Thanks for listening to the EKT Interactive Oil and Gas Podcast Network.
In this episode, we welcome Tony Edwards to the podcast. Join us for this discussion on the digital oilfield, part of our Digital Oilfield podcast series.
Remember, our listeners get $400 off the registration price (use code EKT400) to the Upstream Intelligence Data Driven Production Conference. It’s happening in Houston on July 6-7.
About Tony Edwards
Tony is a recognized expert in the application of Digital Oilfield Technologies in the oil and gas industry.
He has more than 20 years’ experience in the oil and gas industry, in leading companies such as BP and BG.
His core discipline is in operations management, including 5 years offshore and 3 years as Operations Manager on major Oil and Gas projects.
In this episode of Drill Down, we discuss Tony’s background in the digital oilfield and current trends and opportunities in this growing space.
Digital Oilfield Podcast Series:
We put together this series of podcasts in conjunction with Upstream Intelligence to bring our listeners up to speed with the latest trends influencing the digital oilfield.
[1:00] Tony Edwards’ background – The field of the future
[2:45] Mining vs Upstream – comparison and commonalities
[3:45] What sparked an interest in the digital oilfield
[7:00] Breaking down silos – colocating multi-disciplinary teams
[9:10] Integrating teams and technology – impact on production platforms
[12:30] Onshore & Shale Digital Oilfield – from the low cost ecosystem model to a low cost / smart hybrid
[16:00] Last thoughts – Opportunity in greed-field operations to drop cost and CAPEX through digital oilfield implementations
Hi everyone. Welcome to the “Drill Down” with Marty Stetzer. This podcast is part of our EKTI, oil and gas learning network, and brought to you jointly today with Upstream Intelligence in the UK.
Upstream Intelligence is the foremost provider of business intelligence and analysis for the upstream oil and gas community. They’re devoted to providing unique industry insight to drive efficiencies, reduce cost, and maximize production capabilities.
Today our topic is data driven production. With an estimated global value of 31 billion dollars by 2020, the digital oilfield is the oil and gas industry’s hotbed of innovation, including big data analytics in the industrial internet of things, or IOT.
Today I’ll be speaking with Tony Edwards, an industry veteran. This is our first podcast with Tony, an expert in this field. We are really happy to have his input on this new and important part of the upstream business.
Thanks Marty. It’s great to be here.
As we start, can you give our listeners your background?
Yes. I joined BP as a young graduate in the late 1980’s and progressed on a pretty general career in oil and gas, mainly in petroleum and production engineering, some time in RND. Then I really ended up in operations management, and ended up working in North Sea, Southern North Sea, and as offshore as an OIM, and as an operations manager in Baku.
Then my career took a bit of a shift and in 2003 I was asked to join a new program that was called field of the future, which was BP’s version of digital oilfield, and so I was part of the original team that set up the entire concept inside BP on how we were going to use real time data and information to make forms improvement inside our upstream operations.
From there I moved to BG Group in 2006 and set up there a digital oilfield program from scratch, and I did that for three to four years.
Then in 2009 I joined Stepchange Global and decided to do this on the outside in a consultancy firm, and we’ve been advising oil and gas companies and indeed mining companies on how to implement digital oilfield and integrated operations around the globe.
Tony, that’s interesting. I didn’t realize in addition to the upstream side of the business, the mining folks are interested. Can you elaborate on that a little bit?
Yeah, we’ve seen that there’s an awful lot in common in oil and gas and mining in general. They’re both extractive industries, they’ve both got extended value chains in many cases, you know not kind of, an upstream or mine piece, some sort of delivery system, pipelines or rail, and then some sort of export business. If you look at it, their model is actually pretty close to some of our core operations like LNG.
They’ve also got a lot in similar in the fact that they often have siloed organization. They have all the same sort of organizational people challenges of getting people to do things a different way, so we find that a lot of what we learned in oil and gas is ported over pretty easily into mining sector.
We’ve done work with mining companies on iron ore mines in Australia, copper mines in Chile, and more recently on a brand new potash mine in Canada.
Tony again, thanks for being part of this effort. You mentioned earlier and I understand your primary focus is the organizational impact of some of these new technologies. What in your career or in your consulting side kind of sparked your interest in this piece of the puzzle?
Well I think if we dial back to the early days of digital oilfield and integrated operations when many of the big companies were kicking off with concept…. There was BP, Shell, Statoil, Conoco in Norway, and in the national oil companies in particular, Saudi Aramco.
