The oil and gas industry is going through difficult times, with falling prices and rising costs leading to sharp drops in profits and job cuts. Combine that with the fact that 50% of the skilled workforce is set to retire over the next five years and the outlook for the sector seems pretty bleak.
But at GE’s recent annual meeting there seemed to be a genuine, although perhaps overly fervent, belief that innovation and investment in technology will see the industry through these tough times. In particular, it was the digitisation of operations and the internet of things that were held up as being vital to the industry’s survival through the ups and downs of the modern energy market.
Other sectors such as aerospace or automotive have been much quicker to utilise the benefits of the industrial internet to monitor and optimise operations. But it is clear that GE is determined to play catch up . The company is pushing forward digital solutions for oil and gas operations, in particular its industrial cloud-based software called Predix.
Predix has been designed by GE specifically for industrial data and analytics. Described as a ‘platform-as-a-service’ it is able to capture and analyse the large volume and variety of machine data that is common in the oil and gas sector within a highly secure, ‘industrial-strength’ cloud environment. The information can then be used to predict machine failure, avoid costly unplanned downtime and find ways to streamline operations and even maximise output from oilfields.
GE hopes the software will drive the next phase of growth for the industrial internet and enable developers to rapidly create, deploy and manage applications and services for industry, much like Apple’s secure mobile operating system IOS, or Google’s competing system Android.
Kishore Sundararajan, chief technology officer at GE Oil and Gas, said: “It is useful to think of Predix in the same way as IOS – it is invisible and the normal user doesn’t necessarily care if it exists or not. Predix is the IOS of the industrial world. What is on top of Predix is the applications, whether it’s system engineering tools like IBM’s Doors, our own models, or Ansys, laid on top. It is the glue that puts everything together.”
Big ambition
It is offerings like this that make GE’s intention to move into the digital realm very clear. In fact, speaking at the GE conference, the company’s chief executive Jeff Immelt said: “The biggest initiative is the digitalisation of our business and bringing that to our customers.”
Ultimately GE has grand visions of dominating the digital oil and gas space in the same way that Apple or Google do in the digital consumer space. This intent has been solidified with the recent formation of the group’s Oil & Gas Digital Solutions business, and the appointment of Matthias Heilmann – previously at ABB where he led the Enterprise Software business – as head of the organisation.
This has led to a stream of digital projects and partnerships being announced with major players in the oil and gas industry. One such project will see GE and BP co-create, develop and pilot a digital solution for the oil giant’s offshore operations in the Gulf of Mexico. The aim is to increase facility reliability by introducing new process surveillance and predictive analytic tools to provide early warnings of potential issues. The system will use GE’s Asset Performance Management software and Predix.
The goal is that process engineers will be able to eliminate disruptions by being proactive, using the data to find potential problems more efficiently and advise the offshore team to take action if needed.
Productive analyses
In another initiative, GE Oil & Gas and Paradigm have formed a partnership to deliver Reservoir Driven Production Optimisation (RDPO). Paradigm, an independent software developer for the oil and gas industry, is a leader in producing reservoir modelling and petrotechnical services. RDPO, powered by Predix, is a first-of-its-kind upstream solution for optimising field-level production by combining Paradigm’s subsurface knowledge with GE’s knowledge of production.
This platform will use the masses of data gathered from growing instrumentation throughout the oilfield. It will give operators access to real time production data such as pressures and flow rates. This will enable production engineers to conduct nodal analyses and evaluate diagnostics via links to a 3D model of the subsurface. The result, said GE, is a better understanding of the impact of production interventions before costly and potentially adverse actions are taken.
Paradigm’s chief executive Arshad Matin said: “Today, production engineers often rely on single-well analysis to make production decisions that have field-wide impact. Partnering with GE, we can now provide a unified view of both production and reservoir data for optimal decision making.”
For GE, and the industry as a whole, the potential benefits of digitisation are massive. Sundararajan said: “Today in a conventional oil reserve we are able to extract about 35% of the oil. If we can increase that by just 1% by understanding more about what is happening about the whole operation that means three more years of oil production, or it means I have 80 billion barrels of oil equivalent of reserves in excess. Either of them turns to value for the company.”
Bill Ruh, chief executive of GE Digital, said the group’s three-prong digital strategy looks set to be a profitable one. From its own investment in digitisation and automation in its factories, product design and supply chain it expects to generate $1 billion of productivity by 2020.
The second part of the strategy is selling the group’s digital services to customers. This has already seen $5 billion of revenue in 2015, and the figure is expected to double by 2020. Third is the launch of the cloud-enabled, analytic industrial operating system Predix, which Ruh said the company intends to grow to become a $4 billion business by 2020.
But there are some major challenges for the oil and gas industry to tackle before it can reap the full benefits of digitisation, which will take time and investment. Issues lie around tackling cultural changes in the workforce to get them to trust the data and early warnings provided by software. There is also the need to attract a new kind of tech-savvy engineer to the industry, said Sundararajan, that no longer works in a silo but has a wider understanding of the various operations across the entire business and can truly understand and analyse the implications of data.
Further issues lie around standardisation, integration, and the quality of data. Ken Oostman, vice-president of engineering at Columbia Pipeline Group, spoke at the GE conference about the challenges the company has faced in getting meaningful and reliable data. “There are a lot of gaps in data and there are issues with the age of data and location. So it is difficult to bring it into one place, digitise it and get it into a usable format,” he said.
Need to share know-how
“We have also had to upgrade other work management and systems so the integration is more seamless and efficient. That has been a benefit but also a labour challenge to pool resources and get all systems to work together.”
A resounding message from the conference was that, to unlock the full benefits of digitisation, the industry must collaborate, create partnerships and share knowledge – not always something it has been willing to do in the past. Issues such as the ownership of intellectual property must be dealt with quickly in order to see the best results from partnerships, stressed Sundararajan.
No matter what challenges lie ahead in the digitisation of the oilfield, it appears that the industry feels the benefits will be worth it. What is less certain is whether the developments will come quickly enough, whether companies will be willing to collaborate more, and whether GE will succeed in its goal of becoming the Apple of the industrial internet.