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Digital Transformation of Oil and Gas industry

  1. 1. Digital Transformation of Oil and Gas Industry 26-September-2016, GBS Astana Campus Master Thesis Defense, MBA in Oil and Gas
  2. 2. Hello! I am Aidar Satubaldin Executive portfolio: - 11 years of experience in the Oil and Gas industry within Information Technologies and Service Management You can find me at - ITIL Release Control and Validation (RCV) - PRINCE2 Foundation - COBIT Foundation - Windows Servers - ITIL Planning, Protection and Optimization (PPO) - ITIL Foundation - PMI Seminars
  3. 3. Acknowledgement Big Thanks to Great People Galiya and my parents – dear Family Gulmira, Gerhard and Brad – big Bosses Nathaniel and Radomir – great Mentors Alina and Raushan – helpful Campus Marcel Gassen – thesis Supervisor Berik – experienced Project Manager
  4. 4. 1. Topic Background History & Facts vs. Myth & Forecast
  5. 5. “ Upstream is about half way through journey of at least 10 years to go before reaching a similar level of digital maturity of aerospace and automotive.
  6. 6. History of Oil Field Computerization by ExxonMobil ◎1970 ○Computerized Production Control (CPC) reporting ◎1980 ○Drilling Surveillance, Collaboration and Optimization ◎1990 ○Remote Process Surveillance ◎2000 ○Next-Generation Reservoir Simulation ○Upstream Suitcase ○Collaborative Visualization centers
  7. 7. History of Oil Field Digitization by BP ◎Phase 1 (2000-2005) communicated a compelling vision, showed the value and potential of the Digital Oil Field to prove up the concept ◎Phase 2 (2005-2011) implemented at speed and scale real-time remote monitoring solutions and surveillance by exception ◎Phase 3 (2011-present) a 20- to 30-year journey toward ubiquitous, real-time advisory and automated systems
  8. 8. “ Over the past five years, the Digital Oil Field (DOF) has become a reality.
  9. 9. Actual Facts by BP ○Delivered over 70,000 barrels oil equivalent per day (mboed) net cumulative production by implementing surveillance per exception ○Saved $200 million in capital expenditure by deploying real-time monitoring of well construction ○30 minutes pipeline check by drone vs. human’s 7 days ○Increased production in excess of 5,000 barrels per day (bpd) by the use of the operability maps
  10. 10. Actual Facts by Bain ◎Company with better analytics capabilities has following advantages: ○2x more probability of being in the top quarter of financial performance among their industry peers ○5x more probability of making decisions faster than their peers ○3x more probability of execution decisions as planned ◎
  11. 11. “ Global DOF market is expected to reach $30.78 billion by 2020 growing at CAGR of 4.31% from 2015 to 2020.
  12. 12. Forecast for Internet of Things / Everything - IoT/IoE ◎by 2015, less than 14% of industry assets will be connected to the enterprise network ◎by 2025, adoption IoE by O&G industry will ○increase Global GDP up to 0.8% - $816 billion ○generate $600 billion value at stake for industry ○translate 11% bottom-line improvement for a company ◎by 2030, industrial IoT will add $14.2 trillion to the world economy
  13. 13. Forecast for Advanced Analytics ◎by 2016, 50% of Oil and Gas companies will have advanced analytics capabilities in place ◎analytic excellence will help to improve production by 6% to 8% ◎11,900 new data analysts expected for hiring by Oil and Gas companies
  14. 14. Forecast for Workflows Automation ◎25-50% of manual processes can be automated by Internet of Everything (IoE) ◎ by 2015, global market for industrial automation will post turnover of $200 billion ◎by 2035, 47% of jobs across industries will be replaced by ○automatic robotics ○artificial intelligence ○expert systems
  15. 15. Forecast for Digital Oil Field (DOF) ◎The most conservative estimates count 3% of incremental production ◎Industry accepted figure on increase in production is approximately 7%
  16. 16. “ Unfortunately myths surround the preparation of the business organization for the use of a new technology like a DOF application.
  17. 17. Myths about Business Readiness ◎Myth 1: Software/system is “intuitively obvious” for users and so easy to work with ○Busted: Operations need help in learning to get their job done. Period. No shortcuts ◎Myth 2: Great project manager along with team will get ready all business users ○Busted: Business readiness requires appropriate authority level in the organization
  18. 18. 2. Problem Statement Purpose. Aim and Goal.
  19. 19. How To Repeat Success of Digital Forerunners? ◎Computation has 30+ and Digitization 15+ years experience in the Oil and Gas industry ◎Supermajor companies already sharing some lessons learned and best practices ◎Now it is time to repeat their suceess and harvest benefits of digitization effectively
