoT solution  

To fully harness the benefits of LTE for industrial IoT applications, and overcome the challenges faced by early adopters in the oil and gas industry, there are a number of equipment features decision makers in the oil and gas industry should consider when architecting their next-generation LTE system. These include (but are not limited to):

  • Rugged Design

Industrial oil and gas applications typically require equipment that can operate in remote locations exposed to harsh conditions. The equipment used in these environments needs to withstand extreme temperatures, humidity, shock, vibration and be able to operate without interruption for years at a time. For this reason, any viable industrial LTE equipment must have industrial-strength casing, and remain fully operational across an entire temperature range, whether it’s arctic cold or desert heat—such as -30 to +70 °C—since some equipment delivers limited or reduced performance when temperatures extend beyond typical ratings. When operating in a hazardous environment, it’s essential to select equipment with appropriate ratings, such as Class I Div 2, to ensure the communications equipment cannot have adverse effects in the event of abnormal operating conditions.   Industrial LTE equipment must also be capable of surviving brownouts and voltage spikes, for example from -600 VDC to 200 VDC, as machines with internal combustion engines and alternators often power industrial infrastructure, and can subject it to large voltage variations.

  • Ultra-Low Power Consumption

Because industrial infrastructure is commonly located in places that have no connectivity to either fixed line communications or power sources, industrial LTE equipment that can operate via low-powered solar panels provide an optimal wireless alternative. In the oil & gas industry, from drill bit to burner tip, there are many locations that rely on solar power, such as SCADA systems, pipeline and well monitoring and metering in gas distribution.

For existing infrastructure where solar panels are already in use, low power consuming LTE equipment such as an industrial gateway, with an idle power consumption of under 1 watt, that can work within the capacity of the existing panels is ideal, avoiding the need to upgrade at costs that can run into thousands of dollars. This is particularly relevant where customers are upgrading from 2G to 4G, and having a 4G upgrade path that operates within the capacity of the existing panels originally sized for 2G equipment is essential. For new installations, the low power consumption means smaller, more cost-effective solar panels.

  • Remote Manageability

Industrial oil and gas applications can involve hundreds or thousands of devices operating over a very large geographical area. It’s important to be able to manage all these devices from a single service that supports a full range of capabilities. Service providers will want to perform remote device monitoring, remote firmware upgrades, and make bulk changes to configurations, even years after the initial deployment. Look for an industrial LTE equipment with remote management and monitoring capabilities to improve efficiency, operating costs and maintenance schedules.

  • Scalability

As LTE networks continue to evolve, network coverage will vary among MNOs and in geographically dispersed locations. Look for industrial grade LTE equipment that is compatible with multiple network operators, particularly in North America where traditionally each carrier required specific hardware—as there are now solutions available that can automatically adapt to the carrier in use.

Ensure that the industrial LTE equipment is compatible with legacy networks, such as 2G and 3G, so it can operate in areas where LTE networks and ecosystems are evolving.

These are just a few of the many factors to consider when choosing a best-in-class industrial LTE cellular gateway to connect your critical infrastructure.

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Satellite Communications: Enabling Total Operational Visibility in the Digital Oilfield http://www.oilgasmonitor.com/satellite-communications-enabling-total-operational-visibility-in-the-digital-oilfield/ Wed, 30 Dec 2015 07:16:36 +0000 http://www.oilgasmonitor.com/?p=10604 Chuck Moseley | Inmarsat In today’s tough economic climate, the oil industry looks for any advantage to maximize their return on investment. While oil prices are falling, the volume of oil required has remained the same, if not increased. This means that in order to remain competitive, the oil industry must focus on efficiency, to […]

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December 30, 2015
Chuck Moseley | Inmarsat
In today’s tough economic climate, the oil industry looks for any advantage to maximize their return on investment. While oil prices are falling, the volume of oil required has remained the same, if not increased. This means that in order to remain competitive, the oil industry must focus on efficiency, to do achieve more with less.

