DOF-Digital Oilfield Outlook Report Opportunites and chllenges for DOF transformation-JWN_Digital_Oil_Report_Sept_2016.pdf

Digital Oilfield Outlook Report Opportunities and challenges for Digital Oilfield transformation

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Key insights JWN’s second annual Digital Oilfield Outlook Report , conducted with partners Siemens, Storm Telematics Telematics and GDM G DM Pipelines, has revealed a number of positive trends emerging in the implementation of digital technologies in the Canadian oil and gas industry. The survey of more than 350 industry professionals found that awareness and knowledge about the various digital technologies available has improved, and feelings about the overall benefits of Digital Oilfield implementation remain high. Emerging digital technologies are seen to be increasingly market ready an d the adoption curve has moved forward, while concerns about cyber security have subsided. But important barriers to adoption remain, both financial and organizational. Both vendors and users of the technologies need to become more proactive in making the business case for technology implementation, and measures must be taken within organizations to promote the use of the technologies if the full benefits of the Digital Oilfield are to be realized.

• Digital Oilfield technology implementation starts with

constraints. This could be alleviated as prices rebound

knowledge about the technology offerings and the po-

and the cost of Digital Oilfield technologies continues to

tential benefits they bring to an organization. The number

drop as it moves along the maturity curve. Existence of

of survey respondents who stated they had insufficient

organizational barriers was the second highest ranked

knowledge to answer questions about two specific Digital

impediment to adoption.

Oilfield use cases, Field Productivity and Fleet Manage-

• Another significant finding was the decrease in those

ment, declined six per cent and eight per cent respectively,

respondents who felt cyber security could be a deal

a positive indication the industry is becoming more in-

breaker in adoption of Digital Oilfield technologies. As a

formed about technologies available.

barrier to implementation of Digital Oilfield use cases, it fell in rank from a tie as the second biggest impediment

• In a deeper dive into the Field Productivity and Fleet Management use cases, it was found that respondents

in 2015 to the fifth-ranked barrier in this year’s report.

perceived both to have matured and moved significantly

• There is often often a disconnect between people in different

along the adoption curve. The year-over-year compari-

seniority groups and functional groups within organiza-

son shows the perception of Field Productivity and Fleet

tions as to the benefits and barriers of Digital Oilfield

Management technologies’ maturity and highly proven

technology implementation. A breakdown of organiza-

market readiness jumped by 27 percentage points. As

tional silos and a better alignment of interests among

many in the industry remain tentative about Digital Oil-

the various groups could go a long way toward toward moving

field technology maturity and uptake remains sluggish,

the adoption of Digital Oilfield technologies forward.

• There is a strong strong case to be made that the biggest

this is an important consideration going forward. • The top ranked ranked benefits of Field Productivity Productivity were increased increased

hurdle slowing adoption is not technology related, but

labour productivity, increased asset uptime and improved

rather business related. There remains a lack of a clear

safety, while those for Fleet Management were reduced

vision in many respondent’s minds as to the benefits

maintenance and repair costs, improved safety and increased

the Digital Oilfield can deliver, suggesting the need for

asset uptime. This indicates that while boosting efficiency is

a bottom-line business case to be made to move im-

paramount in today’s challenging price environment, environment, safety

plementation forward. Secondly, organizational barriers

remains a top-of-mind issue in the industry.

need to be overcome, an indication that companies lack

• The biggest perceiv perceived ed barrier to implementation is iden-

sufficient expertise or clear leadership to drive a greater

tical to last year’s across the board response: budget

level of implementation. 3

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Contents Siemens sponsor message ..........................................................................................................................................6 Storm Telematics sponsor message.........................................................................................................................7 GDM Pipelines sponsor message ..............................................................................................................................8 Executive summary ......................................................................................................................................................10 The productivity imperative................... .................... .................... ..................... .................... .................... ............... 11 The digital opportunity ..................... .................... .................... ..................... .................... .................... ..................... 12 Digital Oilfield successes ............................................................................................................................................14 What can the Digital Oilfield do? ................... .................... .................... ..................... .................... .................... .... 18 Survey

methodology...................................................................................................................................................20

Early returns: Awareness since 2015 has increased .................. .................... .................... ..................... ......... 23 Perceptions of Field Productivity technologies: The needle is moving .................... ..................... ......... 24 Key benefits of Field Productivity technology adoption: What’s not to like? .................. .................... 26 Key barriers of Field Productivity technology adoption: Not so fast .................. .................... ................ 27 Field Productivity case study: Access to data when it’s needed .................... .................... .................... ... 28 Field Productivity case study: Ending the paper chase.................... .................... .................... .................... 29 Perceptions of Fleet Management technologies: Solidifying its strong case .......................................30 Key benefits of Fleet Management technology adoption: More than fuel savings.................... ......... 32 Key barriers of Fleet Management technology adoption: Some roadblocks remain ................... ...... 33 Fleet Management case study: Driving down costs and optimizing with analyti cs.................. ......... 34 Conclusions and recommendations ..................... .................... .................... .................... ..................... ................ 35 Field Productivity case study: Virtual training................. ..................... .................... .................... .................... 36 Fleet Management case study: Model behaviour ............................................................................................40

5

Message from

I

t’s been nearly two years since global crude oil

More and more, oil and gas executives are

prices declined in response to increased global

starting to look beyond their own markets and

supply, and the industr y is still reacting to the

geographies to seek out lessons learne d from the

changes that have been imposed on it. A series

most innovative companies from other industries.

of technical innovations brought light tight oil to

At Siemens, we’ve helpe d thousands of or-

market and introduced a fundamental change to

ganizations across multiple industries gain more

the supply of crude oil that, as microeconomic

value from their data and documents by taking

theory would suggest, reduced market prices

a life cycle approach to technical information.

accordingly. If the crude oil market reacts like

In fact, connecting the digital thread from an

the natural gas market did to shale gas in the

initial idea, through its realization, to oper-

2000s, higher prices may not return anytime

ational utilization has helped organizations

soon. An appetite for innovation has arrived in

significantly improve margins and compete

the industry to react to these new conditions

more effectively on the global stage. The com-

that have not been seen in decades.

mon eleme nt was the need for rapid access to

JWN’s 2016 Digital Oilfield Outlook Report  pro-

complete, correct and consistent information

vides an opportunity to examine the progress of

to become more efficient, regardless of prod-

that innovative spirit on what’s working well and

uct or process.

what isn’t, and suggests how we hold the gains

This is the essence of the Siemens Digital

made to date as well as continuously improve.

Enterprise and its application to the Digital Oilfield.

6

Message from

T

he challenges that producers and suppliers

one in value in comparison to all other GPS fle et

are experiencing within the energy sector

management systems in North America. A con-

should not come as a surprise to anyone

tributing factor to our success is our approach to

living in North America today. There are constant

view your organization as an integrated system,

downward pricing pressures being placed upon

to obtain the granularity required to measure

everyone within the value chain. This combined

the true cost of inefficiency.

with increased costs, while at the same time hav-

Storm’s proprietary efficiency algorithms are

ing to do more with less, is placing significant

used to create visualizations based upon descrip-

strain on all stakeholders. With mounting chal-

tive analytics, which focuses on the historical

lenges comes opportunity to re-engineer the way

performance and the reasons behind past success

you have managed your fleet, a ssets and mater-

or failure; diagnostic analytics, which is focused

ials in the past. The 2016 Digital Oilfield Outlook

on determining the root cause of cer tain perfor-

Report  will hone in on a nd demonstrate the im-

mance outcomes; predictive analytics turns your

mense opportunity to maximize your operational

data into actionable information by determining

performance by leveraging tools and data to pro-

the probable future outcome of an event; and fi-

vide greater insight into the performance of your

nally prescriptive analytics that synthesizes the

organization to help solve the problems many or-

data and then suggests de cision options to take

ganizations are facing today. Storm Telematics

advantage of predications.

provides a holistic view over everything related

In today’s economic environment, data must

to your fleet, assets and materials by leveraging

be collected, blended from multiple sources,

and optimizing the data collected from the use

cleansed and mined in order for true fleet, asset

of enabling technologies such as GPS, radio fre-

and materials optimization to occur. An organiza-

quency tagging and analytics.

tion cannot become efficient if they do not know

Storm Telematics is extremely proud of the

where they are inefficient, and Storm Telematics

Frost & Sullivan Customer Value Leadership Award

is leading the way to bring forward best prac-

it received in 2016 that ranked Storm as number

tices in measuring the true cost of inefficiency.

7

Message from

W

ith our industry facing increasing

companies are looking to quickly and seamlessly

pressure to do more with less, now

integrate newly acquired assets into their exist-

is the time for us to redefine our

ing field programs, manage the abandonment

approach and embrace technology as a means

of inactive assets or enable field personnel to

to improve operations. The second annual Digital

make decisions in real time, these efforts may

Oilfield Outlook Report   is leading the way as

be crippled or even halted without access to

organizations look to find new and better ways

proper information.

to become more efficient and improve field

As we look to the future, GDM is poised to

productivity.

help companies navigate the Digital Oilfield com-

At the heart of any successful Digital Oilfield

plexities by finding better and more efficient

implementation is access to comprehensive asset

ways to use information to minimize re-work,

intelligence. This includes accurate, consistent

maintain historical information that is critical to

information that can be used across multiple plat-

future operational success and ensure that in-

forms to gain a holistic picture of operations and

formation is readily available when and where

perform analytics to improve efficiency. Whether

it is needed most.

8

Grow your FULL PAGE business.JWN AD OUR COMPANY JWN has been Canada’s most trusted source of information, insight and intelligence on the energy industry for over 75 years. Buyers and influencers depend on the insight delivered by our products to make informed decisions that affect Canada’s oilpatch and the construction industry in Alberta. CUSTOM REPORTS AND CONSULTANCY Need specific research? The JWN analysis team can build custom reports focused on market intelligence, company benchmarking, cost studies and more. For more information please visit us at jwnenergy.com

Executive summary The pall that settled over the oil and gas industry after

emerging industrial Internet of Things (IoT), which lever-

the global price collapse in mid-2014 has not abated—in

ages ever cheaper, ubiquitous connectivity, data storage

fact, in some ways it has only deepened over the past

in the cloud and analytics.

year. Amid the pullback in investment, the collapsing rig

If there is hope for a reinvigoration of the Canadian oil-

counts, the job losses and bankruptcies, the oversupply

patch, short of higher prices, the Digital Oilfield, in its many

overhang persists as low-cost producers continue to pump

guises, is the single most promising solution. It holds the

at near or record rates and the global economy remains

promise to bring down costs and shrink the industry’s en-

anaemic. The term lower-for-longer to describe crude

vironmental footprint, conceivably in game-changing ways.

oil prices has become the new mantra, while new clouds

But as with any potentially disruptive technological change,

form on the horizon.

it is difficult to predict which applications will come to the

While the biggest story in oil and gas this century, the

fore and have the greatest impact in the years to come.

unexpected and transformative shale gas and tight oil revo-

Hence this survey. We questioned many of the oil and

lution, has been a tremendously positive one in reviving a

gas professionals closest to the emerging technologies,

North American oil sector once considered to be at or near

and those in a position to decide if and when to invest in

its peak, its impacts have not all been positive. Initiated

Digital Oilfield technologies, in order to ascertain their feel-

by the advancement of horizontal drilling and multistage

ings about the technologies—their technological maturity,

fracturing technologies, the tight oil boom precipitated

readiness for adoption and potenti al profitability. We also

the supply glut now ravaging oil markets worldwide and

sought their thoughts about what they saw as the big-

helped deprive Canadian producers of their primary ex-

gest benefits and barriers to technology implementation

port market.

and their own level of knowledge about specific technol-

The apparent decoupling of energy demand growth

ogy use cases.

with expanding gross domestic product portends slower

As this constitutes our second annual sampling of opinion,

fossil fuel needs even when the global economy returns

we have captured some flavour of the trends in the indus-

to expansion. Declining costs for, and rapid growth in, re-

try when it comes to the Digital Oilfield, and found them

newables, along with increasing efforts to decarbonize

to be mostly posit ive ones. New this year, we have drilled

energy production in light of last year’s COP21 ag reement

more deeply into the reasons for answers from respondents

to reduce greenhouse gas emissions, foreshadow increas-

that they did not have enough knowledge about a par-

ing regulation and costs on hydrocarbon producers, and

ticular technology application to form an opinion about it.

competitive pressures favouring lower-ca rbon producers.

