Scaling-up digitalization for a low-carbon industry
For decades, technology, innovation, and vast volumes of data have been the traits of success for the oil and gas industry. Recent world events have reinforced the importance of digitalization, particularly for enhanced remote operations.
With immense potential to be had, the industry must focus on real business value, attracting and developing new talent, and reducing environmental impacts. If tackled correctly, it can demonstrate to society how it can safely and sustainably unlock energy, enabling a more cost-conscious, efficiency-driven and greener industry to emerge from the energy transition.
Though it is widely accepted that the adoption of digital enablers and technologies must be broader and deeper than remote operations alone, the smart use of digital capabilities across domains and workflows, from concept to production to end of life, needs to generate true value, not a false economy.
World Oil Editor-in-Chief Kurt Abraham discussed these digital dilemmas with TotalEnergies’ Jean-Luc Guiziou and Schlumberger’s Wallace Pescarini, both of whom are Executive Committee members for SPE Offshore Europe 2021 and are leading a panel session on this topical subject.
World Oil (WO): How important do you think digital transformation is to the global upstream industry today?
Jean-Luc Guiziou (JLG): Digital transformation is now at the core of the strategy of the oil and gas industry’s upstream players, I would say. And this is true throughout the whole value chain, from exploration all the way to the end customer.
Wallace Pescarini (WP): I agree. The E&P sector has a long tradition of innovating, and we have a historical track record of developing technology that has completely transformed the industry; such as intelligent completions, hydraulic fracturing and horizontal drilling. Digital transformation now represents our industry’s greatest opportunity for value creation, while also demonstrating to society how we can sustainably unlock energy for the benefit of all.
The world still needs a lot of energy. Access to reliable, affordable and sustainable energy is a legacy we, as an industry, will need to assure for society; we need to work together. SPE Offshore Europe 2021 is an important forum, where we can bring collective knowledge together, discuss new ideas, challenge each other and set the next steps for our vital role in the energy transition.
WO: How significantly do you think digital transformation is penetrating the upstream industry, in terms of daily operations?
JLG: I would say that historically, we have two elements that are helping us. The first element is data. For decades, we have been generating and processing phenomenal amounts of data, in particular to generate images of the earth. In doing so, our industry has become one of the largest consumers of computing power on the planet. The second element is automation. This is something which has been deeply rooted into our installations for a long time. Now, digital transformation is taking it one step further.
We need to exploit the data that we’ve got, and mainly, I would say, it’s also about changing the way we work. And on this front, there has been significant progress over the past year, but there remains a lot to do, in order to capture the full value of digital. We have not yet altered our business processes, I would say.
WP: We need to recognize that we are lagging, compared with other industries. However, the pandemic has been a catalyst for accelerating the digital transformation of our industry.
In addition to data and automation, we also need to consider our people, and a real shift in mindset, as essential factors for success in our transformation. By enabling improved efficiency and lowering both production costs and the carbon footprint our industry creates, digital adoption will ultimately allow us to safely and sustainably continue providing reliable energy to the world.
WO: Where exactly is digital transformation affecting, altering and changing the way that certain oil and gas field operations are carried out, whether that be exploration, drilling, completions or production?
JLG: Over the past two to three years, we have been developing a number of digital products to help us optimize and be more efficient in the way we work. We have been quite successful, so far, in drilling operations. For example, TotalEnergies E&P UK has developed a product which completely modifies the daily drilling report from being paper-based to having all the information in a single digital portal. This not only captures the data of the operations, but also the learnings from the engineers on past wells to advance future drilling operations.
Over the past year and a half, we have generated genuine value by accelerating our drilling operations in the UK, by saving seven to ten days of drilling on some of the more expensive HPHT wells. This scales up to all our affiliates with drilling operations. Mobility devices and smart rooms are making a real difference to day-to-day operations on almost all our assets in the UK. Operators who have those digital mobility devices can access information about the equipment directly from the place they are working on the installation. They can link to the vendor and benefit from the digital twin of the installation. This is gradually influencing the way we are working on our sites.
From our control rooms, we can cut the emissions on our installations and try to track the missed opportunities for optimization, from the wellhead down to the export gas valve. These digital developments essentially bring together a lot of data that already existed, but which were not gathered and presented in a way that allowed operators to optimize the processes and the flow.
We have an ambitious target of value creation over the coming years, thanks to the pace of digital innovation. For example, we have set up a digital factory to serve all of TotalEnergies’ businesses.
WP: We have always championed the need for data openness and collaboration across the industry to drive efficiency and more sustainable solutions. Based on that, in 2017 we delivered to the industry the DELFI cognitive E&P environment, which combines domain science with advanced digital technologies to transform planning and operational activities across the E&P lifecycle. This environment allows stakeholders to unlock the full value of data for making critical business decisions and gaining efficiency. We have seen significant progress over the past 12 months, and through the growing adoption by several operators, we are able to quantify some of these gains.
On the planning side, if you look at seismic processing programs nowadays, turn-around time has been reduced from 18 months to 2.5 months, principally driven by applications of artificial intelligence and machine learning. With this 80%-plus improvement in efficiency, geoscientists can now allocate their time to de-risking projects and compressing time to discovery and development of higher-quality, lower break-even cost prospects.
Our DrillPlan solution allows well construction stakeholders to collaborate across disciplines, and integrate and automate the design stages for more reliable well planning. These solutions have proven to be transformational for operators, and they have also become a key enabler of efficiency for Schlumberger, where we deliver integrated projects.
On the production side, in Latin America, digital innovation and edge automation helped us improve the efficiency of artificial lift ESPs by more than 30% while reducing field crew well site visits by 97%. Boosting production, extending pump life, increasing safety, and reducing carbon footprint were remarkable outcomes and a promising example of the value at stake. We look forward to partnering with more and more operators to unlock similar performance gains.