As well as an increasing demand for efficiency, the oil industry still has to struggle with the challenges of production. Oil extraction tends to occur in out-of-the-way places, locations where infrastructure is undeveloped, or perhaps not present at all. Active oil and gas pipelines cover a total length of over one million miles across the globe, or over four times the distance from earth to the moon, crossing some of the most remote and challenging locations on the planet. Oil drilling takes place in isolated inland or offshore locations, often miles from the nearest population.

Oil production activities in these locations can prove costly to regularly inspect and proactively maintain, and identifying and responding quickly to accidents or issues can be a challenge. Connectivity for remote monitoring of key performance metrics and remote control for optimal pipeline operations is essential to drive efficiencies and promote health and safety compliance.

Without the connectivity to establish remote monitoring and control functionality, the only way to gather crucial data on the health and operational status of oil production infrastructure is to send a team out to check it manually. This approach is fraught with potential risks, especially when sending teams out to survey assets located in the most remote parts of the world. The time it can take to receive the report data could mean that identifying the source of any leaks, malfunctions or damage could take days or weeks, having significant impacts on productivity and revenue, as well as the environmental damage caused by a breach. This is in addition to the expense of dispatching and supplying an inspection team, and the potential hazards to their health and safety

Connectivity itself is hardly new. Wired technologies have long been used to enable automation and efficiencies on physical premises. The real breakthrough has been the use of a proliferation of wireless technologies that enable the analysis, control and management of remote applications.  Multiple wireless technologies have been adapted for machine-to-machine (M2M) connectivity and indeed the requirements to extend M2M into more and more areas have driven new requirements for new wireless communications technologies. Each technology has strengths and weaknesses across a range of factors such as cost, size, power consumption, data capacity, reliability, scalability and coverage.

Cellular and terrestrial networks suffer when compared to satellite networks, relying as they do on ground-based infrastructure, which is vulnerable to disruption through environmental disasters and other disruptions. Cellular coverage is linked directly to ‘cells’ or areas where towers provide connectivity.  Network operators are much more focused on providing service to densely populated areas and remote areas are left as lower priority.

Terrestrial networks again suffer from their dependence on infrastructure, in this case through fixed copper wires or fibre optic cables. These services are primarily found in urban areas and are not often available throughout the breadth of territory pipeline operates need to cover. Radio networks were a popular choice for older automation implementations, however they have become increasingly susceptible to interference issues and the construction, maintenance and liability issues posed by erecting the necessary towers have caused operators to look elsewhere for remote automation connectivity.

With the search for operational efficiency paramount, pipeline operators are looking for standardized solutions to widespread challenges. Cellular, terrestrial and radio options will work, but different technologies are necessary for different areas depending on network availability.  This creates more inventory necessary for companies to purchase and train their operations crews to effectively manage.  Satellite connectivity can provide secure reliable coverage that can operate wherever assets are located, without dependence on fixed infrastructure.

While the use of satellite technology can significantly reduce the requirement for physical inspection of assets, maintenance requirements mean that people will still need to operate in these potentially hazardous environments. Satellite phones for voice communications provide global security and potentially life-saving emergency services to those people operating in extreme and remote environments. The phones can also act as a source of GPS location data for monitoring and tracking personnel in these vulnerable situations. Broadband data through satellite can also improve efficiency for field teams, sharing reports and situation data in real time from the assets, whilst also tapping into knowledge and technical resource to become more efficient.

However, the oil industry has long been aware of all of this, and has successfully integrated satellite connectivity into operations for years, and has consistently reaped the benefits. The recent explosion of connected devices and the Internet of Things (IoT) across the world means that other industries are just starting to learn the lessons, and understand the challenges that the oil industry has already mastered.