We were all trying to understand what the dimensions were of this big new thing, where we can have real time data and information coming off of our assets, coming off our platforms, and it being available for use in the office, and available to experts in the office, and what were we going to do with it?
Of course the initial focus was very much around, “We need to get the data.” So, how do we capture the data, how do we store the data, how do we transmit the data. Of course one of the big breakthroughs was the advent of high bandwidth communications, particularly in areas like the North Sea where fiber was laid very early on.
So we could get that data, but then it was very much about, what do we do with the data? Initially the push was to get these IT data and information systems in place, and then we went through a phase of building rooms, collaborative rooms.
We worked out pretty quickly that you needed teams to look at the data, or analyze the data, and look at opportunities in that data, and then convey those to the guys in the field who were going to do something different.
Early on the focus was on the technology in the rooms, and we very quickly worked out that if you took the, “If we build it, they will come,” approach, they basically did.
We then switched this around to thinking about it as technology-enabled transformation, and how do you change the … How do you get the people on board. Literally say, a technician or an operator offshore or onshore… he’s been doing something the same for 20 years, how do you get them to do something different? Because now we’ve got data and information which can inform where they need to be at any one time.
We needed to look at the processes, so when you look at process work flow, they were generally geographically constrained around a platform or a site. Now we’re saying actually we can have people looking at the data, and the process could be done remote. So how does that change?
Then also the organizational alignment, how do we organize ourselves to take value from having this data and information? We quickly understood that just having the data and information was just not good enough. We needed to think of it in much broader terms, and certainly companies like BP, and Statoil, and others started thinking about this is a transformation program, or continuous program rather than a technology program.
Tony, you mentioned earlier the challenge of the silos, which in our consulting and in our training programs we’re still seeing. Was there any way that this helped break down some of the silos by having disciplines, look at problems, or different ways of even setting up the remote operation centers with multi disciplines? Did that help, breaking down the silo side?
Yes it did, and what we found as well is if you wanted to do something like production optimization; and you wanted to be able to optimize a molecule of oil and gas from the reservoir to an export point wherever that happened to be, and of course in gas that could be a very long value chain, in an offshore oil platform might be shorter. But whenever you looked at it, it spanned reservoir, petroleum, production engineering, facilities engineering, operations, pipelines, and maybe even commercial.
We found that once you started having this real time data and information, a traditional siloed organization that was meeting-based just wasn’t fast enough, wasn’t agile enough, so we started moving towards this idea of multi disciplined delivery teams.
So you would co-locate a production optimization … You would form a production optimization team, which was the co-location of representative from reservoir, petroleum, production, operations, facilities, pipeline, commercial in a room, and then they would work as a natural team to deliver the field optimization.
So that was an example. Another example would be around facilities, discipline, engineering, so instead of having mechanical, electrical, instrument automation all being separate, again we would co-locate representatives from each of those disciplines together in a room just to support the guys in the field in a non siloed, fully integrated way, if that makes sense.
It does. Were there impacts say, on the production platforms as well? You mentioned the remote operation centers, and we’ve seen examples of that in our visits to some major clients, but what about on the production facilities themselves? Were there some benefits there?
Absolutely. I think the one thing you haven’t got to forget about is what’s at the other end, if you know what I mean. It’s a bit like the idea of if you’re the only person in the world with the mobile telephone, well it’s actually not very useful.
What we’ve seen is that if you have a collaborative environment in your office, then very much you need to have the ability for your teams in the field to collaborate as well, so that could be either by mobile working devices, which are now becoming much more available. It was a difficult thing to implement 10 years ago although it was done in a few locations, or it was actually we need to mirror the fact that we’ve got a production optimization team in the office with some sort of team in the field. Typically we would then co-locate a production engineer and some of the production team in a room on the offshore platform, and we would have always-on video, always-on data and information exchange between the two.
We see this very much as an organizational alignment, so some of the dimensions that you can think about are integrating across the silos is one dimension, and you most often do that in the office, but you want to do it in the field as well if you can.
Also you’re integrating between the operational location, offshore platform or gas hub, land based operation, and your office, so you’re integrating between the field and your office. That’s one of the other big barriers. Of course there’s the big divide between sub surface and surface disciplines you want to integrate across there. The other one we see is a key dimension for integration in this approach is time.
