Online Exclusive: Digitalization, adaptation will help the industry ride out the current crisis

July 15, 2020
Against a continuing background of COVID-19 and uncertainty over long-term oil and gas prices, the value to companies of using data to inform their activities and protect their long-term health cannot be overstated.

Software advances widen scope for remote ops, smarter maintenance

Against a continuing background of COVID-19 and uncertainty over long-term oil and gas prices, the value to companies of using data to inform their activities and protect their long-term health cannot be overstated.

The widespread availability of a vaccine could be as much as two years away, so it is reasonable to consider that the next 24 months will represent the “new normal” for E&P companies. What will those two years look like for individual companies, and how will it guide their digitalization priorities? How will they leverage current technologies in order to emerge as a stronger business, or capture the data needed to make the decisions that preserve their organization’s long-term health?

Digital technologies can help the industry navigate these new and unprecedented times, and ensure that gas and oil producers continue to provide heat, light, and energy to the world when it needs it most.

Offshore work restrictions

The imposition of social distancing measures offshore, increased costs for transporting personnel to and from platforms, and reduced numbers of personnel onboard have all led to more work being performed onshore. Advances in digital technologies provide the capability to maintain remote working, and can enhance efficiencies and lower costs.

Digitalization can enable opportunities such as remote production performance surveillance and equipment health monitoring; virtual technical support for equipment fault diagnostics; and virtual visual inspections or site surveys. For each company – and depending on the age, configuration and condition of their assets – the extent of digitalization effort and the investments required will vary. Modern platforms will likely be better equipped.

In the office place, social distancing rules may mean less available capacity for staff than before, so the new normal will likely call for a hybrid approach of office and remote working. The role of the office may even be redefined in the short term as specifically the conduit of physical meetings, and while some employees’ roles may still require them to be in the office full-time, others may be afforded more flexibility.

Automation should be explored as a way of doing more with less, and work processes should be designed with the home/office working hybrid in mind. Enhancing workforce skills to be more data-centric, with training in the effective use of new software and applications, can also drive systematic improvements.

Another option that should be considered is a ‘bring-your-own-device’ policy that allows employees to use their personal equipment, where this can be managed securely (given rising cyber security threats). It would provide further flexibility for employees struggling to manage work and home-life commitments.

At the same time, stricter controls on staff presence in the office will have to be extended to visitors. This underlines the importance of technologies that enable both virtual meetings with external parties, and regular contact among employees and managers.

Periods of change and uncertainty are breeding grounds for cyber fraudsters. More than 150 million ransomware attacks were carried out during the initial outbreak of COVID-19 – the same as in the first nine months of 2019 – and there has been a significant increase in ransomware payments via bitcoin in 2020, according to the FBI.

Companies will continue to strengthen their defenses via cyber security programs, but equally critical are training and awareness for employees on cyber matters, and the development of detection and response capabilities. Staff must be provided with the information they need to be able to make educated decisions, not assumptions. Raising their awareness reduces the risk of successfully targeting by mischief-makers or those intent on doing a company actual harm, operationally or financially. And as the industry embraces remote working, the boundaries of cyber programs should be extended to ensure that company information can be protected within a home environment.

Supply chain disruptions

With the impact of COVID-9 causing more frequent disruptions to supply chains in terms of pricing, availability and supplier viability, E&P companies need to ensure they can maintain suitable stock levels at the right locations and provide visibility of stock across a company’s sites. Procurement of stock needs to take into account potentially longer lead times and contingencies for avoiding production disruptions. The inventory management systems should include a catalogue of all sites, with special efforts made to ensure accuracy of the inventory/supplier master data.

Maintenance priorities

Following the sharp fall earlier this year in hydrocarbon prices, it may be better to reconsider the timing of major maintenance activities in parallel with planned shutdown or annual turnarounds. Is there more value in bringing forward maintenance today and expanding shutdown scopes at a time when gas and oil prices are lower? Or is there greater value in increasing production levels later, in a higher commodity price environment?

These are major decisions that require central planning, local execution and strong coordination, and new solutions such as enterprise project portfolio management (EPPM) software are providing operators with powerful tools for this very purpose. These tools can also be integrated with existing enterprise software solutions to provide a holistic approach to risk analysis. Ultimately, it comes back to the same point – providing access to data and information from multiple sources, so that users can make smarter, data-informed decisions.

Exploration support

With many E&P companies reducing or deferring their capex on exploration, there is an even greater need for more certainty in outcomes before committing to expensive drilling activities. In January Neptune announced its new digital subsurface strategy, targeting reduced exploration costs, speeding up the process of discovering hydrocarbons by 70%, and bringing discoveries into production up to three years earlier than current industry standards permit. Achieving these ambitions requires approaches that facilitate more cost-effective data acquisition and data processing. For example, strategic partnerships with the right companies could provide an important step change in lowering the cost of seismic image acquisition and processing.

Data management, too, needs to become much more strategic than tactical, as it often is currently. Neptune has robust data modeling and interpretation tools yet the company believes there may be more opportunities to leverage additional tools by building on its internal capabilities. Providing geoscientists access to the data sets they need at the right time, while maintaining positive collaboration and communication among the company’s geographically diverse geology, reservoir engineering, and drilling & wells teams, can all increase the likelihood of making discoveries.

In conclusion

Since the beginning of this year, organizations across the oil and gas sector have been focusing on dealing with the initial shock of COVID-19 and its immediate impacts in order to safeguard their people, protect cashflow, and ensure business continuity. But it is crucial now to look to the next 24 months and beyond, making sure companies are fit for a very different future.

The effective use of digital technologies should be an important element of that process, and a more data-driven approach may be what helps move an organization from simply surviving to successfully thriving in tomorrow’s new and constantly evolving world.

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