Mar 18, 2021

Acceleration of Digital Transformation to Help Create Stability

This article was originally published on The Jakarta Post.

According to the World Economic Forum report, digital transformation in the oil and gas industry could unlock approximately US$1.6 trillion of value for the industry, its customers and wider society while creating around $1 trillion of value for oil and gas firms. 

Given the increased volatility and expectation of a lower crude oil price environment, companies are accelerating their digital transformation initiatives as a means to reduce operational costs and gain competitive advantage amid market chaos. The drive toward digitalization has gained further momentum through the adoption of the Industrial Internet of Things which provides a missing link that moves hydrocarbon industries to a new level of connectivity. 

All industries are embracing technology to reshape their operating landscape and reap the benefits of improved productivity, higher efficiency, and increased cost savings. The oil and gas industry is not a stranger to this and is progressing toward digital maturity. Data is the foundation of every analytics and machine learning application. 

Data is the “raw material” that feeds into analytics and AI and, in turn, enables data modelling to optimize process, to predict machine failures before they happen and to support decision making. Tagging operating assets with low quality and noisy data at the start of the process is likely to generate inferior or inaccurate results at downstream, reducing the value that can be extracted from the data. Therefore, ensuring robust technology infrastructure to store, manage and contextualize data is a first step toward execution of digital transformation initiatives. 

A good illustration is ADNOC’s Panorama Digital Command Centre that provides operational visibility across the entire hydrocarbon value chain – from exploration to distribution of products, breaking down information silos and providing real-time operational insights based on a single, trusted view. This not only improves operational efficiencies, but also uncovers new pathways to optimize 

Getting design “right first time” is simply unrealistic and not achievable in most cases as this ideology does not have the flexibility needed to cope with client, legal, contractor and environmental changes which influence scope changes throughout the project. Evolutionary design requires the design process to be adaptable to change and should be allowed to cycle through alternatives as quickly as possible until its most ideal form is achieved. 

Improvement in project performance lies in the ability to manage the design spiral effectively to reduce iterations and enable better communications between designers and constructors. This requires a collaborative digital environment that enables all the engineering and design disciplines to respond to multi-discipline changes in an ordered and organized manner. 

As design information is created, it needs to be shared across other design disciplines and across contractual boundaries to make sure that the project progresses to schedule. This process is not a linear sequence by nature; design information is passed to the next team while progressing to the final constructed form. Any construction reworks due to bad quality of deliverable from engineering and design phases can result in huge overspend in a capital project, impacting the bottom line. 

Integrated petrochemical production networks are highly complex and difficult to visualize for planning and operations. While at the same time, increasing volatility of supply and demand in feedstock enables opportunities for margin improvement. Through digital transformation, business units that have historically been disconnected silos can connect in real time to create a unified supply chain model that maximizes profitability by taking advantage of data between real-time economic and market data sources and current plant and production status data. 

Through digital transformation oil and gas producers can explore opportunities, reduce operational risk and shrink the gap between plan and actual results. Product value streams can be maximized within the petrochemical value chain through a site wide planning model. Optimal feedstocks can be selected based on real-time economic data to maximize margin. 

Today, advancements in technology – cloud platform, analytics and computing power – are revolutionizing how companies transform their engineering and design processes to improve project execution. As change management is critical to managing the overall design spiral, technology must provide multi-disciplinary teams with the ability to control and communicate change while enabling each discipline to respond to changes in a prioritized and well-controlled manner. 

With improved collaboration and efficient management of change, companies can effectively reduce the number of iterative steps in the “design spiral” and compress the time needed to reach the final, optimized design in a project. There are four key areas where digital transformation can enable oil and gas operations: 

First, protect workforce and operations continuity. Safety is always the top priority in oil and gas operations. Now, the biggest threat to workforce safety and operations continuity is proximity to co-workers. Connecting an agile but remote workforce to perform digitally enabled tasks such as remote maintenance, engineering and operations is key to protecting teams’ safety and reducing the risk of outbreaks. This is key to business continuity in today’s world. Reducing onsite operations teams has been a long-term goal in the industry. 

Second, supply chain agility. The recent heightened volatility in crude and product prices and demand are making even the most current production planning and process models far from optimized. In addition to the demand uncertainty, process constraints are creating more uncertainties in terms of feedstock availability and pricing. Making production choices today to optimize a plant can be a daunting task for most as that could take days or even weeks to finalize the plans. 

A robust supply chain management cloud platform combined with real-time crude management tools enables rapid modelling of refinery production planning that reduces business risks while improving collaboration between globally dispersed teams. The supply chain tools enable refiners to source the most profitable feedstocks based on plant models and economics in volatile markets. Now, decisions that previously took two business days can be made in two hours. 

Third, operations agility. Process optimization capabilities enable operations to respond to changes in feedstocks and product specifications as well as process performance and constraints based on first principles simulation techniques to maximize profits. It uses real time process and economic data to determine set points that guarantee maximum operating profit. Blending optimization systems and advanced process control ensure that all constraints and regulatory requirements are satisfied at minimum cost. 

Fourth, maintenance agility. Companies may bring maintenance work turnarounds forward with declining demand due to the crisis. Keeping critical assets productive is becoming more challenging due to the changes in maintenance schedules and utilization in this heightened uncertainty period. 

Predictive analytics enables hydrocarbon producers and refiners to not only remotely monitor asset health but also improve asset reliability by providing early warning notification and diagnosis of equipment issues days, weeks, or months before failure. This helps reduce equipment downtime, increase availability, and improve performance while reducing operations and maintenance expenditures. 

True digital transformation platforms provide the ability to choose between deployment options including on premise, cloud or hybrid rollouts. Agility in procurement options allows enterprises to obtain the required tools through several options, including perpetual licensing or subscription based services solutions for implementing technology on an as needed, staged approach help the enterprise reduce upfront costs and decrease time to value of new technology investments while accelerating a path toward increased profitability.

Image via The Jakarta Post

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