The oil and gas industry have been severely impacted due to the current COVID-19 crisis. On April 20, 2020 the oil price crashed to negative $36 per barrel. Although this was only for the WTI’s May futures owing to supply glut at Cushing. But the entire world took notice of tough times ahead for the industry. Plummeting demand for oil products (petrol, diesel, ATF, etc.) has put tremendous pressure on the industry, leading to well shut-ins to curb production.
This is in no way the end of this mega-industry. The world will continue to need oil as normalcy returns to our lives, but the landscape of the oil and gas industry will change. At the end of it, we will see some companies filing bankruptcies and stronger companies taking this opportunity to buy cheap.
The current crisis will clearly differentiate the leaders from others. Leaders will be the companies with higher production and operational efficiencies, better cost controls, and low wastage. While companies experiment with new technologies to become more efficient, the immediate focus should shift toward an untapped pool of efficiency gains in the existing landscape. The next wave of gains in production efficiency will come from IT-OT convergence.
The role of OT and IT in an upstream organization
Upstream oil and gas have a wide OT landscape, responsible for running the core operational services of an upstream company. From control systems used in drilling to systems managing production operations (compressors, separators, flow meters, valves, motors, and SCADA, etc.) all are examples of OT systems in an upstream organization. OT stores and process core operations data related to the performance of all assets in an oil field.
Like other large, complex organizations, upstream companies have a huge inventory of IT systems covering enterprise processes. Systems responsible for enterprise data (corporate planning, finance, and procurement), storage, computing, project management, maintenance planning, and supply chain are considered part of IT systems in an organization.
Historically, for most of the players in the oil and gas industry, the two areas have been complete silos. Primarily because there was very less common ground. Technically, OT manages machines, is more hardware oriented, and reliability/availability focused, whereas IT is more business and software oriented and focused on data security. Also, both technologies were initially built on different technical architectures. In an organization, OT usually rolls up to COO whereas IT rolls up to CIO. At last, the end-user group of both technologies had little in common. The OT user group is more mechanics and engineering focused and IT user group is predominantly about information systems. All these differences led to the creation of different data silos and hence any value discovery due to correlation between these two data sets was lost.
Why IT-OT convergence is important
With the rise in adoption of cloud, IoT and machine learning, the distance between OT and IT has been decreasing continuously. The group responsible for managing OT wants to apply IT developed data management fundamentals to real-life mechanics. IT and OT are rapidly converging based on the ability to capture data at a machine level using sensors, applying advanced IT based data management practices to process data, and use ML algorithms to derive insights.
Figure 1: IT-OT convergence with collaborative operations platform
Consider taking decisions with only half the information available and driving your organization based on these decisions. The IT-OT convergence in oil and gas is in reality a convergence or a unity of different and diverse data sets currently available in the OT and IT data silos. Combining your operational insights with business insights to take informed decisions across the enterprise is the key value proposition of IT-OT convergence. Companies must integrate data from their sensors, SCADA systems, and DCS systems with structured and unstructured data from their enterprise systems to unlock efficiency gains leading to business benefits like increase in production, reduction of deferment, and accurate production planning inter alia.
The way forward with collaborative operations platform
The way forward is adopting the data centric approach. Both technologies will continue to work on different platforms. So, we must build a wrapper around OT and IT, to bring the two data sets together for analysis and driving insights. The wrapper could be a data platform and a collaboration tool enabling different functions to work together. It could be cloud based or on premise depending on the business case and company’s maturity with cloud technologies. Though cloud does have an advantageous position in terms of scalability and analytics capabilities.
Figure 2: HCL’s smart integrated well operations
A good start could be a collaborative operations platform that enables the production operator to have a 360 degree view of a production well. It will collate all the data related to the well such as production and equipment data from the equipment installed on the well and correlate these data sets for anomaly detection and root cause analysis. The platform will be able to also integrate this analysis with enterprise data for maintenance planning or creating a business case for well workovers.
An oil or gas well becomes a central object and data associated with it, OT or IT, is correlated to form actionable insights. The platform, based on intelligent in-built business rules, can highlight non-performing wells in the field. The operator can then look at the production data, as well as performance of a pump installed on the well. Based on the analysis, the operator will be able to create a work order for maintenance and track completion.
Challenges in achieving OT-IT convergence
There are a few challenges on an organization’s journey toward OT-IT convergence.
- The primary challenge is how to start on this journey. The best way is to start small and scale fast. It is important to identify use cases with clear and measurable business benefits. Initial use cases should have minimum integration and collaboration points. The aim is to create a minimum viable product (MVP) and then add functionalities on it in subsequent iterations. You can start with collation and analytics on only OT data. For example, well performance, then integrating it with enterprise data based on the use cases. Most enterprises fail to scale such initiatives. An agile approach toward creating an MVP and then enriching it with case-based functionalities is the right way to proceed.
- The other challenge is data standardization. The collaborative platform should support industry data standards such as PRODML, PPDM, OPC UA, and ISO 14224. This helps in future integration with different systems, making the data mapping exercise easy.
- Last but not the least is management support and change management. Such initiatives should be driven top-down with visible management support. Also, more often these initiatives will lead to new roles, responsibilities, and dotted line reporting etc. Process alignment and technology implementation is incomplete without change management.
HCL’s Smart Integrated Operations Center (SIOC) is an industry proven platform, empowered to intelligently handle the IoT journey of the operational services provided on the front of the IT and OT dual stack. The platform offers unified view, improves operational efficiency, and transforms user experience. With our deep experience of bringing value to our clients in the IoT and engineering space, HCL is well positioned to help oil and gas companies on their IT-OT convergence journey.