In the oil and gas sector, extracting valuable resources and transforming them into usable assets is the name of the game. The digital transformation of this industry is not all that different. Incorporating technologies into the oil and gas sectors is all about extracting value in areas that are either under served or reliant on outdated systems and processes.
In other words, digital transformation involves using technologies to make an a oil and gas company operate more efficiently. This work leads to greater output and improved financial performance.
Digital transformation is impacting all areas of the global oil and gas industries, including exploration and production (E&P) companies that search for hydrocarbon reservoirs, drill and sell raw materials; drilling companies that contract with E&P companies; refineries that purchase and manufacture energy products; well-servicing companies that construct and maintain drilling rigs; shipping companies that transport materials to global distribution centers; and regulatory bodies that govern all of the above organizations.
Basically, everyone is turning their heads toward technology to provide solutions for issues in their businesses. Here are some specific examples of how digital transformation can impact the oil and gas sector today:
Before a company can start drilling, a team of engineers must plan ahead to form a safe and operationally efficient strategy that is also cost-effective. Drilling engineers create these plans, using a combination of engineering specialties, including completion engineering, operational engineering, production engineering, and reservoir engineering.
Technological advancements in drilling engineering are helping companies tap into new reservoirs of natural gas and oil that were previously inaccessible. In the past, companies were typically confined to depths of about 30 meters when drilling for oil and gas. Now, companies are using extended reach drilling and advanced stimulation technology to better understand rock and fluid interactions. As a result, companies can drill deeper and more effectively than ever — all while reducing their environmental footprint.
There are two types of well stimulation practices:
Advancements in stimulation software have made it possible to create and execute well stimulation projects. MFrac, for instance, is a leading hydraulic program, while STIMPRO is used commonly for matrix acidizing analysis.
In the ultra-competitive oil and gas industry, time is critical for success. Broken parts need to be fabricated and replaced rapidly — especially in something like a central delivery point (CDP), where several different operators may use the same CDP system to process gas, separate natural gas liquids and different pressure gasses, and scrub hydrocarbons. Downtime in this type of system can impact multiple operations, driving the need for fast and cost-effective repairs.
Over the past few years, oil and gas companies have been increasingly relying on additive engineering or 3D printing to enable affordable and timely part fabrication; 3D printing also makes it possible to manufacture parts locally, reducing travel time, and lowering total repair costs.
For example, an oil rig in the Persian Gulf no longer has to ship a product from a plant in China or the U.S. Now, that part can be manufacured on-site. Looking forward, 3D printing will play a massive role in digital transformation for the oil and gas industry.
The key idea to remember when thinking about technology integration is that it should always be agency-driven. Integrating technology into your industry shouldn't be limiting your choices, it should be expanding them. 3D printing has allowed business to create parts for themselves so there is less time waiting on others to complete jobs.
While we think that adopting technologies into one's business is invaluable in this current age, that doesn't mean that industry professionals always know how or why they should do it. The refining industry is at a crossroads right now with cracking the code for how they can use digital transformation to grow their businesses.
Digitization is occurring in the refinery sector, albeit slowly. According to Accenture, 50 percent of oil refiners consider themselves to be digital or semi-digital. But there is little evidence of advanced digital maturity beyond pilots and proofs of concept.
“Most refineries have not moved beyond basic digital technologies like cloud technologies or next-generation advanced process control,” Accenture says. “More cutting-edge technologies like artificial intelligence, mixed reality, and edge computing are still not prevalent.”
Right now, there are three major hurdles inhibiting digital adoption for refineries: Budgetary restrictions, a lack of strategy, and a lack of digital skills in the refinery workforce.
“By failing to grow their digital operations, there is still significant potential value which refiners are not realizing,” Accenture continues.
A good start for any refining business is to work through what problems they'd like to find digital solutions for. Then, begin documenting the data they currently have on that problem. No-code application development is able to start solving so many problems as long as you're able to input the data in a cleanly-formatted, and standardized manner.
E&P companies need to know where to drill for oil. To determine the best locations, they rely on geophysical data gleaned from geophysicists, who conduct surveys using digital sensing instruments, which extract information from above and below the Earth’s surface.
Over the last two decades, we have seen dramatic advances in geophysical software and instruments. Today, geophysicists are using advanced seismic processing solutions, prestack seismic interpretation, depth imaging, and quantitative predictive interpretation in order to figure out where to move their operations.
Looking forward, artificial intelligence (AI) and similar technologies will play a massive role in helping geophysicists process the vast amounts of data they are collecting on a daily basis.
In one example, machine learning is being applied to analyzing well log data.
“Reliably predicting lithology becomes one of the key problems in reservoir characterization,” explains data scientist Tannistha Maiti. “In practice, combination of physical models, local geological knowledge, and experience to reduce large seismic and well log datasets into low-dimensional models of the Earth are used. Unfortunately, these simplified physical and geological assumptions do not always hold true in practice, making the inferred model highly uncertain and biased.”
“This problem can be reformulated using general machine learning models,” Maiti continues. “Hence, it would be a good idea to predict the lithologies of the huge well dataset in a basin with some algorithms.”
Machine learning is being implemented across industries because of its power and adaptability. Not only is it streamlining work processes, but it’s future-proofing businesses by growing with the data that is collected as opposed to only updating when a technician releases a new iteration of the software.
Oil and gas companies are under enormous pressure to ensure their systems are operationally sound. This is critical for both personal and environmental safety. The BP oil explosion, for instance — which killed 11 people and resulted in one of the greatest environmental disasters of all time — was partially the result of valve malfunctions, leaks, and misinterpreted pressure tests.
Technology is playing a much bigger role today in helping companies avoid this type of issue. Connected devices and sensors, for example, can now be embedded directly into various parts of a well and transmit data back for analysis. Advancements in big data and AI are also helping crew members notice trends and predict when equipment should be checked or repaired.
It's easy to forget just how much new technologies play in making work environments safer, if implemented carefully and consciously. One of the first thoughts for any business wanting to digitally transform their business should be: how will this make my business and workers more safe?
We've covered a few key areas of oil and gas that have potential to improve through incorporating technology. All of these hurdles can be overcome with careful planning, and a conscious effort in trying to make your business run more smoothly and efficiently while also keeping your worker's safety in mind. The first step is always the hardest, but we hope this inspires you dig a little deeper, you'll be surprised what good things you'll bring to the surface!