Welcome to the digital industrial future
“The Graduate” was one of the iconic films of the late 1960s. Dustin Hoffman played a recent, overwhelmed college graduate barraged with career and life advice from his parents’ unenlightened friends. In one scene, one of the guests tells him, “I want to say one word to you... plastics.” A remake of the film today might feature a young petroleum engineer, and I am sure the neighbor would say, “digital.”
Trying to navigate today’s uncertain oil and gas market cycles is like swimming upstream against a strong current. In a lower-for-longer and cost-constrained environment, old habits of focusing on increasing production, and forging forward into new geographies and reservoirs, won’t sustain us. After over 100 years, and despite great advancements in technology, average oil recovery is only 35%, and downtime is stuck at 13%. On top of this, it is estimated that half of the current upstream workforce will retire in the next five to 10 years.
What will determine our future and differentiate the winners from the “also-rans” is a fundamental change, not in the work itself, but in the way that we work. “Digital” and “industrial” are adjectives. Digital Industrial will define our industry, and the way that we work, from this point forward.
Digital Industrial describes industries transformed by software-defined machines and solutions that are connected, responsive and predictive. Digital Industrial is about technology, software, equipment, manufacturing, and ways of engaging with customers, colleagues and vendors. The key to a successful digital industrial journey is alignment and common vision about where the business needs to go.
Digital transformation has taken hold in most industries. Industrial activity is changing rapidly. The internet of things (IoT) is a reality. Modern Digital Industrial tools make high-frequency measurements and computations on site and in the cloud. Purpose-built industrial IoT platforms like GE’s PREDIX and others are changing how we design, build and operate factories, equipment and homes.
The oil and gas business lags in these applications. Today, the data we collect from upstream operations is typically used only for issue detection and control, not for optimizing the performance of the operation and the assets. In fact, 90% to 97% of captured data are siloed and never used. Our accomplishments, so far, for “intelligent wells” and “smart fields” have not fully captured potential savings, and have been applied primarily where improving run time or avoiding interventions will justify costs. Big data analytics have been applied to a few problems, but rarely with the level of sophistication that is now available.
Digital Industrial has been described as using digital technologies to transform business models in manufacturing. The oil and gas industry is based on manufacturing—from the equipment and facilities that are used to extract, produce, transport and process hydrocarbons, to the processes themselves. Real benefits of the digital industrial transformation will come when the vast amounts of data being measured are used not just for identifying exceptions to operating parameters, but for big-data, value-added results. This will lead to reduced capital expenditures and downtime; lower operating costs; improved health, safety and environmental performance; extended asset life; and higher production and recovery factors. BHGE estimates that a digital industrial business model will bring productivity gains of $8.6 trillion for companies in the oil and gas sector during the next decade—more than two times the future value of the consumer internet, alone.
A requirement, not a luxury. With projections like this, it’s easy to see that, for our industry and the companies that comprise it to remain sustainable, digital transformation is no longer a nice-to-have; it’s a business imperative. That transformation is uniquely challenging. It touches every function and business unit. And, it demands rapid development of new skills and investments that are very different from business as usual.
Today’s and tomorrow’s petroleum engineers need to be as knowledgeable and focused on digital as they are on the conventional basics of engineering. While much of the current workforce nears retirement, new job roles are emerging—digital, mechanical jobs that ask engineers to blend traditional engineering training with mastery of the latest computing techniques. Education for engineers, and particularly for petroleum engineers, needs to be interdisciplinary. As a student, I never heard of “supply chain” issues and only broadly of project management. Interdisciplinary petroleum engineering education should expose students early, and often, to these concepts in a meaningful way. Similarly, petroleum engineers need to have more than a passing acquaintance with nanomaterials and materials science broadly, fiber optics, big data analytics and Digital Industrial approaches to the modern oil industry.
Companies have a key role to play in preparing and training—or re-training—their engineers for a Digital Industrial future. Virtual reality, robotics, high-performance computing and artificial intelligence are extending the range of tasks that machines can do better than humans. But there remain huge opportunities in spaces where humans excel: creativity, entrepreneurship and interpersonal capabilities. Employers need to nurture these capabilities in their employees, just as they do product development, research, and technical problem-solving. At the same time, they need to cultivate, train, build and retain the digital industrial workforce of the future. This movement will open the door to entirely new career paths to develop, manage and maintain new digital solutions, as well as analyze and apply data from them. From software engineering to drone avionics and 3D printing design, the future the oil and gas workforce will be as dynamic and multi-dimensional as the technology driving it.
Going forward, company and industry leaders must change the way we think and behave, aligning on a common vision of digital as a way of doing business that creates value, not as a channel that drives activities. By spearheading STEM and university partnerships and providing on-the-job education programs, we can develop the talent we will need, short- and long-term. We also will be able to incubate local talent to develop countries that are growth markets for our industry. The opportunities exist, but if we don’t leverage them now, we may lose them, currently and in the future. We are past the waiting game. Only when information is shared and accessible in the right ways, across enterprise and ecosystem, will the digital transformation—needed to sustain our industry—flourish.
