Oil and Gas: Why technology could help with competitiveness
Issues in the oil and gas industry
The oil and gas industry has been through a roller-coaster time over the past few years; having experienced a glut of oversupply it now looks as though it could be facing a supply crunch. This combined with the pressures around the external challenges of global sustainability, depleting stocks and increasingly challenging sites means that oil and gas organisations, and their allied supply chains, are having to consider how they remain competitive.
Oil and gas remains an important sector for the UK economy; generating £17bn in income, supporting a workforce of over 300,000, and the associated investment is substantial – £5bn was invested in assets and corporate acquisitions last year. In fact industry forecasts predict that oil and gas will still be vital for fuelling transport, power generation, heating and industrial usage as well as supplying two-thirds of the domestic energy market over the next twenty years.
The ongoing economic challenges means the industry as a whole is recognising the need for organisational cultures which look to focus on operational efficiencies, streamlining business processes, generating increases in capital effectiveness and retaining a no-compromise commitment to safety.
This is particularly true for UK based companies who are involved with the UK Continental Shelf (UKCS). The benefits of operating within the UKCS include an existing infrastructure, established supply chain and access to a highly-qualified talent pool. However the costs and investments required to operate a mature and complex site means those companies have to be particularly diligent around cost and operational efficiencies in order to remain competitive.
There has been a focus on cost improvements, and companies within UKCS have seen some of the highest levels of cost effectiveness being achieved. In fact unit operating costs are predicted to stay around £11.30 per barrel of oil, almost half what they were in 2014.
One of the ways cost efficiencies have been achieved is through a deferred maintenance programme. By off-setting non-critical spending around maintenance and operations, organisations have been able to reduce costs substantially. The Health and Safety Report 2017 by Oil & Gas UK cited the average number of person-hours in backlog per installation for corrective and deferred safety critical maintenance had risen by 25% between Q1 2016 and Q4 2016.
Deferring critical maintenance allows a cost saving, however it can have a serious implication. The crack in the North Sea Forties pipeline disrupted production in the region. It demonstrates why an effective asset management programme is essential to both achieving cost efficiencies and retaining operational excellence. The pipeline had an original design life of around 25 years, yet it is still being used 40 years on. With the cost of replacement often far exceeding effective maintenance, having a robust asset management system is essential for any oil and gas business. However, the asset management system should not be viewed in isolation and the advances in technology means that the enterprise asset management approach can be viewed as a business practice and not as a silo IT system.
How can an asset management system be effective?
It is not unreasonable for oil and gas operators to sweat their assets in order to increase production or extend its working life. However, for those with an established infrastructure the maintenance regime needs to ensure that the assets are kept in good repair, so as to avoid production equipment failures or unplanned outages.
Establishing an effective asset management strategy requires an organisation to ensure they have effective processes for the assets (whether it is buy, build, operate, maintain, renew or dispose) and to have the processes which will improve the asset management practices and capabilities.
How to enhance your asset management system
There are a number of asset management systems used by oil and gas companies, including IBM Maximo, SAP and Oracle. Whichever core system is used though, the advances in technology mean that the traditional asset management system is able to become far more sophisticated; helping organisations to further reduce costs, increase efficiencies and demonstrate compliance and safety.
Deploying new technologies means that oil and gas companies are able to achieve greater efficiencies, and allows management to reduce budgets, improve resourcing levels and decrease operating costs.
What are the new technologies to be considered?
The world of asset management has become far more sophisticated. Its ability to both interact with external systems and to use the data it holds more effectively means that it eliminates the siloed approach of distancing itself from the rest of the business.
Examples of technology which can interact with systems such as IBM Maximo is the ability to create a digital twin, in effect a virtual simulation of the asset, which can be used to improve the efficiency of predictive maintenance. This has been successfully trialled in allied utilities industries, where power generators used predictive analytics and machine learning to calculate maintenance regimes that would minimise downtime and prevent failure, providing the opportunity for increased revenue generation.
It is also possible to contain an engineering model, similar to the Building Information Modelling (BIM) models used on large infrastructure projects, within the asset management system. In addition to asset data it includes photography, location and performance data – whether for a refinery, offshore structure or pipeline. The advantage of holding this information within the asset management system is that it can be shared with engineers and technicians out in the field, so that data being collected and collated is done in real-time. This is particularly relevant for those involved with critical maintenance and where automatic flags/warnings for explosive conditions or volatile environments can then be acted upon immediately.
Working in remote locations and/or in a volatile environment is not unusual for many engineers looking after the company’s infrastructure and assets. Being able to access the central asset management system therefore contributes significantly to ensuring health and safety compliance; it also creates more effective business working practices.
Having a mobile ATEX-enabled device allows engineers to operate in a highly volatile environment. By combining the main asset management system with a mobile solution (such as IBM Maximo with Fingertip) means a seamless join that allows information to be both sent to an engineer (such as job details, location, documents) and allows the engineer to enter information, data and photos so that it is available within the main asset management system in real-time.
What the future holds
With the current economic uncertainty and the increasing macro challenges, focusing on cost-savings, streamlining business processes and developing capital-efficient strategies are essential. The advances in technology mean that traditional enterprise asset management systems can be a key component in identifying maintenance savings, minimising costly failures and creating more effective business working practices for the asset management teams. All of these contribute to helping the organisation achieve a competitive advantage for a sustainable existence.