Digitization Driving Profits in Hydrocarbon Industry

[milindrakhade]

Economic expansion and improving access to energy are fueling the global energy demand. Composition of hydrocarbons are expected to be consistent in future.

Global energy demand by sector –

Primary energy quadrillion Btu

Breakthroughs in technology and automation have forced a significant level of digitization into all aspects of operations. From AI assisted design to digital sensors built into Operations Technology (OT) equipment are gathering and sending data in on a continuous basis, leading to challenges in collection, analysis, storage and archiving. The advanced analysis of the data provides valuable insights as to when an asset is reaching end-of-useful life or how and when an adjustment in the field must be performed in order to better match output to market demand. In order to succeed in digitized business environments, oil and gas companies planning their focus on – operational simplification, process optimization and system resiliency.

Operational simplification – Ongoing pressure to reduce operational costs, operational efficiency and cost profile requires continous assessment and reevaluation operations and elimination of duplicative and complex processes

Process optimization – For most efficient execution of existing processes, assets and resources necessiates proper tools, insights and decision support

System resiliency – In order to remain competitive, the entire ecosystems have to be “always on,” in a highly digitized environment. Operational uptime is critical for all the players in ecosystem – suppliers, partners, customers putting demands on the maximizing lifecycle of physical and digital infrastructure.

 

Transformative technologies that changed the oil industry includes cloud computing, the industrial internet of things (IoT), big data, simulation, additive manufacturing, system integration, augmented reality and cybersecurity. Advancements in IIoT such as low-cost smart sensors, increased connectivity, and new generation data analysis tools have accelerated the level of digitization occurring across many facets of business. However, the degree of digitization is not progressing in a uniform manner across all components of the industries.

Hydrocarbon producing assets – well heads, separation units and pipelines are less digitized compared to refineries and chemical production. Refineries and chemical complexes are planned and built in a single project, working from a design and subsequent upgrades every 2 to 3 years.

Oilfields are more organic in development, taking anywhere between 10 to 15 years from the initial stage, drilling and evaluating the first wells to start of production. Technologies mature and fade during this long period increasing adoption challenges. But advances such as data gathering and processing at the edge of the network, centralize complex analytics help in developing maintenance strategies based on equipment failure, production optimization etc.

The ability to remotely monitor physical infrastructure assets utilizing digitization and automation improves operations safety in many ways. The report published by World Economic Forum, “Digital Transformation Initiative Oil and Gas Industry,” January 2017 mentions by 2025 these new technologies will benefit the oil and gas industry in -

• Add a potential $220 billion in value


• Reduce pipeline spills by 43,000 barrels


• Reduce upstream spills by 66,000 barrels


• Reduce CO2 equivalent emissions by 20 million metric tons

 

Global liquids demand is expected to peak in the next decade, depending on the pace of technological innovation and the net-zero ambition levels of governments and corporations.

 

Refining and petrochemical companies are investing in new technologies –

 

A digital transformation strategy of the end-to-end value chain addresses different functional areas and realization of incremental benefits.

 

• Supply Chain:
  
  
  
  • Crude Purchases: Reduce cost of purchases, reduce maintenance
  
  
  • Planning, Scheduling and Logistics: Increase throughput, increase yield
  
  
  
  


• Process Performance: Longer equipment life, increase availability, quality, and yields


• Blending and Oil Movements: Reduce giveaway, no rework, minimum inventory, minimum downgrades, higher fuels agility


• Energy Management: Reduce energy conversion cost, reduce energy consumption cost, reduce cost of crude for energy


• Production Management: Reduce accounting losses, reduce inventory, reduce hydrogen and steam consumption, increase throughput


• Operations Management: Reduce unplanned shutdowns, increase yield, reduce hydrogen and steam consumption, increase throughput

 

SAP and SAP’s partners, built SAP’s industry cloud solutions on an open platform to address specific needs for the oil & gas industry. These specialized cloud applications can help you drive cost-effective transformation and sustainable growth.

• Sustainable Energy Transition


• Exploration, Development, Production Process Management, Accounting, Project Management, and Collaboration


• Energy Conversion Energy Trading, Storage, and Transport


• Energy Sales, Services, Pricing, Marketing, and Retailing (plus enabling new business models)


• Asset Management and Operations with Digital Technology Advancements


• Workforce and Talent Management


• Finance Management


• Enterprise Data Management, Business Technology Platform, and Analytics


• SAP Industry Cloud

 

An integrated enterprise architecture can enable information and controls between applications, centralized analytics and services. With data gathering from multiple sources including field sensors and linking to central repositories analytics engines can enable higher-level control and more accurate and timely decision-making.

 

 

References:

Outlook for Energy – October 2022 report by ExxonMobil

Refinery-chemicals integration – Wood Mackenzie

Bridging power and process automation silos drive higher manufacturing efficiency – Elias Panasuik / Schneider Electric

A Practical Guide to Achieving Oil & Gas Operational Efficiency Through Digitization / Schneider Electric

Digital agility forges digital resilience - Joseph McMullen / Erika Fernandez (White paper in Refining & Petrochemicals)