The reality of lower oil and gas prices is driving energy companies to operate differently. The lower price per barrel is squeezing profitability and pushing companies to contain costs, increase reliability, and respond quickly to revenue opportunities. Some are reducing workforce to decrease costs. Others are running full bore to protect market share. Industry-wide, they are focused on getting more life and production out of existing investments and infrastructure. They’re turning toward operations related cash flow improvements with quick payback, rather than capital projects with longer-term returns on investment.
Given the challenges they’re facing, how can oil and gas companies achieve top quartile performance? Simply focusing on efficiency improvements won’t help them realize the improvements needed in a $40/barrel market. To remain competitive, companies need innovative approaches to reduce availability losses, maximize capital efficiency and improve personnel effectiveness. They will need to leverage technology to arm personnel with insight for faster, better decision making to reduce operating costs and maximize production.
Leveraging existing investments in automation and plant networking, companies can achieve those outcomes through Integrated Operations (iOps) and iOps Command Centers. Using the existing control room and control system, a company can develop a cross-discipline team, optimize workflows, and add KPI dashboards and analytic packages to the existing operations model, attaining performance gains, without a large capital investment.
Integrated Operations (iOps)
As the Center for Integrated Operations in the Petroleum Industry describes it, iOps is the intentional integration of people, work processes, and information technology to make smarter, faster decisions. It’s enabled by access to real-time information, collaborative technology and integration of expertise across disciples, organizations and geographic locations. The approach helps companies reduce risks to life, plant and environment, increase uptime, maintain a competitive advantage, and make proactive business decisions.
iOps Command Center
A key aspect of iOps is the command center. In an iOps Command Center, a cross-functional team leverages new ways of working together to accomplish process operations, production, maintenance, and business activities.
The iOps Command Center team relies on Situational Awareness Graphics to display data from multiple sources in the enterprise, such as maintenance applications, historians, production and inventory applications and the process control system. At a glance, the team can get a high-level overview of their domain of control or responsibility and determine the state of the process in just a few seconds.
The cross-functional team directly impacts profitability by using Situational Awareness Graphics and workflows designed to optimize tasks and integrate data from process systems into the decision-making process. By aligning people and capital assets, a company can develop a quicker, coordinated response to a business event, ultimately leading to better business decisions and increased profitability.
How can Integrated Operations and an iOps Command Center help?
Remote operations and remote monitoring
Oil and gas companies have operations that spread across wide geographic areas with facilities in “4D environments” – dull, dirty, distant, and dangerous. Using remote operations and changing workflows to control the process from outside the process facilities, companies can reduce cost and increase safety by minimizing the amount of time personnel have to spend in those locations. They can also save the cost and safety risk of transporting people to and from those locations by minimizing unnecessary trips. Transportation related incidents are one of the top risks in the oil and gas industry.
For example, a company operating in Alberta that locates personnel at a centralized iOps Command Center in Calgary, rather than locating them in the Artic, could reduce expenses by as much as $200,000 per person. Centralizing operations in a more desirable location also yields access to a larger pool of potential employees, providing more opportunity to find the right person for the job. By centralizing experts and changing the workflows, companies can leverage their knowledge across multiple locations, quickly and without travel.
Integrated, centralized maintenance
In the current environment, oil and gas companies want to produce as much they can while at the same time decreasing their operating costs. Implementing an integrated, centralized, predictive maintenance approach using predictive intelligence technologies can cut an annual maintenance budget by as much as 50%. By integrating maintenance applications with production work processes, personnel can eliminate unnecessary maintenance activity and production upsets that may result in a shutdown. Instead, they can use health and performance data to diagnose issues and integrate the maintenance schedule with the production schedule. The result is an optimized maintenance spend that minimizes impact to production.
