Can digital technology solve the bust/boom cycle for the oil sands sector?
September 28, 2018
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By Ernest Granson
Owner-operators in the oil and gas sector in Western Canada must feel they are navigating in unfamiliar, and even hostile, waters.
The economics of production have been overturned in recent years, and chances are they will never be the same. If current economics become the norm, those same owner-operators will face the very real challenge of losing future investments if investors feel they can achieve better returns in other global regions.
Linus Hakimattar, Asset Information Management Practice Leader with ReVisionz Inc. in Calgary, Alta., believes that they can prevent this potential siphoning of financial endorsement by transforming themselves into the “Operator of the Future.”
“‘Operator of the Future’ is short hand for a strategy to address these challenges,” says Hakimattar. “It’s a state where companies are leveraging innovations in technology and business processes to make a step change improvement in their cost structure and environmental sustainability. Step change is the key word. It’s not incremental change but rather transformational change. These operators need to meet shareholder expectations at any point in the commodity price cycle including the bottom of the cycle.”
And the industry does recognize there has to be change, says Hakimattar.
“What we are seeing is that virtually every company in the oil and gas sector has already developed some sort of digital initiative,” he says. “In fact, they’re traveling to Silicon Valley to speak to true digital companies about innovation so they can foster that same kind of culture back home. These companies have decided they don’t want to be subject to the boom and bust cycle anymore. That’s their imperative for change.”
And it’s not that other countries are necessarily more advanced than the oil sands regions, Hakimattar points out, but that they have distinct advantages of low cost production compared to Alberta.
“In the oil sands sector, whether it’s mining or SAGD, you’re looking at different economics than the Middle East, Northern Africa, or even deep sea (drilling),” he says. “There, they drill holes and the oil flows for years. Our cost structure and carbon footprint are different. Not only do they create a cost disadvantage but the oil sands production process becomes villainized by the perception that the oil is ‘dirty.’”
So, how will the operator of the future approach these challenges? Hakimattar and his colleagues at ReVisionz believe it means applying many of the newer technologies, such as: Digital Twin, advanced analytics, artificial intelligence, smart sensors, augmented reality, automation and robotic process automation to enable new ways of doing things.
“In the area of asset information, for example,” says Hakimattar, “owner/operators typically access multiple systems or tools across their organizations to retrieve the necessary information needed to execute their work. In many cases the information across these systems do not provide a complete picture. They’re inaccurate because they’re not up-to-date or they’re contradictory. Accessing multiple independent systems with incomplete information has a negative impact on operational excellence, i.e.: workforce inefficiencies, increased maintenance costs, increase in facility downtime, and potential safety risks.”
And while, companies have been digitalizing over the last three decades with process automation, enterprise resource planning and document management, what is changing today is the advent of the cloud technologies and the Internet of Things, together with technologies such as artificial intelligence, and advanced analytics to predict the next equipment failure, smart assets that broadcast their locations, operating state and condition. The Operator of the Future and Digital Twin will see the convergence of Information Technology (IT), Operating Technology (OT), and Engineering Technology (ET) integrating people, processes, data, and technology. The use of technologies such as the Digital Twin to access all asset data from within a 3D model rather than having to go to five to 10 different systems to view it, will be new to the industry.
What is the “Digital Twin?” According to Hakimattar, Digital Twin is a virtual replication of an as-planned, as-built, and as-maintained physical product. It contains all the information generated to design, procure and construct the asset as well as performance data, maintenance history and costs, and equipment information such as model number, part number, spare parts, safety limits and manuals and procedures.
Some of its benefits include:
- Integrated view of the asset, to any user, at any point in time over lifecycle of the asset;
- Identify patterns in data to predict the next asset failure;
- Optimize work planning;
- Virtual Turnaround simulation;
- Augmented reality;
- Support Remote Operations & Monitoring;
- Early discovery of performance deficiencies;
- Foster cross departmental collaboration; and
Significantly, Hakimattar stresses, the Digital Twin technology model is a transformational concept.
“Companies are not going to be able to achieve this transformation overnight,” he says. “They’ll have to undergo a ‘Digital Journey’ by taking a progressive approach to fully realize the benefits of the digital technologies such as the Digital Twin. The timeline will vary for each operating company based on maturity, culture, and ability to institute change within its organization. It must be recognized that along the journey there will be incremental and significant benefits realized, so do not under estimate the value of the journey.”
The roadmap on that journey begins with the decision of where to begin the transformation. Does the company look at the facilities, at the supply chain or should it consider automating its processes in finances? Should the operators go with more clones or use robots for inspections or should they go with the Digital Twin? At this stage, the funds are likely still limited so prioritization is key.
Kelly Kinghorn, who leads ReVisionz’s Owner Design Tool/Engineering Information Hosting Practice, explains that ReVisionz works with owners to define, deliver and implement Engineering and Asset Information Management (AIM) programs.
“Our vision is to lead our clients in their transformational journey towards digital twins of their physical assets to significantly improve safety, increase production, and lower operating costs,” says Kinghorn.
“ReVisionz has a proven methodology providing consulting to owners, understanding their current state of AIM maturity, then working with stakeholders to define an AIM strategy, roadmap, business case and execution plan to achieve their desired state of Operational Excellence,” she continues, adding achieving a digital twin looks holistically at standards, processes, people/culture, content, and technology.
“For some owners, that mind shift to a digital twin can be difficult, however owners need to understand to achieve a digital twin,” says Kinghorn. “It is a journey, and each owner will achieve various levels of maturity over time.”