Strands that deliver

A combination of factors on the supply side is influencing fluctuation in the price of oil. From October 2018, the price of crude dropped more than 25%. The US economy has experienced strong growth, which usually pushes up demand for oil and, therefore, prices, but there may be clouds on the horizon as trade tariffs start to bite. Trade tensions, as well as falling rates of global growth – notably in key economies such as China, Germany and Japan – are combining with a glut of production from Iran and Russia to put downward pressure on prices.

Faced with this, cost-cutting is the way to protect margins. In order to cut back on operating costs, however, many companies are doing more than simply applying pressure within their organisations to do more with less. Instead, they are looking to invest in new technologies to increase efficiency. Some of these technologies – big data, cloud services and robotics – are familiar to many industries, but their potential is still not fully exploited. While companies find new ways to derive value from them, the technologies themselves continue to advance. As a result, the industry could well be undergoing a paradigm shift in terms of how it operates.

Combine to drive value

No single new technology is capable of revolutionising the industry on its own, yet we are in an era when many different strands of development are coming to maturity. A combination creates unprecedented opportunities for companies to run leaner and more efficient operations based on real-time data and decision-making.

Big data and artificial intelligence (AI), for example, bring together a wealth of detailed information on every aspect of the energy business – from subsurface imagery to well production data – with the ability to deploy sophisticated algorithms to query that information and model future trends.

According to a 2017 report from McKinsey, offshore platforms, on average, run at only 77% of their maximum production potential. The report further suggests that the rigorous use of analytics could substantially improve that figure. The kind of predictive analytics that AI can perform is, therefore, high on the list of priorities for software developers and energy companies alike.

GE Digital is one company working to help oil and gas businesses to build automated analytics models and to use machine learning to put in place predictive maintenance processes for industrial equipment. Their solution, Predix, uses AI to process data from a network of sensors and combines the use of big data with other factors, such as weather conditions, to see whether a facility is running at optimum levels and, if not, to recommend maintenance.

HortonWorks is another solution provider working in predictive analytics. Its open-source application – Hybrid Data Platform (HDP) – also collects large data sets of structured and unstructured information, including seismic and drilling data, to monitor performance and view potential problems before they arise. Another of its solutions, Well Log Analytics, works with HDP to create predictive models to increase the speed of E&P activities through the analysis of well logs and sensor data.

Maersk Oil has long been working on its Predictive Drilling Analytics (PDA) project, which started in 2015, and it has been able to combine real-time and static drilling data to reduce the amount of non-productive time in its assets. The advanced pattern recognition capabilities of AI are able to pick up anomalies in real-time data and compare these inputs with historical data to predict events that might shut down production.

The internet of things (IoT) is another technological advance that has been applied across many industries and has a lot to offer the oil and gas sector. IoT relies on smart devices or components that can, for instance, monitor all aspects of an asset and its performance, and is currently driving rapid transformation of exploration, drilling and production activities. Part of its value comes from its ability to connect the activity of people and equipment in disparate and remote locations with real-time analytics and predictive maintenance algorithms to improve safety and productivity.

The crux of IoT is that is enables end-to-end connectivity and the real-time monitoring of assets. The speed with which an accurate picture of production capability can be generated, and the accuracy of the outputs from sophisticated analytics, mean that the companies can make better decisions faster, whether it is in exploration, production, maintenance or any other aspect of their operations.

This depends largely on the capability of cloud services. Rather than owning huge amounts of additional computing hardware to store and process data, the cloud enables companies to host applications and store data off-site. The data and the applications can then be accessed remotely from anywhere, giving global and real-time connectivity to business-critical information.

It is in the confluence of technologies such as the cloud, big data, AI and IoT that the potential for a great leap forward lies.

Total commitment

Total is a prime example of a company that has embraced digital transformation as a key driver of its strategy. Its aim is to deliver improvements to industrial safety, enhance operational performance, cut costs, create a better experience for employees and customers, and develop new services and new areas of activity. Its annual investment in digital technology currently stands at around $400 million.