So we advocate what we call a time slice organization, where we co-locate people around the time scale of the work that they do, so typically the guys in these collaborative in environments are doing short term support work, and they’re the point of focus for the guys in the field. The guys in the field always know who they got to go to, and the guys in the office, in the collaborative environment, they’re almost triaging the issues as they come in, and they’ve got complete asset awareness, or situational awareness of what’s going in the field at the same time.
It just streamlines all of those communication processes. The guys involved understand what’s going on, understand what the priorities for the day. The result of that is enhanced production, enhanced recovery – free from unplanned events, the better implementation of maintenance practices because you’re being supported remotely by your experts in the office.
There’s a whole bunch of value you can get once you put the ability to collaborate and share data in place between an operational site and an office location.
Tony, we’ve talked about offshore. Is there any analogy, or any operators using these same concepts of techniques in onshore? Especially in the shale plays that you’re familiar with, where we’re drilling hundreds of wells, and it’s more like a mechanical production operation than it is like a classic drill and complete operation. Are you seeing anyone using it in the onshore side of the business as well as the offshore?
Yeah, absolutely. We’re seeing a lot of effort in the onshore side, and we’ve done work with coal bed methane operators in Australia, for instance. The big coal bed methane to LNG assets in Queensland, of which there are three, all of them have gone down this route, and two of them have actually remotely controlling all of their wells and gas facilities from the center of Brisbane, would you believe. They pushed this concept really quite a long way and we’ve been involved in the forefront of this with them in Australia.
We’ve seen certainly SAGD operations in the tar sands are really beginning to embrace this in Canada. In terms of shale, oil and shale gas, typically that model has been what I would call a low cost ecosystem model, so it runs very well because one, it’s been low cost, and two, the ecosystem of companies are there to deliver this in a very efficient manner.
But we are beginning to see the emergence of what I would call a low cost, smart hybrid, where I think those operators are beginning to see just being low cost, especially in the current environment, it runs out of steam in terms of giving you the value you need, and you now need to go more towards a smart approach.
We’ve been working with one operator in Pennsylvania, and typically the traditional mode of operation would be to send an operator to look at a well every day, and in fact the local legislation says you have to visit this well every week to look for leaks, would you believe. The whole idea of sending a person into a gas production system to look for leaks is not something I would advocate at all. We should have instrumentation to do that sort of thing. But we’re working with this operator, and we’re pushing it, we’re trying to push it to the point where we visit the well once every three months.
That is going to mean that we have to challenge the legislation, but I think we can put the senses and the monitoring, the surveillance, in real time in place to make that case pretty easily.
So yes, we are beginning to see shale gas, shale oil do this and indeed a number of the kind of independent land based operators, and we’re working with a few at the moment. I think it has been somewhat slower uptake in that area just because the model they’ve had, it has been different to what you might think of as a big offshore oil operation, or even a big land-based complex operation.
Tony, this is terrific. I know you and I could keep this up all, but I think the insights that you’ve given our listeners on the impacts of these new systems on organization, minimum manning, and production efficiencies, and especially the relationship between mainstream oil and gas and mining, and coal bed methane, which was completely not in my radar, will be extremely valuable.
Is there anything that you would like to say to wrap up to our folks, if they want to seek more information on these topics?
Yes. Just one thing I would say is that historically we’ve been doing a lot of work in brownfield operations, but there’s absolute huge opportunity in greenfields. If you take what we’ve learned in brownfields and you translate that into green- fields, we absolutely believe that we can drop operational costs significantly, and by significantly I mean 50 to 70 or 80 percent.
We can also reduce capex as well, and we’ve done a number of studies on new greenfield projects where we’ve been working with this idea of radical minimum manning, and trying to inject that into the project concept up stream. So I think that’s going to be the next big thing in terms of where we go, so more automation, less manning, more safer operations because we have less people, so that’s fundamentally where I think we’re going to be heading.
If people are interested in hearing more about this, or seeing more about this please go to our website. I work for Stepchange Global, which is an independent oil and gas consultancy specializing in digital oilfield and integrated operations, and our website is www.stepchangeglobal.com.
I’ll be at the conference in a couple of weeks time, it would be great to see people there, so if you want to have a chat on anything I’ve been talking about please don’t hesitate to get in touch.
Thanks again Tony, I look forward to meeting you when you’re in Houston, and folks who would like to learn more about the basics of the important oil and gas industry, be sure to check out our free Oil 101 series at www.ektinteractive.com.
Thanks everyone for listening.