This article, written by JPT Technology Editor Judy Feder, contains highlights of paper OTC 30794, “Digitalization Deployed: Lessons Learned From Early Adopters,” by John Nixon, Siemens, prepared for the 2020 Offshore Technology Conference, originally scheduled to be held in Houston, 4–7 May. The paper has not been peer reviewed. Copyright 2020 Offshore Technology Conference. Reproduced by permission.
With full-scale digital transformation of oil and gas an inevitability, the industry can benefit by examining the strategies of industries such as automotive, manufacturing, marine, and aerospace that have been early adopters. This paper discusses how digital technologies are being applied in other verticals and how they can be leveraged to optimize life-cycle performance, drive down costs, and decouple market volatility from profitability for offshore oil and gas facilities.
Barriers to Digital Adoption
Despite the recent dramatic growth in use of digital tools to harness the power of data, the industry as a whole has remained conservative in its pace of digital adoption. Most organizations continue to leverage technology in disaggregated fashion. This has resulted in an operating environment in which companies can capture incremental inefficiencies and cost savings on a local level but have been largely unable to cause any discernible effect on operating or business models.
Although the recent market downturn constrained capital budgets significantly, an ingrained risk-averse culture is also to blame. Other often-cited reasons for the industry’s reluctance to digitally transform include cost of downtime, cyber-security and data privacy, and limited human capital.
A single offshore oil and gas facility failure or plant trip can result in millions of dollars in production losses. Therefore, any solution that has the potential to affect a process or its safety negatively must be proved before being implemented. Throughout its history, the industry has taken a conservative approach when adopting new technologies, even those designed to prevent unplanned downtime. Although many current technologies promise increases of 1 to 2% in production efficiency, these gains become insignificant in the offshore industry if risk exists that deployment of the technology could in any way disrupt operations.
Cybersecurity and data privacy are perhaps the most-significant concerns related to adoption of digital solutions by the industry, and they are well-founded. Much of today’s offshore infrastructure was not designed with connectivity or the Internet of Things in mind. Digital capabilities have simply been bolted on.
In a recent survey of oil and gas executives, more than 60% of respondents said their organization’s industrial control systems’ protection and security were inadequate, and over two-thirds said they had experienced at least one cybersecurity attack in the previous year. Given this reality, it is no surprise that offshore operators have been reluctant to connect their critical assets. They are also cautious about sharing performance data with vendors and suppliers. This lack of collaboration and connectivity has inevitably slowed the pace of digital transformation, the extent to which it can be leveraged, and the value it can generate.
ESTIMATION OF BUSINESS VALUE AS AN ELEMENT OF FORMATION OF BUSINESS MODELS OF INDUSTRIAL ENTERPRISES AND AGRICULTURAL COMPLEX IN THE CONDITIONS OF DIGITALIZATION OF THE ECONOMY