  20. 20. 3. Importance of the Research Impact of the Study
  21. 21. Universal Rules. Lessons Learned and Best Practices. ◎Most of companies will leverage practical insights of already digitized peers ◎Universal rules of deploying Digital Oil Field technologies and systems revealed ◎Oil and Gas companies will benefit from findings, conclusions and observations
  22. 22. 4. Theoretical Foundation Innovations & Ambitions
  23. 23. “ Innovation is the creation of a new and viable business offering with value to the customers and ourselves. All organizations need one core competency: innovation.
  24. 24. Innovation Ambition Levels ◎Innovation occupy one of three “ambition levels”, which define its purpose or result ○core innovations optimize existing products for existing customers ○incremental innovations expand existing business into “new to the company” business ○new innovations are breakthroughs and inventions for markets that don’t yet exist
  25. 25. Innovation Culture – Five Behaviors ◎Build collaboration across your ecosystem ◎Measure and motivate your intrapreneurs ◎Emphasize speed and agility ◎Think like a venture capitalist (VC) ◎Balance operational excellence with innovation
  26. 26. “ Global Digital Trends reshaping the Oil and Gas industry. Digital has the potential to address key challenges faced by the Oil and Gas industry today.
  27. 27. Digital Trends ◎Wearable Technology ◎Virtual Reality ◎Drones ◎3D Printing ◎Analytics & Big Data
  28. 28. 5. Conceptual Framework DOF Concept & DAM Framework
  29. 29. “ Companies improved net present value of up to approximately 25% from Digital Oil Field related implementation.
  30. 30. Digital Oil Field (DOF) Concept – Lack of industry definition ○Diverse asset portfolios, business context, operating models and technology competencies ○Broad, cross-functional concept with the complex implementation ○Individual companies randomly implemented different choices, innovations and proprietary in-house developments ○Different companies have started their initiatives at different points in the Digital Oil Field (DOF) life cycle
  31. 31. Digital Oil Field (DOF) Concept – Categories ○Vision ○Business model ○Skills and Competencies ○Signature Technology ○Infrastructure Concern ○Impact of Politics
  32. 32. “ Given the diverse starting points, and the array of choices faced by Digital Oil Field (DOF) practitioners, industry requires a simple framework.
  33. 33. Digitization of Asset Management (DAM) framework ◎Asset Lifecycle Management as a workflows framework ◎Service Oriented Architecture (SOA) as a design framework ◎Open Platform Communications Unified Architecture (OPC UA) an industrial M2M communication protocol as data framework
  34. 34. 6. Research Questions Terra Incognita
  35. 35. Main Questions ○What is a Digital Transformation and its benefits? ○What is a Digital Oil Field (DOF) concept? ○How Digital Oil Fields (DOF) built? ○How to measure success, progress and maturity of company in the terms of Digital Transformation? ○How digital success can be repeated in other organizations?
  36. 36. 7. Methodology Survey & Materials
  37. 37. Online Survey and Digital Materials ◎Literature Review ○Analysis of consulting agencies ○Brochures of vendors ○Materials of SPE library ◎Online Survey ○13 questions ○Google Forms ○LinkedIn fellows
  38. 38. 8. Specifics on Methodology Analysis of Data Collections
  39. 39. Limitations and Methods ◎Limitations ○Time limit: 16 days of survey duration ○Audience limit: participants dominated by IT ○Interaction limit: Online only and no physical chat ◎Methods ○Digital: Online survey ○Verbal: No personal interview ○Physical: No paper broadcast
  40. 40. Participants and Demographics ◎Participants: 57 LinkedIn & SPE members ○50 (87.7%) from Oil and Gas ○7 (12.4%) from other industries ○41 (71.9%) with IT as majority ○10 (17.5%) with ProdOps as majority ○6 (10.5%) with no majority groups ○35 (61.4%) team leads with IT as majority ○22 (38.6%) engineers with IT and RM equal domination
  41. 41. 9. Findings Convincing & Significant
  42. 42. Survey Observation Explanations ◎A: Most of engineers do not recognize adverse impacts on the company, while managers see wider picture of unfavorable effects along with their peers from core functions. ◎B: Companies spend much time in ensuring preventive efforts to be better and quality, but proactive monitoring and agile support should be strengthened further.
  43. 43. Survey Observation Explanations ◎C, D: Companies spend many efforts in predicting unplanned outages, utilization of big data, ensuring integrity of production assets and comprehensive real-time control ◎E: Participants were in doubt whether their companies already implemented expert or AI systems. It seems that corporate functions on their way to deploy it, because they are currently do research and development.