Based on the responses, it has become clear that in-

As a high-cost and, in some respects, high-carbon-

dustry professionals collectively hold a high opinion about

in tensity producer, all these pressures are particularly hard

the technologies and their strong potential to increase

felt in Canada’s oilpatch. Though there is little it can do to

productivity and reduce costs in the oilfield. But barriers

affect global oil prices, Canadian producers and service

to implementation, which have shifted from last year, re-

and supply companies can affect costs—through innova-

main a somewhat limiting fac tor. At the end of this report,

tion. And the greatest source of innovation today is digital.

we present some recommendations based on the survey

The dawn of the digital era has already ushered in sev-

results that could accelerate technology adoption and

eral disruptive technology advances, from the Internet and

enhance the competitiveness of the oil and gas industry

the smartphone to autonomous vehicles, social media and

in Canada. We hope they move the conversation forward

3-D printing. Digital technology has also made possible the

over the challenging year to come.

10

The productivity imperative To say that the Canadian oil and gas

sector, as voiced by some of the most

industry, and more particularly the

respected voices in the oilpatch. “Our

Alberta economy, has just gone through

costs, both capital and operating, are

one of the most tumultuous periods in

uncompetitively high. We must re-

its history would be an understatement.

duce both our capital and operating

The oilpatch was on track to see its

costs substantially, in the order of a

biggest two-year capital spending

minimum 30–50 per cent across the

decline in its 70-year history, the

board, to become sustainably com-

Canadian Association of Petroleum

petitive,” industry veteran Jim Gray,

Producers (CAPP) said in Apr il. Total

the co-founder and former head of

capital investment in the oil and natural

Canadian Hunter Exploration, said

gas sector was forecast to plummet 62

in March. “We must, as others have

per cent, falling to $31 billion in 2016

observed, innovate and adapt on an

from a record $81 billion in 2014. The

urgent schedule.”

carnage has been felt from the idled rigs

The productivity imperative grows

across western Canada—with the number

in importance as the lower-for-longer

of wells drilled forecast to plunge to just

oil price scenario stretches into its

3,500 in 2016, a 66 per cent drop from

third year and there is a growing sen-

2014—to job losses across the country—

timent that prices may never return to

an estimated 110,000 direct and indirect

the sustained levels hitherto needed

positions according to CAPP.

to make oilsands megaprojects and

“We have the third-largest petroleum resources in the world, [and] our technology and our ingenuity are the keys to our ability to sell our resources around the world.”  — Greg Stringham, former vice-president of marketing and oilsands, Canadian Association of Petroleum Producers

Canada is particularly vulnerable

many conventional projects profitable.

to the oil price decline due to its high

A combination of factors—energy effi-

cost of production—among the highest

ciency measures, COP21 and growing

in the world—in part because of to its

international pressure to transition to

remote operations and relatively high-

a low-carbon economy, rapid growth

cost bitumen production. As a result,

in renewable power abetted by steeply

Canada saw the most production cur-

declining costs and progress to de-

tailed in response to low prices of any

carbonize the transportation sector

Mackenzie report found in July as prices

major oil producer, energy consultants

through higher-fuel economy vehicles

languished in the US$45/bbl range.

Wood Mackenzie noted in February.

and electric cars—is leading some ex-

Whether or not the current low-

“Canadian production from oilsands

perts to suggest the global economy

price environment represents a new

and conventional onshore is taking

may be nearing peak oil demand, at

normal, it is in the short- and long-term

the most pain due to the high costs

which point oil prices could remain in

interest of Canadian producers to pre-

and distance from marketplace,” Wood

a lower range indefinitely.

pare for such an eventuality in order

As it is, most major conventional oil

to remain competitive with lower-cost

These factors point to an increas-

projects worldwide are at risk of can-

producers and ensure the sustainable

ingly urgent productivity imperative

cellation or deferral if the price of oil

growth of an industry so pivotal to the

faced by the Canadian oil and gas

remains in the US$50/bbl range, a Wood

Canadian economy.

Mackenzie said.

11

The digital opportunity The oil and gas industry is an undisputed leader in many high-tech areas—primarily where they apply to the industry’s core functions of exploration, drilling and production of hydrocarbons. But the industry is a laggard in some other areas of technology development, like spending on research and development, and creation of new business models and products and services. Foundationally, the means by which it goes about fulfilling its core functions haven’t changed in disruptive ways. Even the development of the horizontal drilling and multistage fracturing technologies that set off the tight oil and gas production bonanza was based on technologies used in the industry for decades—but applied in new ways.

In contrast, the digital sector is trans-

vehicles, drones), travel, health care and

redefining virtually all markets and in-

forming various sectors of the economy

personal fitness and others.

dustries in fundamental ways. The past

with a business model that focuses on

The emerging IoT—the melding

five years have seen an inflection point

technology development time scales that

of connected devices, the massive

in which fragmented efforts to connect

dwarf that of the oil and gas industry.

data storage capabilities of the cloud

machines and sensors in industry-specific

It often thrives in a culture where risk-

and increasingly sophisticated big data

ways are now coalescing into a compre-

taking is high, development cycle times

analytics—is bringing digital technology

hensive vision of connectivity permeating

are short and growth can be exponential.

to another level, enabling a host of new

the global physical environment.”

Now, the digital realm is bumping up

applications to increase productivity.

With the capability to combine the

against the energy sector in ways that

The IoT represents a shift from the

deluge of data collected and analyzed

cannot be ignored. Digital technology

narrow development of new information

with machine learning and artificial

is creating disruptive new products and

and communication technology systems

intelligence, the IoT can automate com-

services that are proving to be trans-

for specific industries toward the broad

plex tasks, diagnose problems, predict

formational in other sectors, such as

view of pervasive interconnectivity of

breakdowns and reduce downtime, in-

personal communications (smartphones),

the global physical environment to pro-

telligently guide entire fleets of vehicles,

social media and gaming, transporta-

duce novel and actionable new insights,

remotely inspect, control and optimize

tion (car and bike sharing, autonomous

according to an IHS report released in

field equipment and a host of other

March. “The [IoT] is a technology con-

tasks with performance results superior

cept that is currently transforming and

to that of human operators. The technologies produced are not incremental; they are transformational,

12

Chuck Grindstaff, president and chief executive officer of Siemens, said in a keynote at the Global Leadership Conference. “There’s a confluence of transformational forces that companies are leveraging to make products that are smarter and more connected than ever—and these products

In a report released by BP last year,

are fundamentally changing markets,” he

the company said digital technologies

said. “We are on the brink of an age in

have the potential to increase pro-

which the nature of innovation itself is

duction volumes by four per cent and

dramatically changing. We have always

reduce costs by 13 per cent by 2050.

talked about better, faster, cheaper, but

“At a time of lower prices, revenues and

this goes beyond that. We’ve talked about

capital spending, digital technologies—

best practices, but we really need to think

including sensors, data analytics and

in terms of next practices.”

automated systems—stand out as the

As its applications mature, the IoT is expected to grow rapidly. Globally, it

leading contributors for reducing costs,” the report stated.

is estimated there will be 26–50 billion

The Digital Oilfield potentially offers

connected devices by 2020 and the IoT

oil and gas companies the best route

will annually contribute up to $11 trillion

forward to bolster productivity and

in value by 2025. Specific to the oil and

reduce unit costs. The most mature of

gas industry, the Digital Oilfield market

Digital Oilfield technologies, like Field

is expected to reach $30.78 billion by

Productivity and Fleet Management,

2020, with compound annual growth

have been shown to be field-proven

of 4.31 per cent from 2015, according

value creators for early adopters, as

to Research and Markets. The energy

indicated by the case studies found

sector will need some 12,000 new data

in this report. Given the enormous

analysts across North America and some

potential the Digital Oilfield offers,

90 per cent of new jobs in oil and gas will

it is incumbent on the industry to

require superior digital skills, according

seek ways to overcome the barriers

to Accenture.

to adoption and pave the way for a globally competitive oil and gas industry in Canada.

13

“We are in a global innovation race, and time is of the essence. If you look at the pace things work on the web, with crowdsourcing and the like, we want to tap into that. Effectively, when you tap into that, we are tapping into the world’s brightest minds and their network, and that I see as an exponential opportunity.”  — Judy Fairburn, executive vice-president of business innovation, Cenovus Energy, and chair, Alberta Innovates

Digital Oilfield successes The Digital Oilfield leverages many of the technologies associated with the IoT, and stands to benefit from the rapid evolution of the IoT in the consumer market and other industries. Just as the consumer market is full of hype about the latest innovations related to the IoT, like autonomous vehicles, social networks and augmented reality, the oil and gas sector is developing solutions based on the same platforms. Recommendations stemming from the report included:

Digital Oilfield technologies that are under-

• BP is hoping to improve worker produc-

going testing or already implemented and

tivity and cut health expenses by creating

paying dividends span many subsectors of

a fitter workforce using wearable tech-

the oil and gas industry:

nology. The company purchased 25,000 FitBit fitness trackers for its employees

• In northern Alberta, oilsands mining com-

to encourage healthier lifestyles. Workers

panies are testing autonomous haulage

can one-up co-workers by accumulating

systems, otherwise known as driverless

more steps per day while earning points

trucks, to improve fleet efficiency and cut

toward lower health-care costs—in the

costs. The self-driving heavy haulers are al-

U.S., companies can take up to 30 per

ready in use in hard rock mines in Australia

cent off the cost of insurance premiums

and Chile. Suncor Energy announced in

when employee participation is tied to

2015 that it is piloting the vehicles in

corporate wellness plans. Points earn

Alberta’s soft rock oilsands open pit mines,

employees lower co-pays, deductibles

a more challenging environment. It entered

and out-of-pocket health-care expenses.

into a five-year agreement to purchase

BP reported its health-care costs were

175 400-tonne, autonomous-ready heavy

reduced by almost nine per cent among

haul trucks from Japanese manufacturer

participants and four per cent overall

Komatsu Ltd. Early testing of the tech-

after implementation.

nology found the driverless vehicles cut fuel consumption and maintenance costs

• Caterpillar partnered with technology

with less wear and tear. Full implemen-

company Seeing Machines to develop a

tation of autonomous operations, which

fatigue tracking application that uses fa-

could take place by 2020, would create

cial recognition software to detect driver

more savings by displacing hundreds of

drowsiness. Destined for installation in

high-paying driving jobs.

