The past couple of years have been tough on everyone due to COVID-19, but they were almost a knockout blow for oil and gas producers and related manufacturers already reeling from 10 years of reduced and then wildly fluctuating demand before the pandemic even started.
More recently, the jump in the price of West Texas intermediate crude to $82 per barrel and the recovery in demand for natural gas liquids (NGL) offered a welcome pause in the industry’s latest roller coaster ride. However, it appears that digital transformation and related technologies may provide the efficiency and optimization to smooth more of the oil and gas industry’s bumps and enable its recovery in the next several years.
This was the consensus view of several experts from Schlumberger’s Agora business, Rockwell Automation and the two companies’ Sensia joint venture, who gathered for the Oil & Gas Industry Forum at Automation Fair 2021 this week in Houston.
ESP in Ecuador
“As the world moves beyond COVID-19, we’re facing complex challenges, and have to cover both costs and carbon footprints. Digitalization can help us do both,” said Rajeev Sonthalia, president of the digital integration division at Schlumberger, in a video that led off the forum.
Sonthalia reported that Sensia recently helped optimize production at two wells in the jungles of Ecuador, implementing a smart ESP (electric submersible pump) remote operations program that increased oil production by 30%; saved 50 kilometers of driving per well per day; reduced their carbon footprint by more than 90%; and improved operational efficiency by more than 20%. The well’s operators and Sensia also relied on Agora’s edge artificial intelligence (AI) and Internet of Things (IoT) solution, as well as Delfi’s secure, open and managed digital exploration and production environment to make these gains.
“This is what you can do with partners to improve your carbon footprint, and we’re going to export it to the Middle East, Nigeria and North America,” added Sonthalia. “Automation and AI can give you a digital twin partner that’s ever-present. They’re also letting us combine data and physics to perform predictive asset maintenance, support remote operations, and limit risks by reducing travel in the field.
“AI is also going to have a lasting business impact for us and our partners by further optimizing control, production, costs and carbon footprints, and doing it in a secure environment thanks to Delfi and Agora. This isn’t about taking away the roles of people, but instead giving them new efficiencies and capabilities, and enabling them to contribute to the world in a positive way. Digital transformation will enable a safe and secure future for us and our employees, and digitalized solutions will get us there faster.”
Post-pandemic investment
Following the video, the forum’s expert panel weighed in a variety of the trends and daunting challenges faced by oil and gas owner-operators, and detailed how digitalization and other solutions can solve or at least help alleviate them.
“We saw investment drop during 2020-21 and production plummet for two years, and now many users are struggling to access energy,” said Sujit Kumar, director and founder of Agora. “At the same time, much of the workforce is retiring, and we’re getting a healthy challenge from alternative energy sources. All of this means we need technologies that can reduce inefficiencies, cost per barrel and their carbon intensity. This isn’t a choice anymore.”
Kumar reported that global spending on oil and gas production was about $240-250 billion, and is expected to grow by about 5% per year. Meanwhile, he added that automation and digital technologies used in oil and gas production are growing by about 12% per year, while investment in them is also shifting from information technology (IT) to operations technology (OT).
“As Rockwell CEO and chairman Blake Moret said when we started Sensia, ‘industry has automation, but it’s not automated,’” explained Andy Weatherhead, chief technology and digital officer at Sensia. “We still need to bring automation to the field, even though it’s more difficult than doing it in a factory.”
Pal Roach, industry consultant for oil and gas at Rockwell Automation, added, “Crude was at $84 last Friday, which was the highest since 2014, and will help investment, but the challenge is still at the base. Our industry and others paused for 18 months because of the pandemic, and now they’re trying to restart, which is why we need to take costs out and transition to digitalized technologies. Oil and gas can lead in this area because we’ve always been resilient, carried out complex projects worldwide, transitioned from a regulated to an unregulated industry in a very short time, and handled other seismic shifts. It’s just that this time we’re also doing carbon capture, producing hydrogen, and even wind power, so we can also say we’re green and sustainable.”
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Transition to new roles
Beyond using digitalized technologies to increase efficiency, the panelists concurred they can also help oil and gas producers transition to other types of energy.
“Energy demand is going to continue increasing, but renewables are on the rise, so oil and gas companies are signing on to net zero carbon initiatives. We’re going to see a rise in integrated energy projects and decarbonization, which are both really about increasing efficiency,” said Weatherhead. “We’ll likely see large electrification projects to replace diesel, electrifying offshore operations, using hydrogen as an energy carrier, and a continuing high growth rate for natural gas processes. Digitalization can help all of these applications and resolve problems without sending people to the field as often.”
Roach reported that transitions in the oil and gas industry will continue to be driven by high demand for energy through 2050, especially by emerging economies. However, he added the mix of energy sources will shift. “Renewables are projected to grow from 14% of total energy output now to 28% in the coming years,” said Roach. “However, traditional sources will still be a big part of the overall energy picture. Even moving to electric vehicles (EV) pushes demand for carbon-based energy.”
Kumar added, “In many ways, renewable energy now faces the same challenges that oil and gas overcame in the past, such as building infrastructure, gaining access to capital, and securing the right technologies. This means we have the experience to help renewables meet the challenges they’re facing now. We can take the lead in helping to provide low-carbon energy and fill the role of providing the expertise that alternative energy producers require.”