  44. 44. Survey Observation Explanations ◎F: Amongst top leading benefits from deploying new digital technologies are ○cost reduction ○predictive maintenance ○safety incidents prevention and ○business workflows automation
  45. 45. Survey Observation Explanations ◎G: IT is still considered as a Service by majority of managers and contributors ◎H: External drivers were ○emerging technologies ○sustain competitive ○enabling by industry peers Note: Surprising moment was to see that contributors are ahead of managers in acknowledging new technologies
  46. 46. Survey Observation Explanations ◎I: Strong voice of contributors from IT and ProdOps, where they are keen to improve and automate operational workflows. ◎I: Worries of managers were around cost savings and operational excellence along with safety.
  47. 47. Survey Observation Explanations ◎J: IT managers identified how to drive towards partnership with business through ○showcase potential business advantages ○produce innovative technologies ○collaborate in making decisions ◎J: IT managers clearly understand their place in the business and eager to help with ○new competitive advantages ○innovation and ○collaboration
  48. 48. Literature Findings ○Digital Trends are streamlined innovations ○DOF concept has vague industry wide definition ○DAM framework required to outline DOF concept ○Business Case is the main means of investments ○Integrated Operations are key DOF executors ○Maturity Assessment is an integral part of success
  49. 49. 10. Conclusions Summary of Learnings
  50. 50. Conclusions – Part I ○Digital Transformation starts from Business Strategy and its goals. All the next steps should be aligned with company needs ○Innovation center or committee oversees general concept of digitization according to business plan and serves as a primary guiding council ○Joint Information and Operational Technologies / Integrated Operations Technologies (IOT) Group or department is an executive, leading body in digitization of organization on the level of company or entire enterprise
  51. 51. Conclusions – Part II ○Digital Oil Field (DOF) concept should take into account organizational culture, knowledge, resources and capabilities assessment ○Digitization of Asset Management (DAM) framework should be cross-discipline collaboration across the assets, standardize processes and build investments on long-term technologies ○Business case is the main means for deploying any new technologies to prepare asset and organization for implementation
  52. 52. Conclusions – Part III ○Pilot projects should assure test of feasibility, identify early pitfalls and provide recommendations for enterprise wide roll-out ○Deployment across organization should be done to leverage efficiency at scale ○Assess Maturity to measure success, sustainment of benefits achieved over time and check back if any improvements or adjustments should be done at each step above ○Note: All actions above are circling around four key elements: People-Technology-Process-Organization ○
  53. 53. Strengths. Weaknessess and Limitations. ◎Strength of this work is in honest and open participation of O&G representatives ◎Weakness is in narrow set of representatives with majority from IT only ◎Limitations is in small number of participants and lack of interviews with senior managers on the level of CxO
  54. 54. 11. Implications For Future Researchers
  55. 55. Reaserchers & Practitioners ◎Validate feasibility of findings in practice ◎Test conclusions and recommendations ◎Assess necessity in Innovation Comittee ◎Outline DAM framework in more details ◎Observe impact of Integrated Operations
  56. 56. 12. Recommendations For Public Auidence
  57. 57. Theory. Policy. Practice. ◎Feed IT with business needs, delegate to provide business solutions and build collaborative environment in order to enable synergy ◎Along with business IT is also going through fundamental transformation, where the role of its’ is moving from managing IT infrastructure to enabling innovations
  58. 58. 13. References Cited in the presentation
  59. 59. Authors & Books ○Steve Roberts, 2012 ○Digital Technology by BP, 2016 ○Dutch Holland, 2012 ○DOF market by marketsandmarkets.com, 2016 ○Andrew Swart et al., 2016 ○Andrew Clark et al,. 2016 ○Andrew Smart et al., 2015 ○Bruna Martinuzzi, 2014 ○Rob Shelton, 2016 ○Digital Trends by nesglobaltalent.com, 2016 ○Jeff Dickens et al, 2012 ○Wikipedia.org, 2016
  60. 60. Thank you! Panel Committee Members Dr. Gacem Mr. Marcel Gassen
  61. 61. Appendix. Backup Slides Here more details

