Filling in the gaps

While automation has begun to be slowly implemented offshore, it’s going to take a full business transformation to get IoT and other technologies fully implemented. Karen Boman reports. 

The industrial Internet of Things (IIoT) could help oil and gas companies make production operations more efficient through new automated practices. Predictive maintenance, for example, can monitor equipment condition, making maintenance decisions more predictive versus rule-based.

IoT is about marrying industrial controls with the business supply chain, says Rob Wade, senior director of Oil & Gas and Utilities for North America with Atos. Ultimately, ending up with a better decision-making process.

Atos and Siemens have teamed up to offer Atos’ Codex analytics engine on Siemens’ technology platform Mindsphere, to provide IoT solutions for oil and gas customers.

The implementation of IoT in offshore production is not about replacing current technologies, but filling in the gaps, says Dave McCarthy, senior director of products with Bsquare. The firm has been working with original equipment manufacturers (OEMs) and producers to make offshore production operations more efficient.

McCarthy says that Bsquare has seen deployments in the Gulf of Mexico of SaaS (Software as a Service) IoT solutions to connect devices, allowing the operator to monitor and improve the performance of the parts and equipment it manufactures. Namely, the operator can visualize processed telematics data to rate performance, track historical trends, monitor device health, and make operating system updates to increase overall device and part lifespans and the production window between required maintenance.

Photo from iStock.

Business case

According to Baker Hughes, a GE company (BHGE), offshore oil and gas organizations rack up an average of US$38 million annually due to unplanned downtime. For the worst performers the negative financial impact can be upwards of $88 million. But, the effective use of digital technologies such as IoT could reduce capital expenditure by as much as 20% and cut upstream operating costs by 3-5%, according to consultancy firm McKinsey & Co.

Even marginal gains in volume have a transformative effect on operational financials, BHGE says. The company estimates that the industrial internet will bring productivity gains amounting to approximately $8.6 trillion for industrial companies during the next decade – more than two times the future value of the consumer internet alone.

However, fewer than 24% of operators describe their maintenance approach as a predictive one based on data and analytics. Over three-quarters either take a reactive or time-based approach, says BHGE. The company found that operators using a predictive, data-based approach experience 36% less unplanned downtime than those with a reactive approach. This can result in $34 million in savings.

Health, safety and environmental issues is another reason oil and gas companies are looking at IoT. Automation means fewer workers are needed on an offshore platform, reducing the risk of safety incidents, Wade says.

Industry initially was slow to adopt IoT, either because they viewed the technology as expensive, or because they preferred existing practices. Now, companies are telling OEMs that they need to understand more of what’s going on with their systems, and they can’t just walk the platform and check systems manually. To meet this demand, OEMs are retrofitting existing equipment for IoT capabilities, or designing IoT capabilities into new equipment, McCarthy says.

Oil and gas companies also are looking to measure and normalize performance across different equipment. IoT can create a baseline of what desired and optimal performance is, and not just measure variances, but determine what is influencing performance and remediation solutions. “The common scenario is that two pieces of equipment are configured and engineered the same, but get different operational performances. That drives these guys crazy because they want to know how they can get specific results and help different parts of their business,” McCarthy says.

Standardization of data format and equipment present challenges in bringing data from multiple sources together. It’s not just about equipment data, but additional information such as maintenance schedules, warranty information, and factory equipment configurations. The good news is that software can take data in different languages from different machines and transform it into usable insight, McCarthy adds.

Siemens and Atos are involved in pilot projects with several companies worldwide for IoT in production efficiency, Wade says. “If this was a baseball game, we would be in the third of nine innings,” Wade says of the pilot projects. “We still have a way to go.”

New business architecture needed

Oil and gas companies will need to rethink their business architecture to take full advantage of the benefits of IoT technology. Resetting architecture requires a new mindset of understanding how Industrial IoT can impact business, said Trond Ellefson, former special advisor for digital transformation and strategy with Statoil, and CEO of Houston-based digital technology firm, at the Internet of Things Oil and Gas Conference, which took place in September in Houston.

The right business strategy also is needed. “In the early days of IoT, you would see an initiative like this would be assigned either to someone on the operational side, or to an automation engineer, or on the IT side,” McCarthy says. As a result, these forays into IoT would become lab experiments that never see the light of day. Now companies are understanding they need a dedicated team to bridge IT and OT, and the right skill sets.

Oil and gas majors, independents, and service providers are doing smart things in terms of digitalization. But they are attacking digitalization from a functional silo perspective, instead of the needed holistic approach, Ellefson said.

“Most of the [oil and gas] companies are focused on solving the artificial lift problem,” Ellefson explained. “They are looking at very narrow things, and there is nobody looking at the global perspective of things.”

The pace of digital transformation is fast enough that fast companies will eat slow companies, and incremental changes – the historical method used by industry and taught in universities – will not be enough, Ellefson said.

What’s holding back IoT?

Control Room. Photo from iStock.

While IoT can enhance automation, three factors are holding back the implementation of IoT. First is that new technologies and operating methods present increased risk – some real and some perceived – until they are proven and accepted, says Joseph Perino, president and CEO of consulting firm PERTEX.

“Second, while automation is mature, IIoT, along with Big Data and analytics (BD&A) are not, and so the industry is moving slowly,” Perino explains.

Third, IIoT + BD&A can impact the organization such that people may feel threatened, Perino says.

“For example, let say with IIoT and BD&A one needs 20% less OT and IT people per asset, and the skills sets of the remaining OT/IT staff must change to learn the new technologies, but a benefit may mean that the asset can add more engineers to analyze and manage the wells and production facilities, thereby resulting in a net benefit to the operator,” says Perino. “All this is a big change management challenge, and not everyone wants to tackle this. High oil prices helped companies resist this change but now with $50/bbl oil, it’s coming one way or the other.”

While companies are starting to explore digital technology, some are having a hard time seeing how IoT can impact their business. Those that are testing the technology are not yet ready to share results. Technical executives also are still having a hard time getting buy-in from upper management, Perino says.

Some fields already have been fully automated via subsea technology in the Barents Sea, offshore Norway. Automation also exists on platforms offshore West Africa and Brazil. But in the Gulf of Mexico, a strong cultural bias still exists in some areas to have a human being on the platform making the final decisions, says Jim Crompton, head of Reflections Data Consulting.

Two years ago, a study conducted by the National Academy of Sciences Transportation and Safety Board found that, while major Gulf of Mexico operators agreed that automation technology works, companies still want a human being making the final decisions and on site when possible. Crompton says this reluctance to completely automate platforms is why few examples of automation in production, other than subsea, are available.

Capable technology is available to fully automate processes, but upstream largely has been a reluctant adopter of full automation. One exception is during hurricane season. When a hurricane blows through, companies can evacuate all their offshore workers before the storm arrives, and production will shut automatically, Crompton says.

The mindset against complete automation will eventually change as the younger generation of workers enters the oil and gas industry, both Crompton and Perino say. The industry will have to change if it wants to attract and retain these workers.

“Millennials don’t want to work for what they perceive are technologically backward companies,” Perino explains.   

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