Covid-19 provides an opportunity to increase digitalisation in oil and gas sector
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The coronavirus pandemic has forced us to change many things about our lives; not least our working practices.
As an example, for many of those fortunate enough to still have a job onshore, working from home has become the new normal, or the next normal, as management consulting McKinsey & Company has so appropriately called it.
It’s interesting to speculate on what the impact on our working lives would have been if the pandemic had occurred 20 years ago, before mass adoption of the internet. While it’s challenging for businesses right now, how would we have managed to communicate effectively with each other and our clients without good wi-fi?
Digitalisation has become part of everyday life – from banking to buying our groceries to organising face-to-face meetings with our colleagues around the world. To put this in context, the share price of the video conferencing company Zoom Video Communications more than doubled between January and the end of March as social distancing set in across the world, while the number of daily users of Microsoft Teams rose from 44 million to 75 million between April and May.
In the oil and gas industry, increased digitalisation has been mentioned as a priority for at least four years now as a way to increase efficiency and reduce costs. However, perhaps unsurprisingly for an industry not known for fast actions, the adoption of digital technology has been relatively slow, compared to other verticals such as aviation, automotive manufacture or healthcare.
Furthermore, where there has been interest in data collection, the focus has often been on quantity rather than quality, with comparably less attention placed on a detailed evaluation of the information available.
Could this limited enthusiasm for digitalisation be due to a lack of a true appreciation of its benefits, or even trust in its capabilities, from those who hold the purse strings?
Whatever the reasons for the relatively slow uptake in digital technology, the Covid-19 situation could provide just the impetus the industry needs to fully get on board with it.
Remote operations are one aspect of the digital transformation that is likely to grow in the offshore industry for three reasons. Firstly, it can support social distancing and increased safety by undertaking high-risk activities such as inspections in hard-to-access areas of the rig. Secondly, the comparatively high costs of oil and gas extraction in mature regions like the North Sea mean anything that can reduce spending on manned activity offshore, from transportation costs to accommodation, is likely to be of interest in operational expenditure (OPEX) reduction. Thirdly, there is the environmental impact of working offshore to consider. Fewer helicopter flights must mean fewer emissions.
One aspect of remote operations that is growing in popularity is digital twinning – or creating a duplicate image of an offshore asset using existing data. Digital twins have many benefits. Using a twin, you can effectively and accurately plan and cost work campaigns, identify challenges and potential safety issues from the comfort of an onshore office. Also, a twin will highlight where data on an asset is either unnecessary or weak. For example, if you have a four-legged rig, and the twin models only three legs, then you know your data needs improving.
In financial terms, the value of deploying a digital twin with real-time information and constant updating is significant.
Looking at decommissioning, for example, Bureau Veritas, which is a leader in testing, inspection and certification services, has calculated that by using a digital twin, operators could save between nine per cent and 15 per cent on total project costs. That equates to financial savings in excess of £2 million on project costs for assets with topsides of 10,000 tonnes, increasing to more than £8.5 million for assets with topsides up to 40,000 tonnes.
To put these figures in perspective, the company has identified 54 North Sea assets with topsides of 10,000 to 40,000 tonnes that would benefit from using a digital twinning system. It has also identified 35 assets of fewer than 10,000 tonnes that would benefit from the use of a digital twin in late-life operations through to decommissioning phases.
Twinning is just one aspect of the digital revolution that more and more companies are beginning to consider in these economically challenging times. For an industry often hamstrung by a culture of over conservatism, embracing the benefits of effective digitalisation may be the difference between survival and failure.
- Andrew Bradshaw is head of energy insight at global corporate communications company Fifth Ring and is usually based at the company's Inverness office. He is internationally recognised as one of the leading experts in energy public relations.