Notas

  • Phase 1 (2000-2005) dealt with communicating a compelling vision, showing the value and potential of the digital oilfield concept. At this stage central team engaged asset owners and major project teams to understand the potential benefit of new ways working by tackling real time operational information. In an R&D sense, it was about discovering, developing, deploying and integrating a variety set of tools to support technology tests and prove up the concept.
     
    In phase 2 (2005-2011) company started to implement at speed and scale. The goal was to deliver stand-alone and dispersed real-time remote monitoring solutions and target driven value realization for well monitoring, surveillance by exception (i.e. event driven rather than by ordinary scheduling), reliability of equipment and optimization of production. Bp has documented delivery of over 70 mboed net cumulative production and plus other gains. The most importance was about sustainable deployment and well-ground business cases. The least importance was about a specific technology.
     
    Phase 3 (2011-present) dilemmas. Now industry is on thought point whether to focus on embedding success to date as “business as usual” or target next level of difficult problems, operational risk reductions. There is opportunity even for bigger value and deeper changes in the work of energy companies.
     
  • Compound Annual Growth Rate (CAGR) – cлoжный гoдoвoй темп pocта , гoдoвoй темп pocта c учетoм cлoжных пpoцентoв (пoказатель, хаpактеpизующий cpеднюю гoдoвую cкopocть pocта cтoимocти инвеcтиций или величины дoхoдoв в течение oпpеделеннoгo вpемени; pаccчитываетcя как: (кopень n-oй cтепени из чаcтнoгo будущей cтoимocти инвеcтиций и их текущей cтoимocти) минуc единица, где n - кoличеcтвo лет в pаccматpиваемoм пеpиoде)
  • O&G – Oil and Gas industry
    GDP – Gross Domestic Product
  • Myths are widely-held but false beliefs or ideas.
  • Innovation is complex and not always complicated.

    Innovation goes beyond just coming up with new ideas. The foundational key to success in becoming an innovative company is to create a culture of innovation—an environment that encourages creative ideas and innovation on an ongoing basis. If you seriously want your business to innovate, you have to establish innovation as a strategic imperative. You do this by making innovation one of the top items on your leadership agenda—not just once or twice when you first announce it, but consistently. This gets the message out that innovation isn't just a management pep talk but a true commitment.

    You also need to clearly define what innovation means for your company. Are you looking for insights on improving customer service? Are you soliciting ideas on how to break into new markets? Do you want people to focus on trend spotting? Idea generation needs guidance, and if you don't guide people on what you need, you may get a stream of ideas that aren't aligned with your strategic goals.

    Having innovation as a core strategy throughout your company creates a sense of urgency. Without it, pursuing innovation is a directionless and haphazard path. You can protect your time and investment by first laying the foundation for a culture of innovation.

    Your Workplace Climate
    The climate in your company is a composite of the prevalent values, norms, attitudes, behaviors and feelings of the people in your company. In a nutshell, a company's climate is "how things are done around here." One of your chief tasks as a leader is to establish the right climate so people are inspired and encouraged to innovate. No fear – bottom-up innovation – autonomy freedom.

    Your Talent Pool
    You should also include innovation as part of the performance review process. Rate people on their ability to generate ideas that increase efficiency or save time. Tie the results to a reward system that clearly incentivizes idea generation. Above all, rate managers on how they lead innovation. For example, how receptive are they to new ideas? Do they create and nurture an environment that supports creative thinking by everyone on their team? Do they respond quickly and decisively to capture a new opportunity, or do they sit on it and let it go by? Do they encourage people to challenge the status quo? Do they pioneer out-of-the-box thinking?
  • Many companies want to establish a culture of innovation, one that will encourage employees to take risks that lead to breakthrough products.

    Culture is the net effect of shared behaviors, and therefore adopting innovative behaviors must come first. You change the culture by becoming more innovative — not the other way around.

    Companies should focus on changing a few critical behaviors — “a small number of important behaviors that would have great impact if put into practice by a significant number of people.” When it comes to innovation, adopting the following five behaviors can help to organization make the leap.

