February 2017, Vol. 244, No. 2


Disruptive Technologies Enabling O&G Companies

By Chris Niven, Research Director, IDC Energy Insights

Data everywhere is a key driver that is compelling oil and gas companies to build platforms for managing meaningful data and applying various types of analytics to optimize operational activities and efficiencies. IDC Energy Insights recently published IDC FutureScape Worldwide Oil and Gas 2017 Predictions to offer a better understanding of how oil and gas companies plan to leverage technologies to improve performance and adapt to change over the next three years.

The oil and gas landscape has shifted dramatically since oil prices began dropping in 2014, as energy companies aggressively slashed staff, improved the supply chain and placed projects on hold to slow the hemorrhaging of cash. Meanwhile, technology improvements continued to advance, and oil and gas companies have been taking advantage of this downtime to restructure their IT environment to align closer with the business units and become more efficient, agile and resilient to change.

Some of the key drivers (besides low oil prices, politics and economy) that IDC Energy Insights recognizes for 2017 that are more IT-specific include: digital transformation, technology and “data are everywhere,” cybersecurity, data as an asset, and the rise of computer-based intelligence. IDC also identified 10 Top Predictions for 2017 in oil and gas.

To deal with low oil prices, energy companies reported seeing significant value in leveraging technology to improve response time, accuracy and to better predict outcomes. Workers in the field will be armed with wearables and other work-enhancing tools and technologies that will help identify problems and reduce response time by improving communications time and accuracy between control staff and onsite workers. These technologies have the potential to provide workers with the key information they need at the moment they need it, be it data, schematics, maps, guidelines or instructions.

Cybersecurity continues to be a top IT initiative as the growing number of new devices and sensors create new potential points of entry. This, in addition to the sophistication and complexity of dealing with many dissimilar systems and capabilities of the hackers, poses a threat. Organizations have to be pro-active while dealing with cyber-threats and digital attacks by keeping up with the latest technologies and vendors with oil and gas experience in this space to stay ahead of the bad guys.

From a people perspective, energy companies have released over 100,000 workers in a global industry that had already been facing a labor-shortage issue. To perform in the oilfield, workers need to understand safety and compliance as well as industry-domain knowledge, combined with technical knowledge and skills. It usually takes years for workers to become excellent at performing their jobs, but also requires continuous learning and retraining as technology and processes continue to evolve and business models change.

Oil and gas firms are constantly evaluating their technical portfolios in existing digital oilfield initiatives, considering how and where to make further performance improvements in existing and future oilfield assets. The digital transformation (DTX) consultant has become a resource with the ability to help identify, prioritize and evaluate the application of enabling technologies for such areas of improvement and move companies to the third platform.

A special emphasis is placed on: Big Data and analytics, along with the cloud and automation. As organizations apply manufacturing-like processes and modernize IT environments, the DTX consultant works with IT and business to deploy applications to the cloud and identify top analytics solutions.

Companies are updating and fine-tuning software applications; the smart companies are developing platforms to organize and manage integration efforts to manage critical data for accurate reporting and analytics purposes. Integration is the biggest challenge for Big Data and analytics. About half of the oil and gas company representatives interviewed said their IT environments are solid enough to provide clean, accurate data to deploy analytics. As software is updated and platforms are developed, companies continue to refine processes and workflows to align with the IT environment as it evolves.

As organizations evaluate technology portfolios to identify areas of potential improvements, quickly moving to cloud was reported to be the most important strategic way to quickly deal with lower oil prices. The cloud promises rapidly lower costs, faster deployment and a standard framework for new application development.

The cloud is rapidly gaining acceptance in oil and gas because of the benefits and the fact that security is improving. Companies realize some vendors offer better protection than they can even provide. Companies are also moving domain-specific applications to the cloud in some instances.

Security is still a big consideration. It is somewhat surprising that companies are now outsourcing application software maintenance and development for domain-specific applications to preferred professional services partners with the technical and oil/gas subject matter expertise. Allowing partners to manage domain-specific software is new for oil and gas companies, but appears to be a trend as the preference is to focus on what they know best: hydrocarbons.

Also going into mainstream acceptance is Big Data and analytics. Companies like GE with its Predix application connectors and IBM Watson (for its cognitive technology) have gone to the extent of building platforms for their solutions. Platforms are ideal approaches for solving integration challenges, providing critical data for analytics, establishing standards for connection and adding future software and technologies.

Data platforms are excellent architectures to connect the required systems into one tightly integrated environment that is designed to access and manage all requisite data. This data is used to generate dashboards, scorecards, ad hoc queries and advanced analytics like modeling, simulation and cognitive computing.

The key to successful analytics is to identify and understand the business opportunities and problems in order to set measureable and achievable business objectives. One such objective might be to use analytics to optimize production based on allocations or a sampling approach. Both options are important, and the technologies used would be different, depending on the nature of the objective to be achieved.

In addition to all of the data being generated by the existing infrastructure and the new equipment, devices, wearables and sensors deployed in the oilfield, imagery is predicted to be another large source of data for the near future. Cameras and drones will take images for security purposes, and  inspection and materials management to identify potential problems and validation of onsite asses and resources.

Along with analytics, modeling and simulation are taking a fast seat in the world of oil and gas innovative technologies. Part of what makes this possible is the dramatic advancements in these fields that has only recently brought the price down from literally millions of dollars only 15 years ago for 3-D war rooms to $350 for a virtual reality (VR) development kit license.

VR also aids in the preservation and sharing of critical knowledge across the technical workforce. When a new piece of equipment or a component is to be installed, the full process can be simulated in a virtual environment and practiced to create a first-time fit strategy with zero rework or surprises. By embedding best practices and the enterprise experience, virtual training provides a way for personnel to make mistakes/run hit and trial methods and learn from them in a safe environment, ensuring higher retention rates and lowering the potential for critical errors in the workplace.

The development of data management platforms for analytics is also applicable for providing data for cognitive processing as well as analytics, VR, and modeling and simulation. Data-management platforms are a major consideration as different problems require various kinds of analytics and architectural solutions. The key to successfully using these different approaches to analytics depends on the business objective to be achieved and its value.

Cognitive is an enabling technology that works best for solving complex problems by examining large amounts of different kinds of data to discover trends and patterns that most logically answer the questions asked.

Companies are conducting cognitive proof of concepts (POC) to learn how to extract value from unstructured data like process logs, maintenance production data, reports and studies that can be used to derive actual business process context that can solve problems in the field. Cognitive is still in its infancy but already is being used to help solve problems using human-like intelligence and reasoning. Cognitive processing is increasingly being used to sift through large volumes of data, determine best practices and provide information about the correct processes and procedures, as well as flagging potential risks.

Lower oil and gas prices have forced companies to reduce costs and are a catalyst to streamlining operations and developing a solid IT environment while moving to the cloud, applying mobility applications, and evaluating and running PoCs with analytics and other enabling solutions.

Author: Chris Niven is research director for IDC Energy Insights, responsible for thought leadership in the application of information and communications technology to oil and gas.


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