5,000 mining vehicles around the world,

14

the fatigue detection technology uses a camera and light system to measure signs of fatigue like eye

Digital Oilfield use cases

becoming distracted initiates an in-vehicle alarm and sends a vide o clip of the driver to a 24-hour sleep fatigue centre at Caterpillar headquarters in Illinois, where a safety adviser can verify the fatigue event

ASSET OPS Installing robots or other automated equipment to perform operating, as-

closure and head position. Signs

a driver may be nodding off or

6. AUTOMATED PRODUCTION

1. REMOTE ASSET MONITORING

sembly and maintenance tasks in 24/7

Collecting and analyzing sensor

continuous and safety-critical operat-

data related to flow, temperature,

ing environments. Machine intelligence

vibration and integrity to improve

allows the equipment to sense con-

operational safety and performance

ditions in their local environments,

related decisions (e.g. wireless vi-

recognize and solve basic problems

bration data transmitter, downhole

(e.g. self-driving mining trucks).

drilling sensors).

and contact the mine site manager.

7. FLEET MANAGEMENT

Follow-up is conducted to determine

2. REMOTE ASSET OPERATIONS

Obtaining real time data—through

the cause of the event and possible

Developing systems to operate

the use of wireless networks, sen-

remedy to prevent future events.

plants and facilities from a remote

sors and video analytics—from on

Since installation of the systems a

location. The intent is to reduce the

board sensors to improve asset

year ago, Caterpillar estimates there

on-site complement of staff, thereby

identification, tracking, utilization

has been an 80 per cent reduction

increasing operating efficiency and

and logistics operations (e.g. vehicle

in fatigue events as drivers become

personnel safety (e.g. off-site plant

telematics, GPS tracking).

much more aware of the issue due

control centres).

8. FIELD PRODUCTIVITY

to the alarm. 3. PREDICTIVE MAINTENANCE

Maximizing worker efficiency by

Utilizing predictive data analytics

providing wireless mobility that en-

and condition-based maintenance

ables on-demand access to field

approaches to improve asset

data, engineering drawings and in-

availability and reliability (e.g.

ventory and communication with

predictive maintenance of elec-

centralized operations experts (e.g.

technology allows workers to carry

tric submersible pumps, mining

field tablets and augmented reality).

out virtual activities on the rig using

truck tire failure).

• Maersk Oil is utilizing gaming technology on its offshore oil and gas projects to build efficient platforms and produce future cost savings. The

an Xbox controller from the comfort

9. BIOMETRIC MONITORING

of their onshore office. The technol-

4. PRODUCTION ASSET

Issuing wearable devices to enable

ogy places workers inside a virtual

OPTIMIZATION

continuous monitoring of field em-

model on their computer screens,

Utilizing specialized sensors to

ployee location, work status and

appearing as avatars able to move

monitor and data analytics to

health to prevent safety incidents

about within a 3-D visual depiction

identify improvements in complex

or to decrease response time for

of the physical confines of the facility.

operations (e.g. SAGD steam/pro-

emergency responders (e.g. wear-

duction optimization, optimization

ables: RFID tags, GPS trackers, H 2S

of field operations activity).

detectors).

5. REMOTE ASSET INSPECTION

10. IN-FIELD MANUFACTURING

Employing remotely controlled de-

Operating portable manufacturing

vices that use imaging (video, IR,

equipment that can be used to re-

Maersk says the technology has the potential to save millions of dollars. The company, which has created a Technology and Innovation team to allow ideas to be developed, tested and nurtured to commercial applica-

X-ray) and other sensors to complete

duce downtime from critical part

tion, is also developing augmented

inspection and detection tasks more

failure by producing specialized

reality solutions that allow onshore

efficiently and safely than conven-

components/parts on demand and

technical experts to communicate

tional field operations (e.g. pipeline

on site, eliminating need for safety

with those offshore via real-time, in-

inspection drones, unmanned au-

stock or hot shot orders (e.g. enter-

teractive devices.

tonomous vehicles).

prise 3-D printing).

15

State of the Digital Oilfield: Moving forward JWN published its first Digital Oilfield Outlook Report  in 2015 to assess the state of the Digital Oilfield within 10 distinct use-case technology applications. An in-depth industry survey was conducted to quantify the industry’s level of awareness of the Digital Oilfield and what was perceived to be the most promising t echnologies based on three specific adoption dimensions: t he level of maturity of the technology; the expected return on investment; and organizational readiness to adopt the technology. The report examined key benefits and barriers to technology acceptance and provided recommendations to improve awareness and adoption. Recommendations stemming from the report included:

DEEPEN AWARENESS

IDENTIFY CHAMPIONS

ENCOURAGE

EXPAND THE

Developing a better under-

The nature of Digital

COLLABORATION

CONVERSATION

standing of Digital Oilfield

Oilfield innovations is that

A greater level of

Opportunity exists for tech-

technologies and benefits

they cross departments,

collaboration both within or-

nology vendors and oil and

among industry profession-

from IT to operations.

ganizations and among them

gas companies to share

als is a critical first step to

Leaders at all levels, includ-

is needed to take full advan-

knowledge, to better under-

ensuring those technol-

ing executive sponsorship,

tage of the transformative

stand the industry pain

ogies will be considered for

will be needed to focus ef-

opportunity offered by the

points and the innovations

adoption.

forts and deliver results.

Digital Oilfield.

available to overcome them and to jointly develop new applications for emerging digital technologies.

“Statistical evidence reveals that, while capital costs are indeed falling, this has not been entirely achieved by grinding vendors. The real driver of cost reduction is productivity.”  — David Yager, Calgary oilfield services manageme nt consultant

16

This second Digital Oilfield Outlook Report  focuses pri-

and virtual reality, whereby workers can become

marily on the use cases of Field Productivity and Fleet

avatars in 3-D representations of field facilities.

Management. They were deemed to be the best candi-

Onscreen digital representations of equipment links

dates for more detailed investigation due to the fact they

to the equipment’s specifications, performance

were the top ranked of the 10 use cases above from the

and maintenance history, warranty information

first report, based on their perceived return on invest-

and inventory of replacement parts. Emerging

ment, technological maturity and organizational readiness

technologies include wearables that can track

to adoption them. This report looks at the year-over-year

workers’ locations, vitals and real-time status, like

changes in perceptions about each, as well as specific

detecting accidents, and tools like smart glasses

benefits and barriers to their adoption.

for hands-free data input and output delivery.

As the use cases perceived to be closest to or already

In a world in which consumer-based mobile

in commercial use, it makes sense to take a deeper dive

connectivity has become second nature, Field

into their adoption benefits and roadblocks at a time when

Productivity technology provides employees the

oil and gas companies are in major cost-cutting mode and

kind of functionality they have come to expect in

in search for those applications that can bring about ef-

their private lives, and can help to attract young,

ficiencies and cost savings on the shortest possible time

digital-literate workers into the workforce. It can

scale. Technologies months or years away from commer-

pay dividends in short order, often with payback

cialization, like in-field manufacturing, are not of immediate

in six to 18 months.

benefit to those looking for immediate cost-cutting solu-

Fleet Management technology has been shown

tions, whereas Field Productivity and Fleet Management

to have similarly rapid payback, creating cost

represent commercial, field-proven technologies for which

savings that go well beyond the aspects of opti-

a strong business case can be made today. As technology

mized routing, fuel savings and increased driver

solutions not confined to the oil and gas sector, applic-

safety typically expected. In addition to improved

able in many cases to any industry that manages vehicle

vehicle utilization, preventative maintenance and

fleets and field workers, they also represent an oppor-

planning into such aspects as advanced staging of

tunity for technology transfer from those industries where

parts, today’s Fleet Management solutions touch

they are more established, potentially further shortening

on other aspects of a company’s operations, like

the adoption process.

inventory management, that can resolve supply

Field Productivity takes in those technologies and ser-

chain pain points.

vices that make fieldwork more efficient and lower operating

Unprecedented volumes of data from vehicles

costs over time. The replacement of paper-based workflows

as well as from other sources like historic fleet

with digital ones facilitated by mobile connected devices is

data, comparative data from other divisions and

one way Field Productivity is transforming the workplace. It

fleets and weather reports, is cleaned up, com-

is providing field workers with instant and up-to-date access

bined and analyzed to produce new levels of

to such resources as work orders and scheduling, service

actionable insights. Asset tracking, as well as

contracts and invoicing, instructional diagrams, schemat-

vehicle GPS monitoring, is leading to improved

ics and 3-D images of facilities and equipment, installation

inventory control and more customized vehicle

instructions and inspection checklists, and maps and GPS

fleet solutions.

positioning. It speeds financial transactions and reduces

Promotion of driver safety has advanced

errors typically i ntroduced through manual paper-based

beyond the reactive tracking of speeding and

data input processes.

aggressive driving behaviour to proactive mea-

Real time audio-visual communication with head office

sures to promote and reinforce good driving

or central command centres allows experts to remotely

habits through techniques like in-cab verbal

diagnose problems and walk workers through fixes. More ad-

coaching and the gamification of competition

vanced Field Productivity technologies facilitate augmented

between drivers for safest driving performance.

17

What can the Digital Oilfield do?

    M     A      E     R     T     S     N      W     O     D

Digital Oilfield technologies can

    M er     A      E     R pgralidty     T U aci     S     D f     I     M

provide a myriad of benefits to individuals and organizations alike

    M     A      E     R g     T inin     S m     P n     U me Bitu

SAG

y cilit a f D

al &al n o i entntrionn v n e Coconvuctio unprod

FIELD TABLETS Enables field workers to have easy-to-use, hand-held ruggedized device that can display and allow manipulation of any necessary catalogues, manuals, plan drawings and 3-D imagery. Customizable apps can be downloaded to further improve worker efficiency.

HIGH-RISK WEARABLES

DRIVER BEHAVIOUR

Improves the monitoring of

Improves driver safety,

employees working alone, in remote

decreases vehicle wear and

locations or high-risk workplaces to

lowers insurance costs by

detect or prevent “man down”

applying data analytics

situations by using head-mounted

algorithms and visualization

displays, wristbands and badges to

tools to driving pattern data

detect falls, test air quality, measure

to create individual driver

levels of drowsiness and heat

improvement reports.

exhaustion or to simply pinpoint the

AUGMENTED REALITY Decreases the chance of repair errors and increases worker safety by allowing them to simulate the job they are working on before physically interacting with the equipment. AR also enables users to access information relevant to a particular job digitally superimposed on the physical environment in which they’re working.

wearer’s location.

