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ENERGY TECHNOLOGY Innovation to transform the energy future

Aug 7, 2019

Energy transition is a slow process, but the enabler is most definitely today’s technology and future breakthroughs, supported by radical changes in energy use by consumers. As the world demands more energy, it also demands that it be produced and delivered in new ways, with fewer emissions. The article focuses on technologies that bring about constructive energy transformation, the hurdles that oil & gas companies face to reach the full value of digital initiatives, & what to consider to build a successful digital strategy for energy transition.

For many years, the oil and gas industry has confronted many diverse challenges, whether that be between onshore and offshore, different geographies or national versus international oil companies. As the industry looks toward transitioning to a different energy mix, adding to these challenges will be local versus global energy policies, the reliance on oil and gas for national budgets and employment, the skills shortage and the uncertainty over oil and gas prices and demand. There are many trends accelerating the introduction of new energy sources and delivery platforms into the global energy system. Four stand-out developments can potentially transform the global energy landscape:

  • Global population growth brings new expectations and requirements: By 2025, the population of millennials are expected to make up 75% of the global workforce. They are already enthusiastically embracing the sharing economy as witnessed by new digital business models providing efficient solutions for transportation, accommodation and food delivery. This, in turn, is leading to greater use of assets, such as, shared vehicles. They are prepared and willing to make bold changes, such as switching to eco-friendly energy providers or brands to help tackle these challenges. These developments are already affecting demand for oil and natural gas.

  • Electric vehicles: Road transport, aviation and shipping account for more than 60% of the world’s oil consumption and approximately the same proportion of emissions. At the 2015 United Nations Climate Change Conference in Paris, the United Nations Environment Programme set a target for at least 20 percent of road transport vehicles to be driven electrically by 2030. This shift has the potential to drastically impact the demand for oil in the coming years. To meet increasing demand, the big automobile manufacturers are investing billions in the conversion of their product ranges and production facilities. Analysts predict that by 2040 more electric cars will be produced worldwide than petrol or diesel vehicles.

  • Cost of power generation: Beyond the charging infrastructure, e-mobility requires a transformation of the energy system – an Energy Revolution, in fact – both to ensure that the grid can cope with the increased demand for power and to expand the contribution of renewables. An Accenture survey found that 56% of millennials are interested in investing in solar panels and 69% in energy trading marketplaces. This trend is driving start-ups to create platforms that give consumers the freedom to choose their energy source.

  • Distributed generation: As communities continue to grow in size and complexity, new models of energy distribution have developed. Methods of generation such as roof top solar and self-generation by industrial consumers, are becoming more common on a larger scale. The evolving power system needs to be increasingly flexible and interconnected, as well as more reliable & intelligent.

Technologies that enable effective energy transition

As the oil and gas companies expand their portfolios towards future energy markets, there is a realisation that the need for efficient operations and enhanced production uptime is more prevalent than ever. ‘Digital’ has become more important than ever in today’s industrial space. It has been shown that by properly using digital technologies, the oil, gas and chemicals sector can reduce capital and operating expenditures by up to 30%. The same technology will have a massive impact on tying the entire energy ecosystem together.

Technologies are moving companies to an era where critical assets equipped with smart sensors now that tell people what is wrong, long before failures even occur. Providing operators with quick access to hundreds of years of data and analytics, rather than relying on the experience of individual employees, increases efficiencies, reduces downtime and avoids costly shutdowns. When data and technologies across a plant and enterprises are integrated into a holistic view, this opens whole new approaches to how operators and experts collaborate and use asset information and process analytics for quick decision-making and lost time prevention.

Connected operations: The future will bring more enterprise-wide use of remote-enabled condition monitoring technologies, predictive and descriptive data analytics, and advanced process control applications so that operational effectiveness of plants can be understood in near-real time. This provides the right blend of technology, expertise and information. Providing the correct information when it is most needed means the best decisions can be taken.

Industrial Internet of Things (IIoT): Digital success, and ultimately the profitability of a business, hinges not on individual technologies but the integration of the IIoT. Key to this is collaborative operation centres and control rooms which pull the data from these sensors and devices together. They enable analytics reporting and monitoring, while presenting dashboards that are relevant to all stakeholders, including executives, production managers, operations personnel & maintenance staff.

Digital twin applications: A good digital infrastructure is almost impossible to implement without a digital model of the plant. A typical modern industrial device already creates a formidable digital data-trail. This includes CAD drawings and simulations during the design phase, information on location, connected equipment and configuration from the integration phase, as well as subsequently collected utilisation, diagnostic and maintenance data. This information can be used to simulate the behaviour of the physical object.

Collaborative operations: Collaborative operations enable remote operations and fleet wide management. It uses digital technologies to monitor and analyse assets and processes. Collaborative operation centres help to maximise productivity and enhances safety. These centres pave the way for the application of further technology advancements.

Intelligent project execution: In the plan and build phase digital technologies are successfully streamlining project execution and integrating traditionally separate systems in the planning and build phase. Because of cloud engineering, virtual factory testing and simulation, electrical, automation, instrumentation, and telecoms are no longer designed as separate systems, but instead are built into one collaborative environment, thereby optimising customer objectives at every stage of the lifecycle.