    1. Build collaboration across your ecosystem. 
    Innovation is a team sport. It requires excellent collaboration among siloed business and functional units and across geographies, as well as with external partners. Finding the best resources inside and outside your organization and combining them is a hallmark of successful innovation.

    Internally, to find the best solutions, you need to leverage the full range of expertise across your organization. This requires you to pull capabilities from across the company; this doesn’t happen when people are working separately instead of collaboratively.

    2. Measure and motivate your intrapreneurs.
    Intrapreneurs are the folks in larger organizations who couple an entrepreneurial mind-set with the ability to leverage company assets such as channels, brand, and market savvy. To enable intrapreneurs to succeed, you’ll need to measure and recognize their innovative efforts. Three metrics play special roles.

    The first are leading indicators such as the percentage of employees trained in innovation processes and the size and strength of the internal collaborative ecosystem. The second type of metric measures the process. How many meaningful ideas are in your pipeline? Is your portfolio balanced and robust? Are you commercializing your ideas at a fast pace? Finally, there are lagging indicators, which are the ones most people think about first. These metrics focus on the revenues from new products, the impact on profit, and the effect of innovation on brand.

    Metrics fuel motivation: You need to give public recognition to innovators. Bonuses are great, but they’re private — no one in the organization sees the check. However, when you promote someone based on their contribution to and collaboration on successful innovations, coworkers take note. Moreover, it signals management’s commitment to the people who demonstrate truly innovative behavior.

    3. Emphasize speed and agility.
    Innovation happens best when people move quickly and requires a blend of real-time data gathering and smart decisions on whether to invest more now or change course.

    Successful startups seem to know this intuitively, and that agility often helps them disrupt established companies that have far more resources. For big organizations, it’s important to develop similar methods to quickly identify and select ideas and then commercialize them through prototyping.

    4. Think like a venture capitalist (VC).
    VCs tend to focus on big ideas that make the risk worth taking. You should do the same. When you hear a new idea, ask if it can make a significant difference. If not, hand it to someone in operations; it’s still a good idea, but you’re looking for the next big thing.

    When you find an idea that matters, the next question in a traditional mind-set would be: What are the risks? This is where most companies get stuck, because managers tend to say things like “we’ve never done that before” or “that would mean big changes to the way we work.” But the questions you want to ask regarding big ideas are: What are the challenges we need to address to achieve the breakthrough? Which of those could kill the idea? How will we mitigate them?

    5. Balance operational excellence with innovation.
    Some experts think big companies can’t prevail in the face of disruptive innovation, even if they excel in operations. The truth is they not only can, but must. The tension that comes from balancing operations with innovation drives true success in today’s world.

    Companies have proven they can achieve operational excellence, lift profits, and grow revenue from existing products while also ideating and developing products that help to reshape their own markets. In fact, innovation can help to bulletproof your company from disruption.

    Summary
    Of course, not everyone at company is ready to change their behavior today. That’s to be expected. But companies that build strong cultures of innovation don’t wait for that to happen. Their leaders take charge and demonstrate that innovative behaviors generate undeniable value to the business — and before long, others will follow.
  • Digital trends in the oil and gas industry
    Digital technology can help oil and gas companies reduce costs and improve efficiencies by making faster decisions and increasing workforce productivity. These factors are more important than ever given current global oil prices. Technology can also increase the safety of employees, especially isolated workers, by making them more connected and giving them access to the information they need.

    What kind of digital technology could be useful to the industry?

    Wearable technology  - Various technologies could be employed for field workers, who have traditionally just had a radio and a gas monitor, including body-mounted sensors that monitor the external environment and also the worker’s health.  Augmented reality glasses could also be used (like this Intel example), which could overlay real-time information to improve safety. Data input by voice command from a wearable device could be used instead of field workers having to carry around laptops that are harder to transport. The main problem lies with these products having the correct safety certification available for niche and risky environments. Current products are made for the consumer market and aren’t yet suitable, but as the technology becomes more widespread, niche providers will appear.

    Virtual reality - Virtual reality is an exciting technology that is gaining traction quickly in the consumer market (Facebook have invested in Oculus rift and Sony are about to release their virtual reality headset later this year). However, some providers are using the technology in a commercial setting to provide a more immersive training experience to new employees, and thus improving their safety consciousness.