18

ASSET TRACKING Enables improved transparency of where all the

y ner fi e R

mobile assets are, where they are going and what they are being used for. The data can be used to provide utilization statistics that can help inform asset lease versus buy decisions and to find optimum opportunities to divest assets.

SMART ZONES

g n& n i t ke io Masrtribut di

Reduce possibility of asset incidents by drawing geo-fences around regions or sites to enforce customizable attributes including speed limits and hazard warnings.

MAINTENANCE Reduces the chance of unexpected asset failure and subsequent repair costs by being able to t ailor effective

sing s e c prcoility s a G fa

preventative and predictive maintenance schedules based on historical and projected usage patterns.

FUEL EFFICIENCY Minimizes how much fuel is used per day/trip by optimizing route

s ical m e h roclant t e P p

selection, regulating maximum speeds and determining acceptable idle times based on job requirements and weather systems. Additionally, total GHG emissions are lowered.

CLOUD ACCESS Provides a secure library of plan drawings, schematics, supplier part

SMART FORMS

catalogues, forms, training

Reduces paperwork and

manuals and procedures that is

transposition errors when

24/7 two-way access-enabled on

inputting field data. Provides

any type of mobile device.

accurate metrics and improved

Eliminates the need for workers to

reporting of completed fieldwork through enhanced data visualization software.

el Oilfi

d

carry physical material with them

ce offi

or return to an office location to access necessary data.

19

Survey methodology In the spring of 2016, JWN, in partnership with Siemens, Storm Telematics and GDM Pipelines, undertook a comprehensive survey of oil and gas professionals to assess their perceptions about Digital Oilfield technologies and their readiness for adoption across the Canadian oil and gas industry. Ten more in-depth interviews were also conducted in order to gain a more granular assessment of attitudes and perceptions concerning the technologies under review. The survey is a follow-up on a 2015 survey, which assessed 10 d ifferent Digital Oilfield technology use cases, and thus provides year-over-year comparisons of many aspects of the transition. In order to gain an overall industry perspective, the survey targets a broad cross-section of industry professionals, encompassing companies of various size and subsector (service and supply, exploration and production and others) and diverse demographics (from executives and senior management to technologists and front-line workers). The survey had more than double the 2015 sampling, with responses from 355 indi viduals compared to 160 last year, to provide a higher level of accuracy of the opinions and attitudes of the industry in general. As such, the results presented here provide an accurate barometer of today’s industry perspectives on the readiness and current level of adoption of Digital Oilfield technologies.

20

Digital Oilfield technology adoption dimensions, benefits and barriers The survey was broken into two sections. The

year-over-year and would provide insight as to

first section focused on asking the same adop-

how the level of awareness and adoption by the

tion dimension questions as were asked in the

industry was shifting. The second section then

first Digital Oilfield Outlook Report for each of

drilled into the adoption benefits and barriers

three use cases. This would draw out whether

for each of top two use cases to emerge from

and what type of industry trends were emerging

last year’s report.

Adoption dimensions for each use case Solution maturity

Business case of the ROI

Please provide your understanding of the maturity of this use case and readiness for in-field deployment.

Please provide your perception of the return on investment (ROI) of this use case (and associated technologies) relative to other uses of capital investment.

This use case: 1) Will not be ready for at least 18 months 2) Will be ready for testing in 18 months 3) Is ready for testing today 4) Is ready for deployment 5) Is highly proven in the market

This use case compared to other options for capital use: 1) Much weaker ROI 2) Somewhat weaker ROI 3) Comparable ROI to other uses of capital 4) Somewhat stronger ROI 5) Much stronger ROI

Organizational readiness

Please provide an assessement of your current organization’s readiness to adopt this use case and the associated people, process and technology changes.

My current organization: 1) Will not be ready for at least 1 8 months 2) Will likely be ready in the next 6 –18 months 3) Will likely be ready in the next 6 m onths 4) Has most of the capabilities today 5) Is fully capable and is ready to adopt this use case

Use case top adoption benefits

What are the biggest perceived benefits of adopting the given usecase technologies (choose up to your top three)?

• • • • • • • • •

Use case top adoption barriers

What are the top identified barriers to adoption of the given use-case technologies in your organization (choose up to top three)?

• • • • • • • •

Decreased unplanned outages Improved safety Increased asset uptime Reduced maintenance and repair costs Improved production/enhanced recoveries Increased labour productivity Optimized inventory Lowered environmental impact Reduced energy costs increased security

Budget constaints Existence of organizational barriers Cybersecurity concerns Difficulty in consolidating disparate/siloed data Poor data quality Low network capacity for data transmission High cost to collect machine data Lack of interoperability of solutions between different vendors • Poor integration with existing solutions and infrastructure • Shortage of necessary talent • Superior alternatives

21

Adoption dimensions for each use case On average, each adoption dimension question for each

year-over-year changes and trends. Respondent industry

use case in this year’s Digital Oilfield survey garnered 150

subsectors consisted of 52 per cent supply and service, 20

respondents versus last year’s average response total of

per cent exploration and production, five per cent oilsands,

126, an 11 per cent increase in participation. By asking some

three per cent engineering, procurement and construction

of the same questions as last year, the data can measure

management, two per cent midstream and 17 per cent other.

Industry knowledge: Respondents who indicated they “lacked adequate insight” to answer a use- case question were probed further with the following question

Reasons for lack of subject matter insight

• • • •

Out of scope for my role in my organizati on I do not clearly understand the benefits of adoption The currently available literature is too technical or complex I do not clearly understand who all the vendors are and what their specific solutions are • I have not seen enough applicable case study examples • I have not seen enough demonstrations/pilot projects • I do not know all of the adoption requirements (people, process, technology) for my organization

What is the main reason for your “do not have adequate insight” response to one or more of the previous questions related to the given use case?

A broad and representative cross-section of the Canadian energy industr y surveyed others

s&s

producers

5%

22%

26%

52%

3%

6%

355

4%

total respondants

12%

4% 11%

7% 8%

20% 8%

executive

management

technical

12%

front line/ support

The survey of 355 industry professionals represented a broad

The functional group category “other” is comprised of supply

cross-section of responses by seniority, including senior exec-

chain/procurement, environment, health and safety, human

utives (C-suite), vice-presidents, general managers, directors,

resources and finance.

senior technical advisers, asset managers, engineers, geologists,

By industry vertical, representation included exploration

geophysicists, accountants and instrumentation technicians.

and production, service and supply and others, comprised of

The seniority group category “front line/support” is com-

representatives from midstream, downstream, engineering,

posed of union front-line staff (foremen/supervisors), other

procurement and construction management, government

non-union regular staff and professionals (e.g. LL.Bs, C.As).

agency and consulting groups. 22

Early returns: Awareness since 2015 has increased Overall industry awareness of Digital Oilfield technolo-

YoY change in respondents’ overall awareness of Field Productivity and Fleet Management Digital Oilfield technologies 2015

gies is improving, as shown by the decline in the number of survey participants who did not complete parts of the survey due to a perceived “lack of adequate insight”

2016

about the subject matter. The increase is a positive foundational step since improved industry awareness is more likely to translate into increased industry adoption of 67%

60%

the technologies.

overall awareness

Respondent demographic breakdown: industry vertical versus seniority

out of scope for my role

2%

don’t understand vendor/solution landscape

unaware of all adoption requirements

don’t understand adoption benefits

information too technical/ complex

1% 2%

not enough case studies

2%

6%

6%

6% 1%

11%

13%

not enough pilots

66%

44%

of all respondants indicated “lack of adequate insight” to at least one survey question

2% 3%

1% 2%

23%

20% 13%

9% executive

management

technical

front line/ support

In response to the high number of respondents signalling a

adoption benefits, finding the details too complex and tech-

lack of knowledge about the technologies previously, this sur-

nical and a lack of pilots and case studies, were not cited

vey asked a supplemental question of those respondents to

as top concerns. Therefore, the task of vendors is t he more

gain insight into the reasons behind their lack of awareness.

straightforward one of pointing to the benefits of the tech-

Primarily, respondents stated they felt knowledge about the

nologies and why that should matter to them, as opposed

technology was out of the scope of their role wi thin their

to convincing them that the technology itself works.

organization—63 p er cent for Field Productivity and 68

On the other hand, the fact so many respondents felt it was outside of their roles to become knowledgeable about

per cent for Fleet Management. In one sense, the fact that a strong majority of those who

the technologies indicates they are not taking on the obli-

felt they lacked adequate insight chose the reason they felt

gation to stay informed about new technologies that could

it was out of the scope of their roles can be considered a

make their jobs or the jobs of their colleagues more pro-

good sign, since it does not reflect poorly on the technologies

ductive and safe. This reinforces organizational barriers as

themselves and their potential benefits. Other responses

workers don’t see the benefit in pursuing technological

that could have indicated that, such as not understanding

change and may view it as a burden instead.

23

Perceptions of Field Productivity technologies: The needle is moving

YoY change in perceived relative ROI of FP technologies 2015

2016      %      3      %      4      1      4

50 40    t   n   e   c   r   e   p

30      %      %      8      6      1      1

20 10

Field Productivity was already highly ranked last year in

     %      8      %      2      5      2

terms of perceived return on investment (ROI), technological maturity and organizational readiness, ranking in second place out of 10 use cases in 2015, showing the indus     %      0      %      1      9

     %      6      %      3

try is highly confident in its commercial appeal compared to other Digital Oilfield applications. In 2016, that perception has only improved.

0 weakest

weak

neutral

strong

strongest

As the graphs show, Field Productivity has solidified its position in particular in terms of technology maturity and readiness for adoption. A majority of those who provided a response, i.e. not including those who answered they had

YoY change in perceived maturity of FP technologies 2015

inadequate knowledge to respond, believe the technology is to some degree already ready for deployment. A particu-

2016

larly big jump was seen in those responding the technology 50 40

is highly proven in the market with an improvement of 27

     %      8      3

30    t   n   e   c   r   e   p

20      %      1      1

10

     %      %      5      4      1      1

     %      6      2      %      0      2

     %      1      3      %      3      %      2      9      1

percentage points, from four per cent to 31 per cent year over year, and a similar fall in those suggesting maturity remains at least 18 months away. This is the biggest perception change recorded in this year’s survey, a strong indication the

     %      4

     %      9

Field Productivity use case has moved rapidly up the technology maturity scale in the eyes of industry professionals and pointing to the likelihood of more widespread adoption.

