Innovate to get through this cycle
THE INDUSTRIAL INTERNET AND BIG DATA CAN TRANSFORM THE OIL AND GAS INDUSTRY
MATTHIAS HEILMANN, GE OIL & GAS, SAN RAMON, CALIF.
WE ARE ALL AWARE that these are demanding times for the oil and gas industry. However, while the oil price collapse has put a spotlight on the sector, it has also shined a light on the substantial opportunity for productivity and efficiency improvements. Realizing the potential of a digital oil and gas industry will not only help operators navigate through this tough cycle, but also position them for performing better in the long run.
As the industry copes with the lower oil prices and revenue, operators must innovate in order to find new ways of increasing cost-efficiency while continuing to meet the world's ever growing need for energy. Looking beyond spending cuts, oil and gas companies need to also enable people, machines, and processes to work together more efficiently and effectively. They need to manage across the enterprise more holistically, even as their asset portfolios grow in size and complexity.
Today, as technological boundaries are being constantly pushed forward, the combination of cloud technology, big data capabilities, comprehensive analytics and machine learning functionality, and true convergence of IT/OT is paving the way for a step change in productivity improvement.
Merging big data and analytics with industrial machinery, the Industrial Internet is the very real phenomenon that will deliver transformative change for the industry. The application of advanced digital technologies will empower operators to make better, quicker decisions aimed at outcomes such as increased uptime, cost-efficiency, productivity, and operational flexibility. The room for improvement is vast, and therefore there is a monumental opportunity for the industry.
In today's environment, uptime means more than ever to operators. In the days of $100 oil, downtime might not be crippling or a concern at all. Today, however, a reliable stream of revenue is critical for the balance sheet and sustainability of the business. The Industrial Internet has the potential to help the average mid-size LNG facility save $150 million a year by eliminating unplanned downtime, driven by a focus on analytics-based, planned work management, rather than reactive and ad-hoc work orders.
Digital technologies that monitor and analyze performance data can identify impending issues, enable operators to prevent costly shutdowns, and improve overall reliability.
Digital transformation also presents the opportunity for oil and gas companies to capture and retain the knowledge of a retiring workforce. The demographics of the sector's workforce have for some time pointed to an impending generational change, and it is estimated that 50% of the employees in oil and gas are due to retire in the next five to seven years. Knowledge management capabilities can digitize the expertise and experience of the workforce and democratize the knowledge quickly and widely across the company.
Another opportunity that digital brings to the table is the better ability to manage a complex, growing asset portfolio. The mix has evolved steadily to include more unconventional facilities, especially in the area of LNG, which call for greater levels of engineering and operational expertise. Keeping track of this diverse infrastructure and ensuring that insights are gleaned all the way across the enterprise is a challenge best addressed by the unparalleled reach of the Industrial Internet. With a platform built for industry, oil and gas companies can break down operational silos and increase connectivity even across harsh-environment, remote locations. Through a better view and collaboration across divisions, best practices can be more effectively identified and applied across the globe.
While the companies control costs, they must continue improving environmental, health, and safety. Digital innovations will be essential to achieving this, and in fact they are already being implemented. For example, GE has delivered a digital risk management solution aimed at helping pipeline operators make fast, informed decisions around pipeline safety, asset integrity, and operational efficiency by providing comprehensive, real-time views of their pipeline networks.
A comprehensive digital strategy is the key for oil and gas companies to address a wide spectrum of challenges.
Oil companies are already availing themselves of these technological breakthroughs today. For instance, last year GE and BP announced a solution deployment to connect all of the company's oil wells globally to the Industrial Internet. Using GE's data management software, BP field engineers will now gain real-time access to common machine and operational data sets across all wells. The project will initially be deployed across 650 of BP's wells, expanding to 4,000 wells across the world over the next several years.
It is a new era for digital in oil and gas. While digital transformation has hit roadblocks in the past - including the cost of retrofitting sensors and controls, the difficulty of changing business processes, and decentralized decision-making - the technological advances we have today indicate that time is now to reap the benefits. The convergence of advanced computing, increasingly sophisticated analytics, ubiquitous sensors, and unprecedented levels of connectivity have changed the landscape.
An exponential increase in digital information has provided industries around the world with staggering quantities of data, largely fueled by a proliferation of low-cost sensors. By 2020, we forecast that equipment installed by GE will produce one exabyte, or one billion gigabytes, of data every day. The investments and advancements made in cloud computing technology are now allowing us to collect, store, and analyze this data at faster speeds and lower cost.
Worldwide, there are currently more than 100,000 pieces of turbomachinery, one million pieces of artificial lift equipment, and approximately two million miles of pipeline generating petabytes of data each year. Just a single gas turbine compressor blade can give off 500 gigabytes of data per day. GE estimates that every 30,000 miles of pipeline generates more data than the entire printed collection of the Library of Congress, or 17 terabytes.
We now have better tools and technologies to make sense of that data and turn it into actionable insights. We estimate that by analyzing the vast amount of data, oil and gas companies can raise production by 6% to 8%. With the average world oil recovery rate now hovering at about 35%, just a single percentage point improvement would lift output by the equivalent of about three years of global oil production, or more than 80 billion barrels of expanded conventional oil reserves.
The first wave of Industrial Internet solutions has already proved they can deliver meaningful efficiency gains that translate into a direct and positive economic impact. We have estimated, for example, that the industrial solutions already deployed by GE across a number of industries are yielding an average 20% performance improvement for our customers.
The capabilities that the Industrial Internet bring to oil and gas have the potential to fundamentally reshape the sector and redefine what it perceives as possible. It offers the tools to meet the industry's pressing challenges and unlock unprecedented productivity levels for the years ahead. For those companies that grasp this, big data and analytics will be their competitive advantage.
ABOUT THE AUTHOR
Matthias Heilmann has more than 20 years of industry expertise in technology, software, operations, and finance. He was named chief digital officer of GE Oil & Gas in January 2016.