A revolution is under way in the oil and gas industry at the intersection of digitalisation and climate change — two disruptive events that are transforming an industry that has a reputation for conservatism.

Digital experts from across the industry’s value chain say this revolution has been brought on by two factors: lower oil prices, which demanded efficiency — doing more with less — and the move by governments around the world to cut emissions of greenhouse gases such as carbon dioxide.

These trends are driving structural changes in upstream technology programmes and strategies, according to speakers at the IIoT and Digital Solutions in Oil & Gas conference in Amsterdam.

Oscar Abbink, director of upstream energy at IHS Markit, says the rise of digital technologies and capabilities is having a growing influence on all elements of upstream development and the management of assets throughout their lifecycles.

In addition, a focus on decarbonisation has emerged, as increasing awareness of the impact of carbon emissions influences the asset and technology portfolios of oil and gas companies and how these companies develop and operate their resource. However, despite the attention, CO₂ emissions have not fallen. On the contrary, carbon emissions are growing at their fastest rate for years.

Doing more with less while addressing emissions requires changes to the whole “energy ecosystem”, digitalisation experts say.

Havard Devold, ABB’s global digital leader for oil, gas and chemicals, says: “It’s no longer about replacement but it’s about learning to deal with a whole new energy ecosystem.

"The oil and gas industry will be a significant part of the energy system in the coming year, but not the whole part anymore, as peak oil is expected by around 2030-2035, and peak gas by around 2040.”

New expectations

Devold notes that global population growth brings new expectations and requirements.

“Millennials are expected to make up 75% of the global workforce. This generation has different preferences for energy sources and embrace energy from solar and wind and tidal,” he says.

However, there are some hurdles that need to be addressed regarding both the digitalisation of the industry and the race to cut emissions, including regulations, lack of standardisation, culture and mind-set, talent and cyber security.

Harshit Sharma, leading analyst in energy transition with consultancy Lux Research, says that if industry is serious about reducing CO₂ emissions, identifying faulty equipment is crucial.

“The only way to bring value and reduce CO₂ emissions is to inspect assets throughout the day and see how much they emit,” he says.

With sophisticated infrastructure-monitoring technology “you can monitor facilities for oil and natural gas leaks, monitor remediation programmes for regulatory compliance, and identify contamination risks”, Sharma adds.

The analyst adds that, while CO₂ emissions “might not be directly impacted by the digitalisation of the industry”, it is an opportunity to improve. “But if companies are serious about reducing CO₂ emissions, there needs to be a focus on carbon capture and storage (CCS).”

Peter Van Den Heuvel, Shell’s manager for the Process Information Centre of Excellence (PI CoE), says: “The changes being made (to the industry) come due to the energy transition and digitalisation. Digitalisation has a role to play in fighting climate change.” For the supermajor, the PI system — a real-time data historian technology — has been “fundamental” to the company’s digital transformation.

Shell is using the PI system on its Prelude floating liquefied natural gas facility, the largest in the world of its kind, to support its operational technology infrastructure to transform traditional applications, solutions and system integration.

“What we are doing is changing the wings on an airplane while we’re flying,” Van Den Heuvel says.

Connected

All of Shell’s businesses have been connected to PI, which means 7.5 million instruments accessed by more than 15,000 users.

The use of this system for the supermajor has led in the past to around 30,000 reports being issued daily to support the decision-making process, the company says, as PI can run 100,000 calculations every minute.

The use of real-time analytics is beneficial to the next step in digital transition — predictive maintenance, which maximises production, extends the life of assets and supports operations in running as safely as possible.

Vincent Jacquemet, digital consulting director with French giant Schneider Electric, says: “Machine learning and cloud-to-edge analytics pave the way for new upstream automation and predictive maintenance, which are key drivers of the digital transformation.”

According to Jacquemet, a digital oilfield where cloud computing, machine learning and edge analysis (local analytics with embedded devices) are applied will lead to reduced safety risks and downtime — as well as lower maintenance costs — while increasing production.

Giacomo Silvestri, Eni’s head of digital strategy and innovation adds: “The value in digital solution is at the end. It’s not a game-changer in the short term, but in the long term.

“For Eni, the time is now to scale up, so it’s about simplicity. An enormous amount of activity has created a lot of noise, so we are trying to simplify it now," Silvestri says.

“The first step is not about adding new technology but trying to utilise the one we have as much as possible across multiple platforms. Then, secondly, looking outside and bringing in new ideas.”

By 2022, Eni plans to spend €1 billion ($1.1 billion) on new technology, including looking into around 200 digital projects, both from inside the group as well as outside.

Focus

Industry gears up for switch