Recently, I attended the Siemens Oil & Gas Innovations Conference in Houston, where I made three observations:
With recent activities around Infrastructure Week, there’s no better time to discuss how infrastructure investment will also positively impact the oil and gas industry. Energy infrastructure is becoming a big challenge for the U.S. – particularly in the oil and gas markets.
In our Wall Street Journal (WSJ) sponsored content series, we cite how, according to the Energy Information Administration, U.S. oil production climbed to 8.5 million barrels a day in June 2014, reaching a peak last seen in July, 1986. This increase in production has made the need for infrastructure investment and upgrades more important, in order to move product to market efficiently and effectively.
Just how has this increase affected the ability to move product to market?
Our WSJ piece explains that in lieu of pipelines to transport that oil, rail shipments have rocketed from fewer than 600,000 barrels per day in 2010 to roughly 1.6 million in late 2014.
Simply put, more oil and gas is on the move, to more places and in more directions than ever before.
But infrastructure isn’t just about pipelines. It’s also the technology, equipment and ongoing innovations that keep oil and gas flowing.
Don Norman, Director of Economic Studies at MAPI, made an interesting statement in the opening session of the conference. He said “a modern oilfield is really like a manufacturing operation.”
And with falling oil prices, the industry is looking toward digitalization and automation to streamline their operations and help make decisions about their future production environments.
Traditionally, there has been a reluctance to adopt new technology in the industry, but many companies are now investing in software systems that improve operations. Automation is extending to robotic components—called “smart pigs” in industry lingo—that travel through pipelines and collect reams of data for infrastructure monitoring.
So what can companies do to transform their oilfield operations with technology available today? They can focus on addressing the three key areas that are generally addressed first in traditional manufacturing industries: efficiency, visibility and reliability.
Efficiency – Service density is increasing, especially in shale oil operations and off shore. This brings a level of complexity that can no longer be managed by manual methods. They simply don’t scale.
Oil and Gas companies are seeing great success with integrating the monitoring and control of upstream production facilities. Programmable Logic Controllers (PLCs) help optimize production, avoid downtime costs, reduce labor costs, improve regulatory compliance, and deliver reliable, real-time data about operations.
Visibility – Getting away from manual, localized standalone relay-based solutions is a must. Advanced automation technologies use intelligent sensors and can be networked, often wirelessly. They deliver real-time operating data to supervisors thousands of miles away to PCs, tablets or even smart phones.
A great example is TransCanada’s automation on the existing Keystone Pipeline. The automation system already in place sends more than 20,000 points of data from Siemens pump stations along the pipeline to an oil control center in Calgary every 5 seconds. The result is a system that is easy to program and maintain as well as to scale when additional pipeline sections are added.
Reliability – Let’s talk about unplanned downtime. According to the ARC Advisory Council, aging automation assets across all industries are causing $20 billion in unplanned downtime every year.
Unplanned downtime, safety issues, environmental problems are the things that keep everyone in this industry up at night. These are C-suite issues. And they’re often the reason that oil and gas professionals have been reluctant to change. But it’s precisely the harsh and hazardous conditions inherent to the industry that make it imperative to deploy ruggedly engineered systems and components with safety and security built in, not built on.
The Internet of Things and Industry 4.0 are among the most significant changes that we’ve seen in decades, and our portfolio maps the most important needs of both large and small manufacturers and processors, to help our customers maximize their own performance, and address the changing demands in the automation market.
With every change, some challenges might be realized. The top challenges that the oil and gas industry might face in this shift to automation is the aging workforce and/or lack of workers, cyber security threats, competitiveness and increased regulation. However, the benefits outweigh the challenges and in order for companies to compete they will need to automate their operations. Moving to advanced automation isn’t modernization for its own sake. It’s modernization and infrastructure investment that goes right to the bottom line.