WO: How successful have digital transformation and data analytics been in improving the efficiency of the average operator’s or service company’s operations?
JLG: We have seen tangible results in the operating efficiency and integrity of our installations, and that’s true across the UKCS as a basin, Fig. 1. We have improved our operating efficiency, due to a number of enablers, and one of them has been the installation of so-called “smart rooms.” For more than five years now, they have been in constant contact with the control rooms at the site itself, enabling us to support some of the decisions of the control room. The next step is data analytics, where I think the key challenge to reach its full value will be to put in place in our organization’s high standards of data quality and data governance.
WP: Our strategy today is centered around the performance of our customers, and digitalization is a cornerstone of our shared performance gains ambition. This means unlocking efficiency, reducing the cost of barrels produced, and minimizing the carbon footprint that our customers generate during their operations. During the pandemic, we accelerated the use of remote operations in all our drilling and logging activities, allowing the continuity of our customers’ operations in a safe and reliable manner. We also realized, in the process, that this translated into a reduced carbon footprint of our operations, a performance benefit ultimately shared with the operators. We have an important mandate to collaborate with our customers and are committed to helping them deliver more resilient and sustainable energy solutions.
WO: How much room do you think there is for digital transformation to further affect/modify the average operator’s or service company’s operations?
JLG: I believe there is still a lot of room for digital transformation to help and increase our efficiency and improve our ways of working. There’s a lot to do from drilling to logistics, and to the production operations, themselves, as we seek to increase the pace on emissions reductions, as well. From our experience of digital transformation over the past two years in the UK, I would say that when we look at our objective in four- or five-years’ time, we see a scaling-up by a factor of about five of the value that we have been able to capture in 2020 and that we plan to capture in 2021. So, effectively, we see a space to increase this value by five-fold or so in the coming four or five years.
An event like SPE Offshore Europe 2021 can really galvanize action in this crucial area and spur the motivation to be able to leverage those technologies and the data itself, and to make digital transformation an enabler.
WP: This may be the most exciting aspect of the opportunity in front of us. Though we are in the early days, the last year has revealed the huge efficiency and performance upside that digital can unlock.
For us to continue in this direction and make the best of the opportunity, we need to keep embracing openness and a collaborative mindset within the industry. In 2019, Schlumberger open-sourced the DELFI data ecosystem and contributed it to The Open Group OSDU Forum to harmonize information exchange and improve data flow across stakeholders. Partnerships are extremely important, not only with our peers but also with digital technology providers and innovators. For example, we recently introduced a global cloud-based data solution, built with Microsoft Azure, that is opening access to data and AI, unlocking significant potential for productivity and performance gains across all domains, Fig. 2. Such openness and collaboration will enable us to accelerate innovation in the industry and bring to scale the early gains we are witnessing.
WO: Do you have any estimates as to how much money the upstream industry is pouring into digital transformation on an annual basis?
WP: Most impressive, I think, is the potential value at stake from digitalization for the industry, which the World Economic Forum, in a 2017 publication, estimated at $1 trillion for the 2016-2025 period. This is remarkable.
The stakes, though, go beyond financial benefits. That same publication estimates that we can reduce up to 1.3 billion tonnes of CO2, save around 800 million gallons of water, and avoid spills equivalent to 230,000 barrels of oil. So, the digital transformation is definitely attracting a lot of interest—we really need to focus on this $1 trillion value opportunity and the associated environmental benefits.
WO: How much is the digital transformation improving your own company’s operations and efficiencies?
JLG: At TotalEnergies E&P UK, we have increased our operating efficiencies by 2% or 3%. We are generating value from simplification. For instance, our new daily drilling report has been replaced by a fully digital template. We have also generated genuine value by accelerating our drilling operations in the UK over the past year-and-a-half and can now save seven to ten days of drilling on some of the more expensive HPHT wells. This consequently scales up for all our affiliates with drilling operations.
WP: I think that every company and every operator is at a different level of maturity. While it is very clear that pioneers will realize the benefits of their digital investments first, other operators will also capitalize on the lessons learned from these early adopters to accelerate the rate of this digital transformation. Even the most skeptical players in the industry are now starting to realize that the winners will be those who embrace digital transformation as fast as possible.
WO: How important do you see digital transformation being to your company in the future, in the next five to 10 years?
JLG: Well, there is no doubt that the digital transformation will be one of the key enablers for the more global energy transition that we are in. As a company, and as an industry, I see the importance of the digital transformation as being significant. We will get the value from the digital factories that we are putting in place, in the different companies of the upstream sector. My belief is that when we have matured through the first cycle of developing tools for our engineers and our operations to be more efficient and simpler, we will scale-up the impact of the new ways of working.
Our vision is that our installations, offshore in particular, will have fewer people onboard and they will be increasingly operated from onshore. We already see a shift from some of the work and activities that used to be carried out onsite, we are now transferring those activities onshore and the vision is that this will be even more important in the coming years.
WP: Digital transformation is a continuous process, so it’s not a one or two-year task, but a journey that will take us well beyond the next ten years. How we adapt and grow will define our industry in the long run. We have an exciting opportunity ahead of us to shape a resilient industry, focused on creating sustainable value for many more decades, Fig. 3. The main challenge will be to embrace the right mindset, and to prepare and equip our people.
Everybody will be impacted by the way that we will work. People at the well site, people at the office, the petro-technical communities, everyone’s role will be transformed. We are very excited to train more people and entice new talent. We need to create an industry that is able to attract the new generation, who seek exposure to this level of digitalization, innovation and sustainability. I believe that our industry can offer this to them.
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