0 ready > 18 months

ready < 18 months

in testing

deployed

highly proven

That trend is also reflected in the significant increase in companies’ readiness to adopt the technology, up from a mere six per cent last year to a meaningful 23 per cent this year. This indicates that internally, organizations are starting to put into place the necessary resources to facilitate

YoY change in perceived organizational readiness for FP techhnologies 2015

adoption. This is an important consideration given the major advances in the Industrial IoT, one of the drivers of advanced

2016

Field Productivity technologies for which it will become in-

50 40    t   n   e   c   r   e   p

creasingly vital for the oil and gas sector to take on. Studies

     %      1      4

suggest the Industrial IoT could have a transformative im     %      4      2

30 20

     %      8      1

     %      5      1

pact on industry, and keenness to embrace it could be an      %      %      2      0      2      2

     %      8      %      1      4      1

     %      3 2

The perceived ROI, however, has not significantly changed,      %      %      9      6

10

important competitive advantage going forward.

perhaps an indication respondents are waiting for a stronger business case to be made. Vendors might consider better making the case through case studies or marketing to cus-

0  > 18 months

6–18 months

barriers still exist

capable adopted but not adopted

tomers in a way more tailored to their specific needs. 24

ADOPTION DIMENSION SCORES BY SENIORITY FOR FP TECHNOLOGIES tech. maturity

ROI

org. capabilities

overall

executive

3.57

3.65

3.05

3.42

management

3.34

3.36

2.75

3.15

technical

3.41

3.26

3.23

3.30

Field Productivity adoption: Demographic breakdown Breaking down Field Productivity adoption dimensions by demographic group reveals some important insights. From

front line/  support

3.75

3.16

2.94

3.28

average

3.49

3.36

3.00

3.28

a seniority perspective, it is promising to see that executives, though further removed from the direct applications of the technologies, all scored above average on the three adoption dimensions, indicating buy-in at companies’ most senior levels. However, management was shown to be the least bullish of all seniority groups, indicating a substantial disconnect be-

ADOPTION DIMENSION SCORES BY FUNCTIONAL GROUP FOR FP TECHNOLOGIES

operations

tech. maturity

ROI

org. capabilities

overall

2.97

3.24

2.93

3.05

tween the two most senior groups. While executives appear cognizant of the big picture benefits of technology adoption, and technical and front-line staff see the immediate on-theground benefits, management is pointedly less convinced of the advantages digital technology would bring, creating

instrumentation, controls & eng.

3.85

3.62

3.88

3.78

information technology

3.55

3.33

3.25

3.38

others

3.80

3.39

3.38

3.53

a potential impediment to adoption. Among functional groups, it is also telling that one field group, the instrumentation, controls and engineering group, scored the highest in all three dimension categories, since this group would be at the front line providing the input data and

average

3.49

3.36

3.27

3.37

using that data in the field, while the operations group scored much lower (overall 3.05 versus 3.78). As operations are key decision makers in adoption, this could present a challenge for actual implementation of Field Productivity technologies. Based

ADOPTION DIMENSION SCORES BY INDUSTRY VERTICALS FOR FP TECHNOLOGIES tech. maturity

producers

on the lower scores in all adoption dimensions for the more junior staff compared to executives, there appears to be a large

ROI

org. capabilities

overall

3.16

3.29

2.85

3.10

service & supply

3.61

3.43

3.10

3.38

others

3.74

3.32

3.06

3.37

average

3.49

3.36

3.00

3.28

communication or support gap that needs to be overcome. By industry vertical, the service and supply segment, with more resources in the field, scores consistently ahead of producers. To the extent producers seek to increase the benefits of these technologies, and thereby pare per barrel production costs, it makes sense to invest in raising their organizations’ ability to adopt and use digital technologies rather than depend on the service and supply sector to move adoption forward for them.

“Little or no inn ovation was occurring at $100/bbl [price of oil]. Now, at roughly $35/bbl, everyone is innovating and working dilige ntly to reduce costs and remain relevant. In this context, $30 oil isn’t such a bad thing…. For we Canadians to be sustainable players in this increasingly complex and competitive global market, we simply have to improve our recent performance.”  — Jim Gray, co-founder and former head of Canadian Hunter Exploration

25

Key benefits of Field Productivity technology adoption: What’s not to like?

Since Field Productivity applications are designed to make workers more

Weighted average rankings of respondents’ top three choices for perceived benefits of adopting FP technologies

productive, it is not surprising that increased labour productivity ranks as the

top benefit. Because Field Productivity applications focus on having the right

increased labour productivity

45% 39%

increased asset uptime

people at the right place at the right time with the right equipment, it fol-

improved safety

lows that industry would rank having

reduced maintenance and repair costs

assets running for longer and with less maintenance as top outcome benefits.

The third-ranked benefit, improved safety, is gained by the technology’s ability to provide a real-time view of the location and condition of people and mobile assets in the field. Up-todate information on demand allows

37% 34%

improved production/ enhanced recoveries

32%

decreased unplanned outages lowered environmental impact optimized inventory reduced energy costs

31% 17% 15% 14%

workers to be more aware of their surroundings by, for example, knowing where buried utilities and pipelines are via technologies like augmented

FIELD PRODUCTIVITY

are. Both front line and technical groups

reality applications that use digital

BENEFITS: BY SENIORITY AND

prioritize safety and asset uptime, the

geospatial data.

FUNCTIONAL GROUP

issues they are most impacted by and

Increasing efficiency of the field

In terms of seniority, there is alignment

have the most control over.

workforce and thus cutting costs, rather

over the perception that the major benefit

By job function, no one perceived

than bolstering oil and gas production,

Field Productivity technologies provide

benefit is universally recognized, which

a side benefit of reduced downtime, is

can increase labour productivity, but

suggests the messaging of the key

seen to be the main benefit for much

that is where the similarities end. With

benefits of these technologies is not yet

of the technology involved in Field

their eyes firmly on the bottom line, ex-

clear. Just as there was the potential for

Productivity. It is also clear how big

ecutives and senior management view

adoption roadblocks because priorities

a priority safety is in the oil and gas

decreasing unplanned outages and im-

did not align with the seniority demo-

industry, placing in the top three for

proved production and recoveries as

graphics (executives versus front line)

both use cases.

most important. This can be attributed in

here too the operations group (the deci-

When reviewing the offerings of the

part to the costs associated to shutting

sion makers) have a very different view

major technology providers and com-

down operations unexpectedly, which

as to what these technologies can pro-

paring it to this data, it is apparent that

can amount to millions of dollars in lost

vide versus the instrumentation, controls

the industry gets it, as the perceived

revenue per day, exceeding revenues

and engineering group (the key users).

benefits are aligned to the actual bene-

being brought in through steady state

Making a clear business case that ad-

fits being marketed. This is an important

operations. On the other hand, the closer

dresses both groups’ needs will be key

step in making the connection between

a person is to the physical operation of

in advancing to see more technologies

need and solution offerings.

an asset, the more safety focused they

implemented.

26

Key barriers of Field Productivity technology adoption: Not so fast

Consistently, budgetary constraint and existence of organizational barriers con-

Weighted average rankings of respondents’ top three choices for perceived barriers of adopting FP technologies

tinue to rank as the first and second biggest barriers to adoption of both Field Productivity and Fleet Management use cases. Because some of key enablers for use cases overlap, it is not surprising to see the perception of the top barriers to be similar.

budget constraints

45%

existence of organizational barriers

38%

lack of interoperability of solutions

27%

poor integration with existing solutions

24%

The second-ranked barrier, the existence of organizational barriers, indicates that some of the financial issues and pressures could be improved if Digital

high cost to collect machine data

Oilfield technology was viewed as more

low network capacity for data transmission

of a cross-functional group initiative.

poor quality data

Additionally, organizations have long indicated that they would be more interested in piloting or adopting technologies if they could be integrated with existing systems. This is a direct function

22%

cybersecurity concerns

21% 20% 19%

shortage of necessary talent

18%

difficulty in consolidating disparate/siloed data superior alternatives

14% 8%

of organizations wanting to minimize the risk of having to rely on only a few vendors or solutions and their prefer-

FIELD PRODUCTIVITY

ence for making step changes versus

BARRIERS: BY SENIORITY AND

groups that the high cost to collect

quantum leaps.

FUNCTIONAL GROUP

machine data (the IT group) and the

The fourth-ranked barrier to adoption,

By seniority, all groups indicated budget

shortage of talent (the operations

poor integration with existing solutions,

constraints as their top perceived bar-

group) appear for the first time as

supports the comments of some survey

rier, but it was the executive group, at

barriers to Field Productivity technol-

respondents that the real challenge isn’t

34 per cent, that had the largest per-

ogy adoption. It is also instructive that

the cost, ease of technology integra-

centage of respondents. Together with

it is the instrumentation, controls and

tion or getting the necessary data, but

this group’s third-highest perceived bar-

engineering group that is concerned

rather the glut of disparate data from

rier, the high costs to collect machine

about cyber security and not the IT

numerous sources that first has to be

data, representing another cost issue,

group. Since Field Productivity tech-

standardized and normalized before

it becomes obvious there is a very cost

nologies could allow the distribution

anything of value can be done with it.

conscious approach to adoption—even

and access of key electronic engineer-

With the lower ranking of concerns

more so than to functionality and in-

ing plans and schematics, the former

over low-network capacity, it is apparent

tegration/interoperability concerns

group has security concerns because

that the data management infrastruc-

with current technologies. Organiza-

of the sensitive content, whereas the

ture issue is becoming less of a limiting

tional barriers are consistently ranked

latter group is confident in the security

factor, a positive signal for Digital Oil-

as a second-place concern across

infrastructure, but rather is concerned

field implementation going forward.

the board.

about the cost to gather remote data. 27

It is among the different functional

Field Productivity case study: Access to data when it’s needed A matter as simple as access to infor-

available. Data may be stored in a fil-

historical infrastructure including asso-

mation has the potential to cost oil and

ing cabinet, on a network drive, on a

ciated production and environmental

gas companies millions of dollars per

spreadsheet or in someone’s own head,

features. Access to such information

day when it means the difference be-

making it difficult or impossible to use

at a company’s fingertips, in the office

tween operating and not operating an

the information to make decisions about

or in the field, is allowing companies

asset. When a large exploration, de-

the most efficient way to use, plan and

to avoid costly information gap delays

velopment and production company

schedule resources.

and improve efficiency.

sought to put a recently purchased

Field productivity begins with asset

GDM showed this to be the case

pipeline back into service, it had to

intelligence—access to accurate, con-

when it enabled a mid-sized western

wait two weeks to get information on

sistent information that can be used

Canadian oil producer to proactively

the originally approved maximum op-

across multiple platforms in the or-

manage the integration of new assets

erating pressure on the line before it

ganization to gain a holistic picture

by providing information to its teams

was able to proceed. It also experi-

of operations and perform analytics

in the field shortly after the transac-

enced delays related to field activity

designed to improve efficiency.

tion, rather than having to wait for

in abandoning pipelines due to lack

Asset intelligence is particularly

weeks to begin managing the new

of information about the pipeline’s

valuable in the oil and gas industry,

assets. The technology also made the

exact location, and the inability of field

where assets are copious, diverse in

submission of One Call reports more

workers to provide updates to data in

nature and geographically dispersed:

efficient by having faster access to

real-time to facilitate timely and in-

• In western Canada, there are over

accurate information about pipelines

1,400 operators managing in excess

and changes to pipelines, thus en-

Additionally, work is sometimes

of 660,000 kilometres of pipelines,

suring the safety of both company

done multiple times because people

795,000 wells and 158,000 facilities.

personnel and the public.

don’t realize it has been completed

• There are over 333,000 pipelines

In another case, a large integrated

before, or do not have access to the

that have been built in western

oil and gas producer was able to save

previous records, notes GDM Pipelines,

Canada since 1900; approximately 73

$300,000 in municipal road use taxes

a Calgary-based provider of compre-

per cent of these are still operating.

by demonstrating its actual road usage

hensive pipeline, facility, midstream

• Approximately 30 per cent of op-

based on routing to its known assets.

and transportation information to the

erating pipelines are greater than

Additionally, a provincial regulator in

Canadian oil and gas industry. Critical

20 years old.

western Canada with an identified

formed decision-making.

information about an asset’s history is

Field Productivity solutions like that

need to make historical documents

often misplaced when assets change

provided by GDM integrate and re-

more accessible is in the process of

hands, leading to time lost trying to find

late information across the complex

using GDM’s technology to make them

information or completing field activities

physical network of wells, pipelines

available, rather than adding additional

that could have been avoided if histor-

and facilities across western Canada,

staff to manually retrieve documents

ical information had been immediately

providing reporting on current and

when requested.