    Drones - Drones (or unmanned aerial vehicles) can be especially useful in the oil and gas industry to improve safety and reduce any down-time, and there are already companies who offer this service (such as Sky Futures). Drones can be used to inspect flare stacks without the need for scaffolding or having to stop operation, and they can be used to perform under deck and topside inspections, which are traditionally hard to get to and pose safety risks. They can be operated by a UAV pilot or could be programmed to follow a predetermined route in the future.

    3D Printing - Various companies (including GE and Shell) are currently looking into 3D printing (or ‘additive manufacturing’) to enhance their production of parts. 3D printing allows operators to prototype new parts faster, experiment with parts to improve efficiencies (without spending a fortune), and has the potential to allow the manufacturing of spare parts whilst on-site. Although oil and gas operators see the benefits that 3D printing brings, because it is still in the early adoption stage and with oil prices currently low it is likely that plans will be delayed to explore this technology in depth in 2016.

    Analytics & Big Data - Although not exactly a new phenomenon in the oil and gas industry, big data is increasingly being used to analyse processes across the whole supply chain. With the findings, companies can make decisions on how to improve processes. Once more, with the right technologies in place, companies can use real-time data to make on-the-spot decisions, therefore improving safety as well as operational efficiencies.
     
    What does it mean for oil and gas professionals?
    The introduction of new technology doesn’t necessarily mean ‘robots replacing humans’ as many think. Instead, the next generation of field worker will be more digitally enabled with drones carrying out potentially dangerous visits and computers giving them better insights, making the industry safer and employees better informed.

    Technology can also create new jobs within the industry related to IT infrastructure and data, for example mathematicians, quantitative specialists, data scientists and analysts.
    When companies have adopted such technologies, employees who are fluent in data management and can make decisions based on interpreting this, and engineers/technicians in the field that are ‘switched on’ to new technological advances, will have the competitive advantage over other candidates.
  • Net Present Value, accounting term, abbreviation: NPV
    An assessment of the long-term profitability of a project made by adding together all the revenue it can be expected to achieve over its whole life and deducting all the costs involved, discounting both future costs and revenue at an appropriate rate
  • The concept of Digital Oil Field (DOF) is held in common across multiple production companies and their vendors, suppliers. Thus there is a difficulty in producing an concerted and applicable industry wide definition of what encompasses a digital oilfield and its related programs. This difficulty in establishing a consistent scope occurs because of a number of factors:

    Different companies have diverse asset portfolios; dissimilar priorities and focus areas; individual business context, organizational design, operating models and technology competencies.

    The Digital oilfield is a broad, cross-functional concept with the complex implementation due to numerous underlying components and various business cases with puzzling array of choices of technical and workflow improvements.

    Individual companies randomly implemented different choices, innovations and proprietary in-house developments, because it is hard to predict where the next good idea will be.

    Different companies have started their initiatives at different points in the digital oilfield life cycle, where late entrants exploit commercial products and services that did not exist for earlier entrants.
  • Basic Digital oil Field concept would look like this, if we divide it by categories:

    Vision – proactive real time decision support driven by analytics and automated processes

    Business model – pilot project demonstration, and rapid replication at pace and scale

    Skills and competencies – capable and open to learning new technology and concepts; virtual cross functional teamwork

    Signature technology – remote real time monitoring and advice; Life of Field Seismic; analytics

    Infrastructure concern – latency, sensor accuracy, storage capacity and processing of “big data”

    Impact of politics – limited digital oilfield maturity
  • Asset management, broadly defined, refers to any system that monitors and maintains things of value to an entity or group. It may apply to both tangible assets such as buildings and to intangible assets such as human capital, intellectual property, and goodwill and financial assets. Asset management is a systematic process of deploying, operating, maintaining, upgrading, and disposing of assets cost-effectively.

    The term is most commonly used in the financial world to describe people and companies that manage investments on behalf of others. These include, for example, investment managers that manage the assets of a pension fund.

    Alternative views of asset management in the engineering environment are: the practice of managing assets to achieve the greatest return (particularly useful for productive assets such as plant and equipment), and the process of monitoring and maintaining facilities systems, with the objective of providing the best possible service to users (appropriate for public infrastructure assets).

    Digitization of Asset Management (DAM) consists of management tasks and decisions surrounding the ingestion, annotation, cataloguing, storage, retrieval and distribution of physical and logical assets.