Remote condition monitoring of valves, rotating equipment, and other critical assets can enable predictive maintenance in support of programs to improve process reliability. Companies with top quartile reliability performance will have an average process availability of 97.6% and they will spend on average 3.5 times less per year on maintenance than lower quartile performers. This helps to improve profitability and business integrity in the following ways:
- Cost savings on expertise to perform condition monitoring analysis
- Increased personnel safety due to fewer unnecessary trips to the field
- Increased availability resulting in increased production and less downtime
- Increased process safety due to reduced transient operations
- Lower maintenance costs due to a predictive maintenance culture
- Reduction in spare parts inventory
Diagnostics embedded in a remote pump can warn personnel of deteriorating conditions. Working together, the reliability and production team can analyze asset health conditions and make decisions quickly to prevent a catastrophic problem or minimize impact to production. For an operation with a cost of $40-$50 per barrel, saving four days of downtime as a result of a condition based predictive maintenance program could result in $800,000 per unplanned shutdown assuming $50 per barrel X 4,000 BPD X 4 days of down time.
Most companies are not fully leveraging the capability of the technology they already have. Some of it is sitting on the shelf. Other companies are monitoring assets but they haven’t designed their workflows to analyze and respond to that data. One of the most powerful elements of iOps Command Centers is in the redesign of workflows, processes and organizational structure to drive better decision-making.
Traditionally, operations, maintenance, logistics, safety, quality, and production organizations work independently in vertical silos. The breakdown of those silos, with new workflows and organizational structures, improves a company’s business agility when responding to a business event – whether it be a process upset, product release, weather, logistics changes, or changes in the reservoir or a market opportunity.
Engineering support via collaboration is readily supplied to a facility anywhere in the world directly to and from an iOps Command Center, saving time and money. Remote monitoring and diagnostics give experts the ability to solve problems from wherever they may be located by connecting to rotating equipment and field devices such as transmitters, analyzers, flow meters and valves.
Smaller to mid-size companies can benefit from collaboration with third party experts. For example, a company with insufficient personnel and expertise to perform necessary reliability monitoring, planning and execution can engage third party experts, from anywhere in the world to monitor their assets 24 hours a day, 7 days a week and provide advanced warning of problems. The company saves money by preventing unplanned shutdowns without the expense of additional personnel.
Production Planning & Optimization
Integrated production planning and optimization also helps companies increase production. One company analyzed its planning process and factors related to taking a well out of service for work over. Before integrating production planning, the company looked at its production plan, well maintenance schedule, personnel availability, parts availability, and well site availability independently. As a result, activities got out of sync which caused waste and inefficiency. For instance, the people and parts were at a well site to perform a work over on a well but were unable to complete the work because the rig truck was unable to get to the site. When the company implemented integrated production planning, equipment, people and parts all showed up at the right time to perform the service. The company decreased the number of days the well was out of service from 46 days to 2 days, increasing revenue close to $10 million.
Validated, timely data enables better cost control, financials and enterprise planning. An energy trader identifies that the spot market is high. He knows that another tanker full of LNG would mean $150 million in revenue. In minutes, the team can indicate organizational readiness, maintenance readiness, the production capacity, logistics transport availability and confidently make a decision about the contract.
In an iOps Command Center environment that includes energy traders or brokers, integrated decision-making can increase profit. The trader uses information to take advantage of market fluctuations to obtain the highest profit available for the company. In order for the trader to do this, he needs validated and timely information from operations, maintenance and production.
Enterprise performance management, operational risk management, and even production accounting solutions yield more accurate results with validated data from process systems integrated with the business systems.
Analytic graphics with KPI’s are also included in iOps Command Centers, measuring business unit performance and providing feedback and guidance to the team to determine what action is the most profitable to the business.
What’s the first step?
At a time when companies are moving away from capital investment, iOps and an iOps Command Center may seem like a stretch. But it doesn’t have to be. The first step is to make a small investment in assessing your current operational practices against your business goals. The assessment may reveal that you have existing technology and infrastructure that is being underutilized. You may uncover opportunities for new organizational structures, coordinated workflows, or tools to help personnel analyze data and enable better decision-making. Without making a substantial investment and by rethinking the way your personnel, workflows, and technology work together, you can see substantial impact to your company’s profitability and achieve top quartile performance.
From Jim: You can connect and interact with other integrated operations experts in the Operate & Maintain group in the Emerson Exchange 365 community.
In addition, if you’ll be in Houston for the May 2-5, 2016 Offshore Technology Conference (OTC), visit our iOps experts at booth number 5817. Register to receive a complementary OTC day pass for more on this and other oil and gas solutions.