28

Field Productivity case study: Ending the paper chase Tundra Process Solutions, a Calgary-

service management software com-

From there, all work performed

based instrumentation and control

pany based in California, in order

is entered onto a report on the iPad,

specialist in the oil and gas industry,

to automate and speed up the bill-

including time, parts and materials

was getting so bogged down with its

ing process, reduce non-productive

used, and when completed the report

paper-based work order processes

time and needed paperwork, provide

is relayed to the company’s office for

that delivery time for invoices after

field workers with remote access to

processing. With customer signoff,

work had been completed could

information and work orders, im-

the report is uploaded and automat-

stretch to four to six weeks. The com-

prove forecasting and cash flow

ically emailed to the customer, and

pany, which also provides service and

and provide data for analysis that

invoicing can occur the same day.

in-house custom engineered solutions,

could reduce bottlenecks and lead

serves remote locations throughout

to greater workforce productivity.

western Canada.

Tundra realized a 75-per-cent reduction in the time to send out

Tundra created a four-person task

an invoice after service was com-

The company was old-school, still

force to extensively trial the soft-

plete and a 25-per-cent reduction

employing paper and pen in the field

ware, including sandbox testing, used

in non-billable time. And there were

and using Excel-generated service

by software developers to test new

other benefits. The reporting errors

reports. Its three dozen field techni-

programming code in isolation from

of the paper era were eliminated.

cians needed to attend to company

the production environment, and a

Analysis of the data now available

offices to manually enter written

field service process before rolling

brings new transparency, enabling

work onto company computers, cre-

out the ruggedized iPad-based solu-

the company to effectively track

ating excessive non-billable hours.

tion in 2015.

aspects like billable and non-billable

Other inefficiencies seeped into the

The new process starts with cre-

hours, worker productivity and ex-

working day. The company couldn’t

ation of work orders in ServiceMax

penses, and to determine its highest

effectively track its field workers or

dispatch console, which can then be

expenses compared to revenue.

generate reports on billable time

sent electronically, along with any

The solution is also a time saver—

and had no effective way to trace

other necessary information, to techni-

technicians can file work orders

other inefficiencies and bottlenecks.

cians in the field. The job is automatically

and other documents online, largely

Tundra turned to a paperless solu-

placed into their calendar when it is

eliminating their need to come into

accepted by the field worker.

the office.

tion offered by ServiceMax, a field

29

Perceptions of Fleet Management technologies: Solidifying its strong case YoY change in perceived relative ROI of FM technologies

In terms of technology use cases, Fleet Management was and remains the darling of the Digital Oilfield. In

2015 50% 40% 30%      %      %      8      6      1      1

20% 10% 0%

     %      3      3      %      %      7      5      2      2

2016

2015, Fleet Managem ent was ranked highest overall of

     %      1      4      %      7      3

the 10 Digital Oilfield use cases and in terms of technological maturity and organizational readiness (and fifth in ROI). This year, it improved in all those categories, with a particul arly strong 27 percentage point      %      1      1

boost in the perception it is already highly proven in

     %      5      1

the market, up from 11 to 38 per cent, among those

     %      %      3      0

weakest

who provided a rank. Fleet Management rose year-over-year in the perception weak

neutral

strong

strongest

that organizations are fully capable and ready to adopt the technology (from 16 to 26 per cent). Together with the sig-

YoY change in perceived maturity of FM technologies

nificant increase in recognized maturity of the technology, the results tangibly show that industry believes this tech-

2016

2015

nology is past the initial pilot stages and abundantly ready

50%      %      9      3

40%      %      8      2

30%

10%

     %      8      %      4

     %      2      3

The case for ROI is also solid, with more than half of respondents feeling it has somewhat stronger (37 per cent) or much stronger (15 per cent) ROI compared to other in-

     %      9      1

     %      4      1

20%

for larger scale deployment.

     %      8 3

     %      5      %      1      1      1

     %      7

vestments. That compares to just 21 per cent ranking its adoption as somewhat weaker (18 per cent) or much weaker (three per cent) than other uses of capital. More generally, Fleet Management–type technologies

0% ready >18 months

ready <18 months

in testing

d ep lo ye d

h ig hl y proven

have become more high profile in recent years as hype about their potential grows in the consumer market, with advanced mobile-based personal navigation applications

YoY change in perceived organizational readiness for FM technologies

and monitoring technology, car sharing applications now available and both automobile and information technol-

2015

2016

ogy companies investing billions of dollars in the race

50%

to develop the driverless car. In the oil and gas industry, companies are piloting driverless trucks in oilsands

40% 30% 20%

     %      6      1      %      2      1

     %      %      6      6      1      1

     %      7      2      %      3      2

     %      6      %      2      4      2

mining operations in addition to adopting more conven-

     %      6      2

tional Fleet Management solutions. At a time of rapid

     %      %      6      5      1      1

technological innovation, Fleet Management is an area to watch with more cost-cutting applications sure to

10%

enter the marketplace in the near to midterm.

0% > 18 months

6-18 months

barriers still exist

capable but not adopted

adopted

30

Fleet Management adoption: Demographic breakdown

ADOPTION DIMENSION SCORES BY SENIORITY FOR FM TECHNOLOGIES tech. maturity

ROI

org. capabilities

overall

executive

4.36

3.45

3.27

3.70

management

3.93

3.54

3.34

3.60

technical

3.85

3.35

3.65

3.62

front line/  support

3.41

3.29

3.00

3.24

average

3.92

3.42

3.35

3.56

Perhaps surprisingly, the seniority group most driving Fleet Management’s favourable ratings was the executive group. With the front-line group having a below-average score, it’s clear the value and importance of these technologies is not making its way down the full chain of command. The real value of Fleet Management technol-

ADOPTION DIMENSION SCORES BY FUNCTIONAL GROUP FOR FM TECHNOLOGIES

ogies is the ability for operations to have data

tech. maturity

ROI

org. capabilities

overall

operations

3.53

3.06

3.15

3.25

instrumentation, controls & eng.

4.11

3.67

3.50

3.76

information technology

4.45

3.80

3.73

3.99

others

4.05

3.56

3.40

3.67

average

3.92

3.42

3.35

3.56

analyzed so it can pinpoint where it needs to change high-cost behaviour (e.g. driving patterns and style, idle times, improved routing). Yet in terms of functional groups, operations does not appear to fully understand or believe in the ROI, taking a dimmer view than the overall average score and contrasting sharply with IT’s high ratings across the board. Addressing this disconnect could be key to improving adoption. The “other” category, including midstream, downstream, engineering, procurement and construction management, government agency and consulting groups, is particularly confident

ADOPTION DIMENSION SCORES BY INDUSTRY VERTICALS FOR FM TECHNOLOGIES tech. maturity

ROI

org. capabilities

overall

producers

3.69

2.92

3.12

3.24

service & supply

4.02

3.59

3.41

3.68

others

3.96

3.65

3.52

3.71

average

3.92

3.42

3.35

3.56

about Fleet Management’s potential. This could be a reflection of the fact some of the companies in this category operate some of the largest vehicle fleets and are therefore most cognizant of the demonstrated benefits of the technology’s adoption.

“Fleet management is a solid plat form for communications providers to build additional value, beyond connectivity, for automakers, t hird-party logistics companies and the like. Autos represent the raison d’etre of IoT—things with wheels, always connected, all the time interacting with other things with wheels and their environment.”  — Eric Goodness, IoT and mobile analyst, Gartner Inc.

31

Key benefits of Fleet Management technology adoption: More than fuel savings

While fuel cost savings is the most demonstrated and obvious benefit of

Weighted average rankings of respondents’ top three choices for perceived benefits of adopting FM technologies

Fleet Management solutions, survey respondents surprisingly ranked reduced

reduced maintenance and repair costs

44%

energy costs at the bottom of the list, choosing instead aspects leading to

42%

improved safety

higher efficiency. In fact, understanding behaviour, usage and wear patterns of

35%

increased asset uptime

mobile assets in order to lower maintenance and repair requirements was seven to 10 priorities spots higher than focusing on reducing fuel consumption. This could be an indication respondents are looking past the most established benefit of Fleet Management—fuel savings—to the more intangible savings that have come to the fore as the tech -

increased labour productivity

35%

improved production/ enhanced recoveries

24%

decreased unplanned outages lowered environmental impact increased security

21%

17%

16%

nology has advanced in sophistication and capabilities.

optimized inventory

14%

reduced energy costs

14%

As expected from a technology intended to monitor and improve driver behaviour, improved safety was highly ranked, second only to reduced maintenance and repair costs. The results

indicate there is a shift in industry workers’ view and comfort level in the increased visibility of their movements and operations as there is a direct safety

the responsibility on their shoulders to

mobile warehouses, this makes sense,

benefit, and this transparency isn’t just

drive down costs in light of fallin g rev-

but surprisingly that insight seems

about reprimands and job reductions.

enues. Increased asset uptime was a

to have been missed by the “other ”

top three benefit listed by all groups.

group, of which a big sub-grouping

FLEET MANAGEMENT

Among functional groups, increased

is the supply chain management and

BENEFITS: BY SENIORITY AND

asset uptime is again a consensus top

FUNCTIONAL GROUP

three choice, as is improved safety.