To remain competitive, the industry mist innovate, and  continue to lead the way when it comes to IoT and M2M applications, moving more towards automation of select portions of their network and demanding richer, more insightful data from their monitoring activities, especially given the current pricing conditions, which demand efficiencies, doing more with less resources. For example, a remote pipeline that was cost-prohibitive to service manually could be fitted with cameras, triggered by a pipeline integrity alarm to photograph a damaged section of pipeline, analyse the image based on pre-determined criteria, and automatically stop the flow, alerting a human maintenance crew to quickly repair the damage.

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Utilizing Technology to Comply with Regulations http://www.oilgasmonitor.com/utilizing-technology-to-comply-with-regulations/ Fri, 20 Nov 2015 12:00:17 +0000 http://www.oilgasmonitor.com/?p=10489 Donald Fisher | Software AG It’s no secret that greenhouse gas emissions and pollution are continuously becoming a problematic environmental issue. Therefore, in August 2015, the Environmental Protection Agency (EPA) proposed a suite of requirements under President Obama’s Climate Action Plan to reduce methane and VOC emissions from oil and natural gas production, processing and […]

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November 20, 2015
Donald Fisher | Software AG

It’s no secret that greenhouse gas emissions and pollution are continuously becoming a problematic environmental issue. Therefore, in August 2015, the Environmental Protection Agency (EPA) proposed a suite of requirements under President Obama’s Climate Action Plan to reduce methane and VOC emissions from oil and natural gas production, processing and transportation activities. According to the EPA the proposed rules are, “a suite of commonsense requirements that together will help combat climate change, reduce air pollution that harms public health, and provide greater certainty about Clean Air Act permitting requirements for the oil and natural gas industry.”

In targeting methane emissions reduction, the new proposed rule expands coverage within the source category to additional processes, and equipment such as storage vessels, compressors, and pneumatic controllers used in upstream and downstream operations. Where the 2012 New Source Performance Standards were applicable to volatile organic compounds applied to hydraulically fractured gas wells, the proposed rule will cover both hydraulically fractured oil wells and gas wells. The proposed rules will also implement requirements for fugitive emissions survey and repair in accordance with a Leak Detection and Repair program.

While the rulemaking process will be championed and challenged on the merits of its potential economic impact on the industry and society, several technological trends in the industry could greatly lessen the operational and compliance cost impact. The application of new sensor-equipped valves and optical imaging devices have set the stage for oil and gas companies to ensure their equipment, completion processes and systems, as well as refining processes, transportation systems, and repair and reporting activities are effective and compliant, while not incurring large long-term costs or having to hire more personnel.

Monitoring health through IoT

The industry’s digital oil field efforts have been aimed at developing technology and organizational structures capable of leveraging advancements in sensor and communication technology. While much work is left to be done, the industry has foreseen the increasing environmental regulations aimed at decreasing greenhouse gas emission and improving air quality. Along with the industry’s desire to ensure the safety of its operations, this view has helped shape the DOF efforts of the industry.

Rather than performing periodic manual inspections and follow-up engineering assessments before being able to get the right personnel and equipment on station to conduct repairs, leveraging sensor technology can position the industry to remotely monitor its emissions, detect problems and automatically dispatch personnel and equipment needed to facilitate compliance.

Coupled with the leak detection and imaging capability of optical technologies, these systems can be further leveraged in condition-based monitoring applications where sensor data is used to monitor vibrations, temperatures and pressures. Sensors also monitor thermal representation of pumps, compressors, and other key system components to measure the overall “health” of drilling, transportation and refining systems. With each vibration or temperature change, sensors alert appropriate personnel of conditions which change the emission factors of the equipment.

Sensors also provide the key inputs required for predictive maintenance applications. Similar to condition-based monitoring, predictive maintenance uses advanced analytics from data released by the sensors. The data alerts personnel if any maintenance needs to be done on the drills, which reduces any downtime. A drill that is not working properly, may release more methane than the EPA allows.

With the right use of sensor and monitoring technology, the oil and gas industry will see a change in their processes and allow them to stay compliant with the new regulations.

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