Intelligent Energy: A Strategic Inflection Point

Abstract

Abstract As defined by Andrew Grove, strategic inflection points (SIPs) represent what happens to a business when a major change occurs in its competitive environment (Grove 1999) or when major market changes significantly impact business fundamentals. Oil and gas case studies have documented new ways of working and a more than tenfold improvement to individual productivity, demonstrating that new, more effective ways of operating oil and gas assets are both possible and practical. This evidence suggests that oil and gas production has experienced an SIP. Throughout the last few years globally, nearly 400 workflows representing more than 50 digital oilfield automation projects have been implemented successfully. Many have focused on improving efficiency and all have gone far beyond SCADA implementation. These projects encompass nearly every asset type, demonstrating that intelligent or digital energy (I/DE) solutions are not restricted to a single operating environment. Many papers have been published on this topic at SPE conferences. Examples cited by Barbarino 2011, Dutra 2010, Moisés 2008, Sankaran 2011, Al-Jasmi 2013, Vignati 2013 and Van den Berg 2010 provide descriptions of representative projects. All of these projects experienced significant engineering capacity gains. This implies that when companies respond to the SIP, engineers and operators no longer must devote the majority of their time to routine, low-value tasks. Instead, they can concentrate on activities that produce meaningful performance improvements and business value. In other words, the resulting expansion of effective engineering capacity, the maximum amount of high value work that an engineer is capable of completing in a given period, can change the way oil and gas companies operate (Holland and Crompton 2014). Although specific work processes are prioritized differently amongst various companies and assets, the underlying I/DE principles of operational excellence, efficiency and automation on which solutions are based remain constant. The application of these principles is what makes business transformation possible (Lochmann 2012). Presently, significantly higher levels of production performance are achievable within the oil and gas industry. Companies that choose to fully implement I/DE principles are likely to follow the steep upward performance trend predicted in the SIP model, where employees focus on such business imperatives as increasing production, reducing cost, and managing risk, rather than routine, mandatory, low-value assignments. The consequences of a strategic inflection point within production are similar to those encountered in exploration 25 to 30 years ago when the introduction of information technology made the routine application of 3D seismic interpretation a reality and brought profound business changes to the upstream geoscience sector.