When profits are squeezed, it might be time to look at a new way of operating. Energy companies are cutting the more obvious costs where they can, but according to technology experts inefficiencies seemingly built in to systems can be eliminated by integrating data-sharing.
Oil and gas companies “must avoid the temptation just to cut costs in hopes of surviving today’s price crunch,” Cisco Consulting Services said in a recent report on digital transformation of the energy industry. “Instead, they must view the current scenario as an opportunity to make technological and business process innovations that will drive competitive advantage now and in the future.”
“Oil prices are decreasing with no indication they will pass $100 per barrel in the near future,” Franco Castaldini, Bit Stew Systems’ vice president of marketing, told Hart Energy. “It’s time for companies to weave technology innovation into their operations to maximize profits in a demand-constrained and oversupplied environment,” he said.
Operational savings can be found within the Internet of Things (IoT), in which data is shared over a network without any human interaction required. Bit Stew Systems facilitates the IoT with its “pipeline integrity solution,” Castaldini said.
Bit Stew’s technology “provides a holistic and contextual view of pipeline performance by aggregating data from sensors, SCADA (Supervisory Control and Data Acquisition) systems and core operational systems like geographic information systems (GIS). This is incredibly valuable for businesses, as asset failure can come from pipeline leaks or from damage attributed to events like fires or earthquakes.”
Most energy companies have already begun collecting operations data of some sort as SCADA and GIS become more widely utilized. Complex gathering and processing systems generate an extraordinary amount of data, leaving midstream companies to face a new challenge: how to get the right data to the right place at the right moment to allow employees to act. That is where what Cisco called the “Internet of Everything” comes in.
“Most O&G firms already have extensive experience with the ‘things’ component of IoE, given the large number of sensors and other devices already deployed throughout their operations,” Cisco’s report said. “Now, O&G firms need to focus on the other three areas of IoE—data, people, and process—to maximize business and operational benefits—and position themselves for growth.”
One way companies can connect their already digitized “things” as part of a larger process that lets employees act on all that data is through technology like that offered by Bit Stew Systems, Castaldini said.
“These environments have diverse layers of software and hardware complexity with multiple vendors and legacy systems,” he said. “Our technology is able to translate those protocols, and adapt the data to a common model. That gives companies a great platform and foundation to deploy insightful analytics that maximize uptime and production.”
Insight into the data that hardware is detecting is crucial to preventing data fatigue, which can overwhelm human operators trying to make sense of the massive amount of information instruments pick up every day. Cisco ranked data integration as one of the biggest technology issues facing energy companies today.
“Oftentimes, there’s alarm fatigue. There’s difficulty in diagnosing between a communications or a process failure, and oftentimes pipeline operators have to rely on the equipment manufacturers to help them diagnose that,” Castaldini said. “By leveraging Software Defined Operations that simplifies complex data environments, oil and gas personnel now have a single ‘pane of glass’ with all of the relevant information needed to avoid asset failure and optimize the response to any potential failure.
“That, at the end of the day, rolls up into the ultimate value proposition of having a pipeline that continues to run, continues to flow, and enabling greater uptime and productivity,” he added.
Companies across the energy value chain stand to boost profits significantly by adopting practices consistent with the IoT, according to the Cisco report. A company with $50 billion in annual revenue could potentially increase annual profits before interest and tax by 11%, the report indicated. Most of those savings, equal to about 72%, result from reduced costs through asset monitoring, better risk management and data management.
Operators aren’t yet at what Castaldini called “the Utopian state of software-defined operations.” As with most newer technologies, energy industry leaders like to see proof that it can deliver on its promises, and as big players like General Electric Co. (NYSE: GE) implement software-defined operations, management from other companies is starting to take notice.
“The industry is strategically evaluating these types of solutions to derive the short- and long-term business value in real-world applications,” he said. As that value becomes more apparent, it is likely that technology adoption will “accelerate exponentially in the coming years.”
“Soon you’ll start to see greater efficiency in the traditional oil and gas operating model associated with maintaining its pipeline, infrastructure and assets. There’s quite a bit of operating costs associated with keeping the infrastructure running and flowing reliably.”
Contact the author, Caryn Livingston, at clivingston@hartenergy.com.
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