Hurdles ahead

Oil and gas companies face significant hurdles to realising the full value of the digital initiatives, not only in any future energy ecosystem, but also in their current exploration and production environment. Some of the more regularly debated barriers are detailed below:

Regulation: Some commentators believe that today’s data security regulations are not fit for purpose and that much effort is needed to ensure this happens in the new world order. This can only be addressed through technology, as well as due diligence in the operational use of data and a recognition that compromise is not an option. As companies continue to navigate the new energy ecosystem, conversations around intellectual property frameworks need to be further explored. Understanding data sharing models will allow companies to innovate further, while maintaining data integrity.

Data accessibility: When data is collected across large enterprises it can often appear in formats that are not easily managed. This can affect how the information is processed and the subsequent insights that are gathered. ExxonMobil’s work with Lockheed Martin, to develop an open standard, open architecture control system that runs on commercial software and hardware, is an excellent example of how the oil and gas industry can embrace the proven digital strategies of other industries to improve performance.

Integration: To address challenges such as increased productivity, and improved efficiency while maintaining safe operations, companies need to adopt an integrated approach. Each asset needs to be connected across the value chain to realize the benefits of digitalisation. An integrated information system is essential as companies move into the digitalisation age. The exploration and production (E&P) departments of oil companies often do not share data, even between themselves. This must change, especially as the transition is seeing a move from the once dominant “exploration” departments to an era where the “production” departments are the value drivers.

Business models: Unless work processes and business models are changed, oil and gas companies risk losing out to new rivals from inside and outside the industry. Companies from other sectors have often already adapted to changing markets by embracing new business models and integrating information technology (IT) with operational technology (OT) to reduce costs and boost efficiencies.

People focused: Oil and gas companies tend to be capital and technology-centric, while, at the same time, being people intensive. Future concerns include how many people will be needed, the training that they should be given and the types of people that should be hired who are fit for purpose. The industry is inherently unable to take more of an experimental, “fail-fast” approach because of its conservative nature and concern about the potential consequences of change. It is important to start now in preparing the workforce to manage and operate new technologies and digital plants of the future.

Knowledge transfer: Technology is an enabler of the energy transition but requires a cultural change to be fully realised. It is important to actively capture process knowledge by converting data collection and analysis practices into software applications that can be deployed remotely. These “advanced digital service” developments are fundamental to the collaborative operations way of working described earlier.

Cyber security: Many traditional cyber security best practices do not apply to industrial control systems. A malicious command sent to an industrial device often looks identical to a legitimate command. There needs to be a better understanding of pattern of life analysis. Generally, national and international oil companies adopt a “keep data within our gates” policy. There are many reasons ranging from close ties to government, sensitive commercial data and international conflicts. Many of these reasons are not related to cyber security issues but follow a “better safe than sorry” approach which, in effect limits the usefulness of the digital ecosystem.

IT/OT integration: A key benefit of IT/OT data integration is that it addresses the challenges of managing ever increasing costs, minimising schedule overruns, mitigating risk, optimising or maximising production and controlling energy expenditure and efficiency. IT and OT cannot operate in silos if good shareholder returns are to be delivered considering an increasingly difficult and uncertain market realities. Companies are coming to realise that addressing emerging challenges effectively means transitioning to an environment which provides remote asset diagnostics, continuous automation and production optimisation made possible through a fully integrated approach to power, automation and telecom systems.

Building a digital strategy for energy transition

Success during the energy transition relies heavily on the creation of a robust digital strategy that has buy-in from the boardroom. Here are some key considerations that will help avoid investing scarce resources without realising the benefits:

  • Prepare and retrain executives: The energy transition’s success resides on an effective digital transformation roadmap, driven by a culture of innovation and technology adoption. All levels of the organisation need to embrace the digital transformation. Leadership should play an active role in establishing clear goals while creating an environment that supports ideation across multidisciplinary teams.

  • Invest in talent: The fall in the oil price forced the industry to think differently. It introduced new technologies which depend on a new breed of engineer to fully understand the impact on a business. Companies need to continually assess the current skill levels and rapidly identify any gaps. They need to build a digital strategic workforce plan to address any shortage of skills.

  • Continually explore the potential of digital: Building an end-to-end digital infrastructure that connects all data sources into a centralised platform needs much investment – in time and resources. Going forward, many oil and gas companies will not have full control over the supply chain, with distribution networks owned by partners. This alone will require a robust digital infrastructure where collaboration is essential.

  • Assess and benchmark current data architecture: There is an abundance of critical, yet disparate, software applications deeply embedded within operations. Without a strong foundation in capturing, safeguarding and sharing data, potentially business transforming insights are lost. Without adequate integration, new investments will be wasted as they will not be able to rely on historic data and will merely add fresh, high-quality, insufficiently used data to the rest

  • Work the data harder: Today’s analytics are more sophisticated at diagnosing, sorting, comparing and identifying cost savings and performance improvement areas than ever before, and certainly at a pace far faster than the average employee. Using digital insights to automate processes boosts throughput by eliminating delays from human decision-making and frees up employees to focus on higher value-adding activities.

  • Collaborate: Working closely with partners to develop new customer-centric solutions will be essential to the success of these new models. Harnessing innovative ideas and, more importantly, turning them into reality will not be possible without industry collaboration, both by production companies and suppliers along the value chain. Only in doing so will oil and gas companies drive innovation in the industry and secure competitiveness.

Image Gallery

  • A diagrammatic representation of how industries are gradually shifting from automation to collaborative operations

  • Digital success hinges not on individual technologies but the integration of the IIoT

  • Madhav Vemuri

    President - Industrial Automation Division

    ABB India

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