Technology to the rescue The need to economise forces the oil and gas industry to innovate, says Wouter Last, president of Hint
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ith the lowest oil and gas prices since 2009 and the disappearance of shopfloor-based knowledge, cost cutting has become a priority for many companies in the industry. Research by Lloyd’s Register Energy shows that the reduction of costs is the main objective for 43 per cent of organizations in the oil and gas industry. Meanwhile, improvement in operational efficiency, directly related to cost, scored 44 per cent. I believe, going forward, that investment in innovation is the best way to save. First sow and then harvest. While the crisis of the last few years can now be left to the history books, it has left its mark. Back then, there was too much resting on laurels, which allowed us to be overtaken, suddenly, by events. Now is the time for catching up. In modern industry, digital technology is most often responsible for cost reduction. I find a number of additional developments to also be promising. My top four: 1. Every oil and gas factory is an ICT company: In the future, each plant in the energy industry will be controlled from a digital platform. Here all the data on the site will be measured together in one dashboard. The system would then analyse the data and draw conclusions on which engineers on the shop floor can base their actions. Think of “actions” not as physical work in the field, but as adjustments to the plants from afar. Maintenance is condition-based and not malfunction driven. This saves costs since you keep ahead of potentially bigger problems. According to a Gartner study from 2013, effective software-based asset management can, within one year, result in technology cost savings of 30 per cent. With a high degree of automation, we also address the outflow of personnel and knowledge that many companies face. This becomes another cost saving because you can make do with fewer staff at a plant. 2. New extraction methods: Oil fields are still being found, but their reserves can be difficult to exploit. Some organizations have become more adept at exploiting such reserves. In Texas, Norway’s Statoil, for example, is currently experimenting with sand of different gradations. It is spraying water and chemicals in the ground to loosen hard rock that is deep within the soil. It also varies the depth of wells in order to discern what level delivers the highest production. The engineers can control the valves remotely and can quickly adjust the flow. But does this represent cost savings or investment? As so often is the case, they go hand in hand. Statoil can now produce more with fewer rigs and the average cost of the drilling process has decreased from $4.5 million to $3.5 million by, for one, reducing the initial exploitation time from 21 to 17 days.
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