Its track record of developing a digital culture within the business goes back five years, and it includes training and skills development, as well as investment in new technologies. In 2014, for instance, the company introduced a reverse digital mentoring programme in which executives received coaching from young digital natives. In 2016, more than 30,000 of its employees obtained a digital passport showing they had mastered the basics of digital culture. Since then, it has created a digital bootcamp, which consists of a three-month development programme dedicated to digital issues.

For the past four years, the company’s executive committee has taken a Digital & Innovation Week annually to learn from different innovation ecosystems in the world, including Silicon Valley, India and China. This year, that took in the CES 2019 consumer electronics show in Las Vegas. The company has created a bespoke course on artificial intelligence for its senior executives. It will also set up structures similar to The Booster – a digital learning laboratory in Paris that acts as an incubator for internal ideas and helps to push forward digital projects.

Furthermore, the company has invested in a Data Squad, which consists of a team of data specialists and IT experts that works hand in hand with Total’s data officers to design new data-related projects and enable the company to deploy those projects more rapidly across the group.

As well as developing this broader culture, Total is also investing in partnerships to boost its production and marketing operations. Its partnership with Tata Consulting Services in India is a prime example and it has led to the creation of an innovation centre dedicated to the development of refinery 4.0 technologies. It is currently working with Google to develop AI techniques that can be applied to seismic imagery and can enable the semantic analysis of geoscience documents, in order to facilitate the work of its geoscience experts in identifying and developing new reserves.

Digital technology is also helping the company to improve the performance of its workers on oil rigs and refineries. It has implemented the Total Industrial Mobility (TIM) programme, under which all of these workers will be equipped with smartphones or tablets featuring applications to facilitate and simplify their jobs, improve safety and reduce the risk of errors. In 2018, this was rolled out across 40 sites.

Another important strand of its digital strategy has been the implementation of the Data Driven Asset Performance (DDAP) programme, which aims to accelerate the deployment of AI in its industrial operations.

It is not only the oil majors that are exploring the advantages of AI, big data and advanced analytics. Leading oilfield services company Baker Hughes, for example, is also making swift progress down the road towards digitalisation. It is working on next-generation cloud-native software products that will digitally transform the industry.

The company’s industrial IoT software is at work in the area of field development and planning, where it helps to maximise recovery and optimise access to hydrocarbons by integrating subsurface, well, drilling and completion data, and AI-powered software helps to further maximise primary and secondary recovery through the proactive management of upstream operations. Alongside this is a powerful suite of tools that provide an enterprise-wide view of the company’s assets to reduce downtime and monitor asset performance, corrosion and process management.

A fast-growth future

It is a huge task for the industry to leverage existing digital technologies to deliver quick gains in efficiency and productivity, but while taking on that mammoth task, companies must also keep an eye on the disruptive technologies that may soon emerge.

Investing in internal R&D efforts is one option, though potentially an expensive one, so many are looking at how emerging technologies are being applied in other industry sectors and at how nimble start-up companies are able to generate innovative ideas that are ripe for development.

Working with start-ups to accelerate innovation is a key part of Total’s strategy. In 2018, the company engaged in collaboration efforts with more than 100 start-up companies.

These relationships frequently centre on co-development projects to create and refine new technologies. The plant 4.0 incubator – which is led by Total but includes other companies such as Solvay, Air Liquide, Eiffage, Vinci Energies or Orano – exists to enable start-ups to test their products and solutions under real-world conditions. It has already borne fruit. Start-up company Fieldbox.ai, which was identified through this incubator, is now Total’s partner in its DDAP programme.

As Total has shown, digital transformation is not just about new hardware and software, but also about business culture, skills development and investment in new ideas that will shape the future. The industry is on the verge of a technological revolution and it is the forwardlooking companies that take the lead on digital transformation that will reap the benefits, rather than those who follow in their wake.