Finally, it is apparent that the focus

While most groups see improved safety

The outlier is the optimization of in-

of vendors on the potential fuel and op-

as the biggest upside to Fleet Manage-

ventory seen as the chief benefit of

erating cost savings do not align with

ment by a wide margin, the biggest

Fleet Management in the IT group. This

the top benefits listed by survey re-

misalignment among seniority levels

suggests the IT group believes having

spondents. This could be a case where

is seen in management’s greater focus

more insight into the whereabouts of

the vendors needs to better educate

on cost factors, likely a reflection of to-

mobile assets translates into optimizing

the user or adapt their offerings to bet-

day’s challenging price environment and

inventory. As trucks are often seen as

ter correspond with user perceptions.

32

procurement teams.

Key barriers of Fleet Management technology adoption: Some roadblocks remain

Aside from the current state of the industry, battling the deepest bust

Weighted average rankings of respondents’ top three choices for perceived barriers of adopting FM technologies

cycle in a generation, the fact budget constraints is ranked as the top perceived barrier to Fleet Management adoption is not helped by the fact that the technology is for the most part cutting edge and thus has yet to come down the cost curve. It could also be hypothesized that budget constraints is a default answer in the absence of

48%

budget constraints existence of organizational barriers

44%

difficulty in consolidating disparate/siloed data

24%

poor integration with existing solutions

22%

cybersecurity concerns

22%

a strong business case and a history of proven pilots and integrations. As time goes on and more pilots and case studies prove their value, this barrier should be easier to overcome and more

specific concerns, such as integration with existing solutions, will come to the forefront. Most positive in the rankings for both use cases is the marked decrease

poor data quality

18%

high cost to collect machine data

18%

lack of interoperability of solutions

17%

shortage of necessary talent

14%

low network capacity for data transmission superior alternatives

12% 7%

in concerns about cybersecurity, a potential deal breaker that was tied

for the second-highest barrier to adoption of Digital Oilfield technologies in 2015. In percentage terms, it was ranked

FLEET MANAGEMENT

At the functional level, cyberse-

as a top barrier less than half as often

BARRIERS: BY SENIORITY AND

curity pops back onto the agenda

as budget constraint for both use

FUNCTIONAL GROUP

with three out of the four groups

cases. While it remains an issue that

When broken down by seniority group,

making this their third-highest

needs to be prudently dealt with, it is

there is a distinction whereby the closer

concern, though at relatively low

promising in that what was perceived

groups are to the technology, the more

percentage levels compared to the

as a major infrastructure, behavioural

concerned they are with cybersecurity.

top two barriers cited. Oddly enough,

and perception-based barrier can be

This may be a function of having a better

it is not the IT group that ranks it in

overcome to that degree in a relatively

understanding of the technical consider-

the top three. Instead, that group

short period of time. Since much of the

ations of implementation, whereas the

is more focused on the cost to col-

technology applications rely heavily

groups making specific purchasing deci-

lect the machine data that could be

on wireless mobile access and cloud

sions at the management level are more

generated. This could indicate the

computing, it is a positive step forward

focused on the overall picture and how

concerns of the other groups are

to see cybersecurity concerns fall to

implementation fits in with the different

speculative and based more on per-

the middle of the grouping.

applications already in place.

ception than reality.

33

Fleet Management case study: Driving down costs and optimizing with analytics Canadian Natural Resources Limited,

a GPS, RFID and analytics offering

Pro fleet tracking technology provides

one of the largest independent oil and

into an organization’s operations. The

more advanced mapping features,

gas producers in the world, faced a

telematics data (SMART-vu Pro) and

including integrated Patchmaps, in ad-

fleet management challenge recently.

radio frequency identification (RFID)

dition to detailed and comprehensive

In order to reduce vehicle fleet costs

(SMART-vu TagNet) data collected is

reporting, allowing Canadian Natural

and enhance the health and safety of

used to establish a baseline (SMART-vu

to obtain critical fleet performance

its workers, it wanted to take a more

Analytics), which is in turn used to trend

data within three clicks.

proactive approach to reducing ex-

the metrics measured by leveraging pro-

Storm continues to provide

posure to safety incidents by curbing

prietary efficiency algorithms in the areas

Canadian Natural with a dedicated

negative actions like speeding. It also

of descriptive analytics (what happened),

Implementation Specialist to assist all

wanted to obtain Diagnostic Trouble

diagnostic analytics (why did it happen),

11 districts in optimizing fleet assets,

Codes from on-board vehicle com-

predictive analytics (what will happen)

including training and support by way

puters reporting on various metrics, like

and prescriptive analytics (what is the

of configuring scheduled reports for

seatbelt usage, and reduce exposure

best outcome and how it can be made

various Canadian Natural stakeholders

to theft of its ATVs. And it needed to

to happen).

and setting up escalation procedures

replace the CDMA communications

Storm integrates telematics data

network it used that was in the pro-

and RFID technology into an algo-

The technology allowed Canadian

cess of being discontinued.

rithm-based analytics engine to analyze

Natural to establish a solid baseline for

The Calgary-based company,

the massive volumes of data coming

ongoing trending analysis and to begin

which manages a fleet of more than

in from multiple sources and formats

measuring reliably specific metrics such

800 vehicles in 11 operating districts,

and turns it into clear, highly granular

as speeding, idling and off-hour usage

approached the challenge as an oppor-

information that is converted into ac-

of fleet assets. Within the first quarter

tunity to upgrade to the latest in Fleet

tionable intelligence able to deliver

of deployment, one of the divisions was

Management solutions, which leverage

quantifiable savings—and ultimately

able to determine that $4,179 in fuel

digital platforms to maximize fleet ef-

measuring the cost of inefficiency.

was used as a direct result of excessive

using a flexible alerting engine.

ficiencies. It chose the SMART-vu Pro

Storm seamlessly transitioned

speeding (29 assets) and 3,850 litres

solution offered by Storm Telematics.

Canadian Natural’s hardware that was

of fuel was used during 2,485 hours

SMART-vu Pro is a powerful GPS dis-

installed into its fleet to the SMART-vu

of idling (based on 30-plus minutes).

patching tool that also functions as a

Pro platform, replacing the necessary

The first division deployment achieved

comprehensive reporting system and

legacy CDMA modems with HSPA mo-

a 24-per-cent return on investment

can be configured according to specific

dems and deployed satellite tracking

in year one and a 152-per-cent return

customer needs. Storm Telematics, an

devices, providing ubiquitous coverage

on investment in year two. Increased

Edmonton-based company, optimizes

using the Globalstar satellite network,

safety is achieved for employee and

fleets by building business impact mod-

onto the company’s ATV fleet to re-

contractor workers by providing visi-

els to validate the value of implementing

duce exposure to theft. The SMART-vu

bility over driver behaviour.

34

Conclusions and recommendations Present a robust business case Budget constraint has rated at the top of the barriers to adoption of Digital Oilfield technologies every time the question has been asked. But what does that mean? While the oil and gas industry has been subsumed in a ruthless cost-cutting spiral since prices collapsed two years ago, that doesn’t mean companies are not investing in activities that will save money. Indeed, as cost cutting becomes paramount, it makes more sense to spend on measures to reduce expenses, not less. That suggests proponents of Digital Oilfield technologies are not making a convincing enough business case for implementation to pay for itself and actually add value to the enterprise—budget constraint becomes a default answer in the absence of strong business cases and a history of proven implementations. The ability to make a strong business case, including a robust cost-benefit

“Focusing on the quantitative benefits of your idea is the most effective way of removing your biggest hurdle when dealing with key decision makers—their personal biases.” —Bob Phillips, chairman of the board, Precision Drilling

analysis and evidence of successful implementation through pilot projects, case studies and testimonials, can go a long way to de-risking the decision to invest in any new technology.

Building an effective business case The role of a business case is that of

with existing systems, training require-

is to be able to work deeper through the

a communication tool, composed in a

ments). Once these two elements have

tree to identify the specific examples of

language that the target audience under-

been determined, a proper cost-benefit

how a given technology could benefit

stands and with enough detail to facilitate

analysis can be performed to allow a

a user or the organization and then roll

decision making. Using a business case

logic- and fact-based decision on adop-

back up and assign specific values (fac-

approach to sell technology adoption

tion to be made.

tors, multipliers, absolute values) to all

opportunities is first about moving away

the micro and macro benefit levers that

from simple qualitative benefit expression

NAVIGATING A BUSINESS C ASE

would change from the baseline oper-

(e.g. this application will make your work-

DECISION TREE FRAMEWORK

ating scenario.

ers more efficient and safe) to providing

The framework example below is de-

At the end of th e exercise, a com-

quantifiable rigour around the potential

signed to assist in visualizing all the cost

prehensive benefits value should be

benefits (e.g. this application will decrease

levers adopting a new Digital Oilfield

generated that can be then compared

the volume of work by X, increase pro-

technology could affect. After estab-

against the costs, including all the im-

ductive time by Y and lower operating

lishing a proper baseline scenario, a user

plementation considerations—cost

costs by Z over a specific timeframe).

trying to make a business case would

to purchase, maintenance, integra-

After benefits have been effectively

identify all the relevant solution bene-

tion with other systems and training,

categorized and quantified, implementa-

fits that match the application need

to ensure the benefits will outweigh

tion considerations need to be addressed

and work through the framework, left

the costs by the amount and within

and also quantified (e.g. cost to purchase

to right, highlighting all the applicable

the timeframe required for capital

and maintain a solution, integration costs

macro and micro benefit levers. The goal

investment.

35

Business case decision tree framework for adoption of Field Productivity technologies PLANNED OPERATIONS

UNITS OF WORK (e.g. number of truck rolls)

UNPLANNED OPERATIONS

PRODUCTIVE TIME

TIME FIELD PRODUCTIVITY

(e.g. hours spent completing a job start to finish)

UNPRODUCTIVE TIME

Use case

COST (e.g. the average labour rate being

OPEX

incurred)

Macro benefit levers

Micro benefit levers

Field Productivity case study: Virtual training Using Siemens’ advanced simulation software—which gen-

Using Siemens’ COMOS facility management software pro-

erates precise, 3-D virtual representations of technologically

gram, and its COMOS Walkinside 3-D virtual reality model-building

complex industrial facilities, including detailed information

system, technicians can see themselves depicted as an avatar

and the complete history of associated components—a com-

in a virtual model of a facility, which they are training to use

pany operating an offshore oil processing platform in Africa

or required to inspect. Safety is enhanced and the need for

was able to begin its training on a virtual model while its fu-

paperwork, like training manuals, component diagrams and

ture workplace was still under construction. By reducing the

inspection reports, is reduced or eliminated. Companies can

time needed for training sessions on board, the oil platform

also use the technology to complete planning and virtual com-

entered service two months earlier than planned.

missioning of a facility before a single bolt had been tightened.

36

MAINTENANCE: Servicing assets

Reduce frequency of site visits by performing trouble ticket analytics on

routinely/scheduled to maintain

asset usage versus planned work and maintenance schedules to determine

normal operations

which activities can pushed up or back to align with other site visits.

INSPECTIONS: Assessing the

Reduce number of site visits by monitoring infrastructure and complet-

operational health/status of

ing asset inspection remotely and combining actual site visits through

an asset

optimizing inspection schedules.