    The Basic Framework of Application Components within the industrial systems environment includes:
    Data Historian
    Data Visualization
    A complex calculation engine
    A target setting and alerting capability
    Advanced optimizations and control applications such as Multivariable constraint control (MVc)

    A Service-Oriented Architecture (SOA) in computer software design is an architectural style where in services are provided to the other components by application components, through a communication protocol over a network. The basic fundamental principles of service oriented architecture is independent of vendors, products and technologies.[1] A service is a discrete unit of functionality that can be accesssed remotely and acted upon and updated independently, such as an act of retrieving a credit card statement online.

    Different services can be used in conjunction to provide the functionality of a large software application. Service oriented architecture makes it easier for software components to communicate and cooperate over the network, without requiring any human interaction or changes in the underlying program. so that service candidates can be redesigned before their implementation.

    Data Quality and OPC UA
    Standard, integrated, and automated work processes can be successfully implemented only after reliable access to quality data has been established.
     
    In the late 90’s electronic interfacing software known as opc emerged for linking Microsoft Windows based production Automation System’s (pAS) with each other and with real time software applications.
     
    The opc Windows only restriction is currently being broadened in a new version known as opc Unified Architecture (UA) which will incorporate also Java, Microsoft.NET and c. opc UA combines the functionality of the existing opc interfaces with new technologies such as XML and Web Services to deliver higher levels of ERp support.
     
    It is recommended that all production Automation System (pAS) vendors adopt the opc UA standard such that these systems can:
    Receive real time data from opc UA based sub-systems
    Send real time data to opc UA compatible ERp systems, e.g. Hydrocarbon Accounting, Maintenance Management
    Work seamlessly with current and emerging applications

    New and important features of OPC UA are:
    Redundancy support
    Heartbeat for connections in both directions (to indicate whether the other end is "alive"). This means that both server and client recognize interrupts.
    Buffering of data and acknowledgements of transmitted data. Lost connections don't lead to lost data anymore. Lost datagrams can be refetched.

    Extensible
    The multi-layered architecture of OPC UA provides a “future proof” framework. Innovative technologies and methodologies such as new transport protocols, security algorithms, encoding standards, or application-services can be incorporated into OPC UA while maintaining backwards compatibility for existing products. UA products built today will work with the products of tomorrow.

    Information Modeling
    The OPC UA information modeling framework turns data into information. With complete object-oriented capabilities, even the most complex multi-level structures can be modeled and extended. Data-types and structures are defined in profiles. For example, the existing OPC Classic specifications were modeled into UA profiles which can also be extended by other organizations.
  • Sub-questions
    Research methods
    purpose

    What is a Digital Transformation?
    Literature review
    Study existing knowledge and clarify the meaning of the term.

    Does Digital Transformation same as Business Transformation?
    Literature review
    Determine factors that can influence this view

    What are benefits to companies from deploying new digital technologies?
    Literature review and Quantitative data collection
    collect success stories with numbers behind

    How IT and Business get the most from synergy?
    Literature review and Survey
    According to the results of the questionnaire, clarify details

    How digitally successful companies look like?
    Literature review and Quantitative data collection
    outline success measures

    What Information Technology trends matter to oil and Gas companies?
    Literature review
    collect top promising technologies

    What is a Digital oilfield concept? Is it Digital Transformation of oil and Gas industry?
    Literature review
    Review and analyze existing materials of main concept

    How Digital oilfields built?
    Literature review
    Summarize lessons learned

    How to measure success, progress and maturity of company in terms of Digital Transformation?
    Literature review
    Define proposed maturity matrix

    Why IT is shifting from a Service provider to a Business partner?
    Literature review and Survey
    Identify business drivers

    How digital success can be repeated in other organization?
    Literature review and this research conclusions
    Summarize best practices
  • SPE – Society of Petroleum Engineers
  • Survey duration
    Distribution of questionnaire has been started on July 31st and till the end of August 16th, which is full 16 days. At this date I stopped accepting responses in order to have fixed numbers to analyze. Moreover, I have reached the targeted number of responses. The number of responses on each date during the survey period is shown at Appendices section. The highest number of answers (26) was observed on the first day. Then, there were more responses after notifications sent to the participants.

