Oil and gas digital transformation is a hot topic. As an industry, we understand why we need to do it (86% of us understand the benefits at least moderately well, according to our recent survey) – which leaves the big question of how to do it. It all comes down to building your digital transformation ecosystem, the wider setting in which you're going to make things happen.
Digital transformation requires an ecosystem of partners, each an expert in their own area, collaborating with you and with each other. At the very least you will need:
- An industry/innovation consultant
- Change management expertise
- Technology partners (solution providers, system integrators, etc.)
If some of these capabilities already exist in your business, plug them into the project. If not, you can fill the gaps with external partnerships. Our experience suggests that very few companies have the up-to-date, deep expertise in-house that is required to undertake a wide-ranging digital transformation project.
Shell's approach to oil and gas digital transformation
Royal Dutch Shell is a good example of an oil and gas company that has taken the lead on digital transformation by building a strong network of partners.
When the outlook for oil and gas started to dim earlier this decade, Shell took action and started building a digital transformation ecosystem of strategic suppliers and partners to facilitate the transition to a data-centric (rather than document-centric) operating environment. With the price of oil in free fall, the company recognized the importance of digital technologies in managing costs during the development and execution of major capital projects.
"The core challenge is driving down cost inflation in design, construction and engineering. This won't be easy, but it's not impossible. Standardization and supply chain integration are key factors," said Shell CEO, Ben van Beurden.
"We're working to create an Integrated Engineering Environment (IEE). We expect key savings in design and engineering to come from the single-source availability of up-to-date design information… semi-automated data validation… and consistency checking across disciplines, locations and contractors."
Innovation on Shell Prelude
Another example is Shell's floating LNG behemoth, Prelude, which arrived at its destination offshore Western Australia early in 2017. As the world's largest floating offshore facility, Prelude will be used to open up new natural gas fields at sea – something that would not have been commercially viable prior to the launch of this vessel.
"We've taken the learnings from this and applied them to potential projects for the future," said van Beurden. "We now have a standardised design. And we can add different pre-designed topside modules and offloading systems, depending on the composition and location of the gas reservoir.
"Working with our strategic suppliers on topics like replication, standardisation and scope rationalisation, the Prelude project led to spin-offs like FLNG Lean."
Petronas' "step change" approach to oil and gas digital transformation
Malaysia's state energy company, Petronas, is also at the forefront of oil and gas digital innovation. The company has taken a "step change" or breakthrough approach to harnessing digital technology to boost efficiency, reliability, safety and commercial excellence, with a focus on experimentation and collaboration.
In the early years of this decade, Petronas recognized the importance of good, clean data and its role in improving operational efficiency, and implemented a project to ensure readiness. The benefits include asset integrity and process safety, improved maintenance management, cost reduction, increased production and decommissioning preparedness.
The first step was to collect laser scan data for its downstream assets, a major undertaking that took the company's Group Technical Solutions division more than five years. In 2015, laser scan work commenced on its offshore assets. The data was then migrated into Petronas Engineering Data Management System (P-EDMS), a web-based engineering design and data management system that leverages a suite of PPM's Intergraph Smart solutions.
The benefits of an integrated data management system
Petronas' P-EDMS provides a single platform to integrate and manage a range of engineering applications and solutions. It is customized for the company's applications and is fully configured to Petronas technical standards.
It gives all employees and contractors the ability to access and work on the same data, which can be accessed anywhere, anytime. Universal Management of Change (MoC) is a key benefit of the platform, Petronas' Mohd Nizam Mohd Nasir told the Digital Energy Journal conference.
"When we do any engineering design changes – for example, we replace a compressor – it is automatically updated into SAP. That is the beauty of it," he said. "We want to ensure efficient [data] handover from design from development to operation to maintenance."
Another benefit is minimizing the time employees spend searching for data. For example, when relying on paper drawings and documents to conduct an offshore inspection, it can take up to four weeks just to find the required information.
A dynamic information management system such as P-EDMS gives you access to the documents in "seconds," Nasir said, allowing engineers and other key personnel to focus on their core function, rather than searching for documents.
Corbins Electric's construction innovation challenge
Enterprise-wide digital transformation as part of a major change initiative has proved successful for Shell and Petronas. What about companies and contractors looking to drive digital change within a smaller scope – claiming incremental gains by digitalizing processes, for example?
Let's step outside the oil and gas industry and look at another sector facing similar innovation and productivity challenges – construction.
U.S.-based electrical contractor Corbins Electric strives to offer its clients state-of-the-art technologies and lean construction best practices, and is considered a leader in commercial and heavy industrial projects. However, Corbin's internal processes did not reflect the innovative solutions offered to clients, says business solutions manager J.D. Martin.
"Like many contractors, we were burdened by paperwork," said Martin. "In construction, our success is defined by our ability to complete a job with less hours than was used to bid it – yet we were requiring a significant amount of time from our field work force to fill out paperwork."
The Excel trap
Corbins Electric's team completed forms using Microsoft Excel on their laptops. "The problem with Excel is that laptops could be cumbersome to power on, launch the Microsoft suite products, connect the cellular air card, log in behind our firewall, and then finally send the email back to the office," said Martin.
Many of the forms were sent with incomplete or incorrect information. This caused a significant amount of rework for those needing the information residing in the forms.
SaaS… The ultimate innovation hack
As a quick hack to digitalize some of these processes, Corbins Electric implemented Catavolt – a secure rapid development platform that enables you to create connected mobile apps, in a week, ready for full deployment in 60 to 90 days.
The company has deployed more than 40 customized apps, mobilizing processes such as timesheets, tool tracking, accounting and material requisitions. It has also recorded 60 percent year-on-year revenue growth in recent years, which it attributes directly to of eliminating these types of paper-based processes.
"We immediately increased our speed of business," said Martin. "We are able to get relevant information, faster and more accurately. We are also able to drive the correct behaviors that support our core values, because we now have standard operating procedures with respect to nearly all field paperwork."
Rework also immediately decreased. "This means better efficiency with time, which translates to value-add actions, which provides a greater potential for customer satisfaction and profit earnings," said Martin.
Proving innovation can be affordable, easy and effective
The innovation process itself is arguably the most interesting part of the Corbins Electric story. Once the first app was built and the Catavolt infrastructure was in place, the company crowd-sourced productivity ideas from the workforce. Recognizing that many frontline employees have a wealth of ideas for making their day-to-day working lives easier, Corbins Electric's senior leadership team offered them the freedom and the structure to turn the best ideas into reality.
The company also engaged interns from local universities to generate concepts for new apps – after all, who understands digital processes better than the generation that has grown up with the technology?
The Corbins Electric approach is the perfect example of digital innovation approached incrementally, and yet no less effectively than enterprise-wide digital transformation.
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