INSTALLATION: Putting new assets into service or adding functionality to existing assets

REPAIR: Fixing an asset that has failed unexpectedly or correcting previous work done incorrectly

JOB ASSESSMENT: Scoping job requests to identify all possible required resources

Decrease the number of follow-up trips required to complete installations by providing 24/7 access to centrally located troubleshooting experts, installation guides and video tutorials to ensure the job can be done correctly the first time.

Reduce the need for site assessment visits by analyzing historical maintenance and repair logs to best determine cause of failure and dispatching properly trained crews with the ri ght parts/equipment the first time.

Reduce the amount of time a call out could take by conducting outcome probability and risk-based impact analysis on trouble tickets so that the optimally trained technician/crew can be dispatched rather than using a first-available, first-out approach.

JOB COMPLETION: Conducting

Decrease time to completion by providing instant around-the-clock ac-

work on the asset at site and time

cess to centrally located experts, manuals, procedures and engineering

required to finish the job

schematics.

TRAINING: Providing resources

Maximize output from crews by optimizing how crew downtime is

with new skills needed to improve

spent by scheduling skills and safety training during expected down-

their safety and output

times or off peak hours.

SEARCH: Expending effort

Reduce resources spent on searching for parts and equipment by having

looking for parts and equipment

real-time overview of inventory at fixed and mobile warehouses so that

needed for the job

parts can be available without delay for routine and emergency jobs.

TRAVEL: Travelling to and from the worksite

Decrease distance crews travel through intelligent routing of trouble calls that balances impact of asset failure versus likelihood of failure versus crew availability and time for crew to respond.

Reduce average labour costs by organizing crews based on frequency WORKFORCE PLANNING:

of call outs versus required response time versus total overtime wages

Optimizing how crews are staffed

(e.g. standby or on-call model, 24/7 ops). Additionally, optimize the

and deployed

mix of skillse t and seniority of crews using predictive workload models based on historical call-out data.

Micro benefit categories

Examples of application benefits 37

Business case decision tree framework for adoption of Fleet Management technologies UNITS OF WORK (e.g. number of truck rolls)

OPERATIONS

FLEET MANAGEMENT

Use case OPEX COST (e.g. the average costs associated with a truck roll or km traveled) CAPEX

Macro benefit levers Micro benefit levers

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UTILIZATION: Optimizing how mobile assets are used

Increase transparency of fleet location and usa ge to improve their utilization and decrease total distance traveled through intelligent routing, and optimizing the number of mobile assets required to be owned/rented in the fleet.

MAINTENANCE: Servicing assets

Reduce frequency of required shop visits by performing trouble ticket an-

routinely/scheduled to ma intain

alytics on asset usage versus planned work and maintenance schedules

normal operations

to determine which jobs can pushed up or back to align with shop visits.

Reduce potential for re-work or the need for additional resources to be REPAIR: Fixing an asset that has

dispatched by properly analyzing the information received on the origi-

failed unexpectedly or correcting

nal trouble ticket and calculating possibilities, probabilities and impact of

previous work done incorrectly

additional issue and dispatching crews accordingly rather than using a firstavailable, first-out approach.

SAFETY: Minimizing incidents

Decrease chances of lost time to injury due to driver incidents by monitoring

through safe operations of mobile

driver patterns and conditions and providing real-time (e.g. in-cab) coaching

assets

and creating safe zones (e.g. virtual GPS zones regulating maximum speeds).

FUEL: Determine strategies to save on amount of fuel used in operations

INSURANCE: Paying premiums for asset operation and accident claims

ENVIRONMENT: Lowering environmental impact due to operations

FLEET: Managing the purchase, lease and divestiture of assets

Micro benefit categories

Improve driver behaviour through operations monitoring and coaching so that mobile assets are used in an optimum fashion (e.g. no speeding, limit idling). Decrease fuel usage by following proper maintenance schedules and operating guidelines (e.g. tire pressure). Reduce overall insurance rates of mobile assets by being able to quantifiably demonstrate statistics of driver behaviour and provide factual information

to correctly determine at-fault parties in accident situations, thereby reducing claim and litigation costs. Reduce overall carbon emissions and subsequent car bon taxes by following proper maintenance schedules, driving less aggressively and travelling fewer kilometers due to route optimization. Lower other environment costs associated with fees for automotive parts by reducing wear through excessive use.

Increase the time between purchases of assets and increase recovery of assets to be divested as a result of reduced wear due to improved operator usage patterns and proper maintenance programs.

Examples of application benefits

39

Fleet Management case study: Model behaviour A Calgary-based service and supply company that

engagement, with a $295,000 payback on the com-

operates a total fleet size of 2,100 assets sought out

pany’s 110 vehicles. It projected over $150,000 in annual

an assessment for entering into a pilot for 110 heavy-

savings based on reductions in fuel consumption and

duty vehicles (including vacuum trucks, water-hauling

asset deterioration based on a projected five-per-cent

trucks and assorted vehicles serving the needs of the

reduction in aggressive driving behaviour, over $26,000

oil and gas, petrochemical and mining industries) to

in fuel savings by reducing idling by 15 per cent, an

determine the savings a Fleet Management solution

additional $120,000 revenue based on improved utiliza-

could provide. Storm Telematics undertook a detailed

tion and over $176,000 in annual maintenance savings

audit of the fleet to determine possible efficiencies to

based on improved preventative maintenance and re-

reduce costs and improve safety. It used an existing

duced vehicle wear and tear.

methodology that tracks savings in driver behaviour

Based on these projected savings, it was estimated

by moving the worst driving offenders in a fleet in line

that breakeven would occur before six months. Storm

with the best drivers, using in-house benchmarked

projected a 408-per-cent, five-year return on invest-

data revised based on the specific nature of the com-

ment. Additional savings could be realized if some

pany’s fleet. The estimate assumed no use of Storm’s

assets are shown to be saleable without impacting

analytical engine or ongoing fleet optimization ser-

operations. There were also significant potential cost

vices, but was solely focused on using SMART-vu Pro

avoidance and soft benefits with high-potential value

to measure specific metrics related to driver beh aviour

that were not included in the ROI projection.

improvements, idling reduction, asset utilization im-

Some of the direct benefits associated with this

provements and maintenance savings.

case study can be plotted in the business case deci-

Working in collaboration with the organization,

sion tree above, such as vehicle maintenance, driver

Storm’s business impact model found there would

safety, fuel consumption and divestiture of assets, for

be a positive net present value in the first year of the

assessment through the framework.

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Engage technology champions Survey responses indicate there is a high level of confidence in many Digital Oilfield technologies’ readiness for adoption and ability to pay dividends, but the internal workings of organizations themselves are perceived to be one of the biggest barriers to getting them implemented, second only to budget constraints. This is not entirely unexpected, since the kind of sweeping technology transformation that adoption of Digital Oilfield technologies can entail often requires a cultural shift and re-engineering of process throughout the organization, the breaking down of functional silos and embracing of collaborative business models, overcoming knowledge gaps and perseverance to see the transformation through. Given the enormity of the chal lenge, a lack of clearly defined ownership of the task of driving technology selection and implementation forward can become an impediment. One way to move implementation up the agenda is to appoint a leader or team tasked solely with spearheadin g the transition, including rigorously assessing new technologies, testing and piloting the best candidates, quantifying the value of implementation and moving to scale those technologies determined to be cost effective. Moreover,

“Identifying, testing and implementing new technologies that are critical to helping solve an organization’s or the industry’s most pressing issues can’t be another line item to someone’s existing  job description, but has to be their only responsibility and built right into their  job title if you want to experience change of any consequence.”

an effective leader or team should be able to overcome employee resistance to change and convince colleagues that implementation is indeed within the scope of their roles and within their abilities to execute.

— Amit Varma, chief executive officer, True Site View

Engage with suppliers The product-as-a-service model increasingly used in the software and other industries changes the nature of the relationship between the customer and the vendor from that of a one-time purchase to that of an ongoing relationship, with the vendor promoting customer satisfaction over the life of the product. This benefits both sides in the transaction. Tracking of customer usage of a software or product creates valuable feedback to the vendor that can be analyzed and used for ongoing product improvement, while the customer’s ongoing relationship with the vendor ensures it receives the most benefit from the technology. Some vendors now use customer engagement teams, or implementation specialists, specifically tasked with maximizing customers’ value from their technology. Implementation specialists are engaged with managing the onboard implementation, system configurations, troubleshooting and addressing the training needs of its customers. With the ability to make its technology on board easy to understand for end users and to showcase the value proposition of a company’s products, customer engagement teams can play a critical role i n the success of a technology in the marketplace. Additionally, suppliers can often bring experience from other oil and gas companies and from other industries. Those best practices will help drive more value.

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“Innovation is as much about new technologies as it is about change management. The sooner vendors and buyers trust and see each other as strategic partners rather than transactional groups, the sooner they will get to move at web speed.” — Kevin Frankowski, executive director, Kinetica Ventures

Break down the silos Part of the reason for the existence of organizational barriers is the presence of entirely separate disciplines within organizations that have customarily not interacted. If information technology is not considered a full business partner in the process, a gap will remain between IT systems and operational technology systems. Enterprise software development and embedded control systems development have traditionally operated in their own silos, employing different tools, platforms, professional skills sets and corporate cultures. Yet Digital Oilfield technology implementation usually requires some degree of melding of the two. Remote sensors need to be programmed for the task for which they are installed as well as to provide data for analysis and potential actions. Much of the value from Field Productivity and Fleet Management come from IT integration—IT needs to be more closely aligned in order to gain full value. Companies must accelerate behavioural change across

“However, the true realization of the [Digital Oilfield] vision comes not in the field, but in head office, and how producers change their business processes to leverage analytics and to integrate the silos that can exist, for example, between the exploration and production sides of the business. Unlocking this potential is as much about people and process as it is about technology.”

the organization by reinforcing teamwork and promoting collaborative engagement among diverse working groups that are all essential to the

 — James Freeman, chief technology officer, Zedi

success of Digital Oilfield technology implementation.

Maintain cybersecurity vigilance Concerns about cybersecurity have fallen, from second place among barriers to the Digital Oilfield to fifth—that’s the good news. But as more companies install more sensors and devices, and collect and transmit exponentially more sensitive data, the security of th at data will always be a worry—and the threat will always remain. As the IoT penetrates the oilfield, now is no time to let the guard down—and see it return to security being a major barrier to implementation. Companies need to reach the same sort of widespread level of understanding and enforcement around cybersecurity that they have today with protecting their people (safety), the environment and their physical assets (reliable operating and maintenance practices). That means ca refully designing security into IoT systems from the beginning and exercising continued vigilance throughout the implementation and lifespan of the system.

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“The attackers are already doing a great job sharing information between groups, and in order for security providers to keep up, we will need to get better at sharing information as well.”  — Nate Kube, chief technology officer, Wurldtech

Maximize Operational Efficiency With Real Asset Intelligence GDM helps companies navigate the complexities of the modern digital oilfield, by finding more efficient ways to use real-time oilfield asset data. We aim to minimize re-work, maintain critical historical information for future operational success,

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