Why digitalisation matters for oil and gas

Twenty years from now, the oil and gas sector will look quite different than it does today. There’s just too much happening now within the sector and too much just over the horizon.

by Jörgen Larsson


Leading the charge in this change is digitalisation -- from ‘Industry 4.0’ to ‘Oil & Gas 4.0’. Of course, change is also coming through shifting geographic and technical sources (think unconventional shale). The demand side of the equation also is evolving, with most demand growth coming from China, India and other emerging economies, while the extent that we’ll be using renewables ten or 20 years from now remains a huge question.


Even oil companies are beginning to look different. The UAE’s Abu Dhabi National Oil Company (ADNOC) is a perfect example. As announced last fall by its CEO, Dr. Sultan Ahmed Al Jaber, the company is transforming itself from a traditional national oil company (NOC) into a dynamic, innovative international energy company, capable of creating new revenue streams and maximising profit in the era of Oil and Gas 4.0.

They are also putting numbers to that vision: increasing oil production capacity, from about 3 million barrels per day (mbpd) today to 4 mbpd by 2020 and 5 mbpd by 2030, and perhaps even more dramatically, ultimately making the UAE a net exporter of natural gas.


Luckily, ADNOC not only has a vision, dynamic leadership, skilled employees and enabling national infrastructure, but also the opportunity to leverage digitalisation, as this technology continues to expand its ability to derive significant benefits for the industry.

Focus on costs, performance 

Digitalisation’s rise in our industry was helped along by the dramatic fall in oil prices that began in 2014 and seem to have stabilised at a “lower-for-longer” price. This has forced operators to look closely at costs and performance, and to become finely attuned to opportunities to reduce operating and capital costs, drive efficiencies, and increase production.

The industry is increasingly seeing digitalisation as fundamental to a more sustainable way forward. It is particularly attractive to companies like ADNOC that are looking to derive added value from operations that span upstream, midstream and downstream, because digital can be applied across the energy value chain.


By using technologies such as digital twin; open, cloud-based internet of things (IoT) operating platforms, and big data analytics incorporated into powerful software, the oil and gas industry is beginning to achieve both incremental and step-change improvements to their operations. 


To get an idea of the magnitude, consider the following results we’ve achieved for our customers via Siemens Topside 4.0 concept: through the digital integration of topside equipment such as main rotating, electrical, automation and control equipment we achieved 27 per cent lower capital costs and 18 per cent lower operating costs, as well as reducing cycle times of 3 to 9 months, while for a LNG (liquified natural gas) plant, our solutions resulted in an efficiency 50 % greater than other options. These great achievements can only be realised when engaging in a digital journey during an early stage of project development.

A powerful twin

The digital twin, which is a virtual representation of a product, production process, or performance, can help manage costs and improve operations for operators -- from the concept and FEED stage, to design and build, to operations and maintenance. The digital twin in an oil and gas setting allows for a more efficient design phase, key to more efficient use of capital-intensive equipment.


During build, it enables virtual testing, training and commissioning, which means revenue generation can begin sooner. During operations, the digital twin allows for remote performance monitoring and predictive diagnostics. This not only means real-time adjustments to improve operations, but also the ability to predict maintenance requirements, thereby increasing uptime.

Apps for oil and gas 

Another tool increasingly used by the oil and gas industry are the open IoT operating platforms, such as Siemens’ MindSphere. These platforms enable wide-ranging connectivity across device and enterprise systems and equipment, industry applications, and advanced analytics. MindSphere is the platform on which digital twins can operate, and it allows for the creation of other powerful industrial internet of things applications. Capabilities begin with connecting and monitoring systems and equipment that allow operators to get key data from components and systems.


Building on this, applications – including those using artificial intelligence and blockchain – can analyze the data collected to better understand how these systems are operating and identify new ways to improve processes. Ultimately, this information and insight can lead to the development of customized applications that further drive operations and unlock the potential to completely transform the operation.

Securing OT

At the same time, cyber security must be embedded into these systems, given the risks created by connecting critical operational technology (OT) systems and assets to networks, whether or not they are internet connected. That is especially the case given that significant majorities of oil and gas companies are struggling to address these cyber risks across the oil and gas value chain.


This requires assessing risks and then securing their infrastructure and broader OT environment. It extends from the field and pipelines to control centers and processing plants to downstream petrochemicals, refining and beyond.


No matter how different the industry may look a decade or two from now, I am confident operators will maintain their focus on maximizing production, minimizing costs and optimizing operations. As digitalization continues to evolve and bring ever-more tools to the game, it will certainly be playing a central role in achieving these goals.





Jörgen Larsson is Sales Director, New Equipment Solutions, Middle East, GP Oil & Gas at Siemens.


This article was originially published on Pipeline Oil & Gas News

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