From disruption to opportunity: How digital is transforming the future of oil and gas
I recently had the great pleasure of participating in the ONS 2018 conference in Norway, where the who’s who of energy gathered to discuss the future oil and gas landscape.
During the event, my colleagues and I explored how the current wave of digitalization is changing ecosystems around the energy business. It was especially rewarding to hear about the work that companies including Accenture, BHGE, DNV GL, Emerson, Equinor, Kongsberg Digital, Maana and Siemens are doing to advance the oil and gas value chain using Microsoft technologies.
The oil and gas landscape
As we take a step back and look at the disruption facing the industry today—regulatory and compliance pressures, skilled worker shortages and an aging workforce, fluctuating crude prices, and so on—we know that innovation is no longer optional. Automating day-to-day tasks will be one of the key ways we will survive the next decade, and harnessing data is how we will get there.
But this is not just about capturing the data that is collected from connected equipment and assets, but about extracting actionable insights from the data. While the oil and gas industry has been historically good at instrumenting rigs and storing data in large-time series databases, there have been significant issues with utilizing this data for critical decision making. Bain & Co. estimates that better data analysis could help oil and gas companies boost production by 6 to 8 percent. Shell tells us that even an increase of just one percent globally of the amount of oil extracted from existing fields would equate to three years’ worth of production at current levels. Considering typical recovery rates of 36-40%, the opportunity is very real.
The digital opportunity
Based on our engagements with some of the largest oil and gas companies, we have identified what we call digital hotspots: areas where we see the greatest promise for digital impact using data. Here are a few exciting examples that have the potential to translate into billions of dollars of savings.
Exploration – Intelligent Reservoirs
Being able to better explore and model reservoirs means increasing hydrocarbon recovery. There is great momentum in augmenting today’s physical models using data lakes with deep learning models. Being able to utilize machine learning and mixed reality to assist with data interpretation significantly improves the effectiveness of finding pockets of hydrocarbons in reservoirs, not only new ones, but also mature fields.
Development – Well Planning
Field development is an area where using AI and machine learning models for well and field planning offers great opportunity. We can now break the silos of subsurface data to provide recommendations for the best topology for production and injections wells. We can do this by capturing collective data across partner companies using Azure and then putting tools like AI and machine learning to work to analyze and identify the opportunities.
For both exploration and development, the Microsoft High-Performance Compute (HPC) platform plays a big role, enabling organizations to run more simulations against larger data sets for less money, so they can become more accurate and faster in finding hydrocarbons. This, combined with machine learning models and AI, can help companies better interpret seismic data and identify pockets of oil and gas within hours—a process that used to take up to a year!
We are doing exciting work with Schlumberger to better digitize the business of oil and gas drilling as we help companies develop higher quality drilling plans much more quickly through the automation of repetitive tasks and validation workflows using data.
Drilling & Completion – Drilling Optimization
Drilling has been historically about collecting a lot of data, but not utilizing it well. AI can provide significant improvements in hitting the right production zones with geosteering. Large-scale HPC simulations can reduce drilling time. For example, we recently used these capabilities to help a services company optimize their rig operations by reducing the amount of time needed to process logging while drilling data from months to just days. Extraordinary! And Seadrill, the leading oil and gas deep-water driller, is using Microsoft Azure and Power BI to bring together huge amounts of safety, operations and financial data from various systems and turn these into actionable insight.
Production – Digital Asset Integrity
IoT is what drives operational excellence across the production stage by facilitating the collection of diverse data across all resources. These different data sources feed digital twins of end-to-end production processes, allowing us to optimize globally.
Then technologies like real-time AI, Power BI and Azure Machine Learning help us aggregate and visualize the data to minimize downtime and reduce equipment failure. This can be done all the way down to the individual pump level. This kind of predictive maintenance is what will allow oil and gas companies to not only save considerable time and money by extending the lifetime of new asset investments but will also breathe new life—and a new value proposition—into older assets.
Partnerships to enable a sustainable future
As you can see, there is huge opportunity in terms of how digital is empowering new efficiencies, new business processes, and new revenue potential. In fact, we are seeing EPC (Engineering, Procurement and Contracting) companies chart a new digital journey by reinventing business models to expand into value-added capabilities such as creating digital twins and providing new technology services. I like to call this trend EPC-as-a-Service.
Microsoft is proud to be fueling this kind of transformation through strong industry investments and co-innovation with our partners. A notable example: we are investing in a big way in the Nordic region. These investments are deep, strategic and incredibly exciting! First, we are expanding our cloud computing in Europe by delivering the intelligent Microsoft Cloud from two new datacenter regions in Norway.
We are also strengthening our partnership with Equinor, a company that plays a vital role in stimulating innovation in Norway. We are working together to accelerate digital transformation across the region as we leverage Equinor’s vast industry knowledge to support our work in developing new energy solutions. In addition, Equinor has chosen our new datacenters in Norway, as well as a wealth of Microsoft technologies and services, to enable its own digital transformation and drive cloud-enabled innovation.
I was pleased to explore our partnership further at ONS with Equinor COO Jannicke Nilsson, who shared insights about Equinor’s vision for a digital, sustainable and secure future in energy.
ONS is an institution in Norwegian energy history and it continues to play a critical role in the future landscape. I thank them for inviting me to share Microsoft’s vision and join in some groundbreaking discussions as we work together to capitalize on the new energy opportunities in today’s digital era.
Twitter: @Caglayan_Arkan
LinkedIn: Çağlayan Arkan