    Survey limitations
    Questionnaire was created and published online. None of personal interview or paper broadcast was produced due to lack of time to obtain companies’ disclaimer from any potential findings or assumptions. oil and gas companies are very cautious in allowing any works for public audience and complex in aligning all required approvals for interview with their employees. Also some attempts were done to announce this survey in SpE forums with the help of my curriculum team mates.
  • LinkedIn – business network digital community
    SPE – Society of Petroleum Engineers
    IT – Information Technologies
    RM – Reservoir Management
    ProdOps – Production Operations
  • Survey observations
    Majority of respondents were my peer colleagues from IT professional area of international joint ventures. Thus most of findings reflect their vision, even though I had other corporate and core functions representatives.
     
    IT was presented mainly with managers and balanced with RM on the level of contributors.

  • AI – Artificial Intelligence
  • According to materials published by representatives of oil and Gas companies, numerous vendors and consultancy agencies, I can say that Digital Transformation took form of Digital oil Field (DoF) concept with vague description and amorphous goal. Nevertheless there are enough materials to conclude real world best practices and lessons learned from first hands. All success of industry leaders can be repeated and implemented with fewer efforts in more efficient manner. Also current forerunners should utilize go forward in order to keep leadership positions in this area.
     
    The motto of DoF can be described as make better decisions faster and cheaper. This is core value of digital technologies for oil/gas producing and trading companies. These are where emerging technologies help to keep business competitive advantage and survive in persistently long low oil prices.
     
    After reading of SpE materials I can summarize the logic behind and steps followed to deploy DoF. These best practices will help to avoid pitfalls of predecessors. Also these steps can be easily implemented by any organization.
  • Digital Transformation starts from Business Strategy and its goals. All next steps should be aligned with company needs
    Strategy and not technology should lead efforts

    Innovation center or committee oversees general concept of digitization according to business plan and serves as a primary guiding council
    Leading role should be executed by chief Technology officer or operations General Manager

    center should consist of at least any two more chief officer or general management members on two year rotational basis

    chairman of this committee will be chosen by its members
    Review and assess all emerging technologies for feasibility on a quarterly or at least semi-annually basis

    DoF concept and DAM framework should be reviewed regularly

    All best practices, lessons learned from industry peers and similar market sectors should be validated and documented for feasibility

    Responsible to build foundation, set direction, allocate funds and ensure prioritization of R&D projects

    Joint Information and operational Technologies / Integrated operations Technologies (IoT) Group or department is an executive, leading body in digitization of organization on the level of company or entire enterprise
    Responsible for managing IoT assets to enable business with coordinated and centralized efforts of ensuring successful deployment and implementation of new digital technologies

    consist of business and process control networks including ScADA/DcS, instrumentation, devices layers

    Guided by and aligns activities with Innovation center/committee

    Manages adoption of DoF concept and DAM framework
  • Digital Oil Field (DOF) concept should take into account organizational culture, knowledge, resources and capabilities assessment
    Innovation center with help of IoT assesses all emerging technologies and builds DoF concept applicable for organization

    concept should consist of evaluated technologies with recommended area of implementation

    Approved content should be widely distributed and promoted in organization across all assets, disciplines and business units

    Digitization of Asset Management (DAM) framework should be cross-discipline collaboration across the assets, standardize processes and build investments on long-term technologies
    Framework should be applied to whole organization and mandated to all assets

    Any exceptions and exclusions should be justified and well documented

    Already approved technologies should be matched to standardized processes

    Business case is the main means for deploying any new technologies to prepare asset and organization for implementation
    Any actual investments should follow internal approvals for respective resources allocation

    case should have section for bringing asset to organization and another section for making sure that organization is ready for asset
  • pilot projects should assure test of feasibility, identify early pitfalls and provide recommendations for enterprise wide roll-out
    proof of concept is the main pre-requisite before launching it at full

    Any deviations from initial design should be reviewed and evaluated

    Deployment across organization should be done to leverage efficiency at scale
    Local instances can have minor adjustments and should be reflected in central repository

    customizations possible, but core functionality should be the same

    Assess Maturity to measure success, sustainment of benefits achieved over time and check back if any improvements or adjustments should be done at each step above
    All solutions should be re-assessed at the end of first year and later in two year interval to ensure that it is still valid and utilized as has been planned

    Benchmarking with industry peers and similar market sectors like automotive, aerospace, mining etc. to identify new emerging technologies
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