Future innovations to be spurred by collaborative value generation
There is broad consensus in the oil and gas sector that we have to cope with a “lower-for-longer” reality, re-confirmed in IEA’s September 2016 Oil Market Report. But an opportunity comes with the challenge. As an industry known for being adverse to change, there is now a real incentive to re-think our innovation and technology development approach in terms of collaborative value generation. Having more dialogue among the industry about what systems and equipment are actually required to do and deliver, what risks they need to tackle, and as a result make our people’s work simpler, could not only drive competitiveness and make our industry safer.
This is very different from how we have developed technologies and equipment in the past. We certainly can be proud of collective successes in taking on engineering challenges that are un-matched—from moving the world’s heaviest objects, operating in hurricane-prone deep water, and creating economic production from impermeable shale, to measuring back-scattered gamma rays 20,000 ft underground. Many of the techniques and practices have evolved, often incrementally, some through trial and error. But many have grown in splendid isolation, or were developed simply because they can be, and then are left looking for the application that gives them value.
New methods. Work done by Shell in the last four years has given me the opportunity to reflect on business paradigms and the way we operate. As part of our work on automating directional drilling, we brought our control and automation colleagues from downstream to the rig. Although they liked the challenge of downhole control, they asked us, after a few months on the rig, why we didn’t ask them to automate the BOP testing. Their logic was sound; it’s a routine task, it was on surface, the equipment to do so was available, and compared to the downhole problem, it was easier to control. It is routine in process plants to automate this kind of testing.
At the time, I felt a sense of irritation and short-sightedness for not looking at the problem from an industrial control point of view. But it is a widespread phenomenon. When I visit a rig manufacturer and admire the high-tech pipe handling equipment, the ability to walk, etc., I now ask the same question: Why is the BOP test not automatic? The answer is often that it is someone else’s problem—the supplier, operator or drilling contractor.
Once you start down the path of drilling as a factory, you begin to look at equipment differently. Typically, an offshore cementing unit spends more time pressure testing than pumping cement—is it the most efficient system we could choose to pressure test? A top drive can spend as little as 15% of its time drilling—is it optimized for the pipe handling, completion and connection-making that it spends most of the time doing? Shell makes over one million drill pipe connections per annum, yet we run it as a manually controlled process with wide performance variations. Even small process improvement efficiencies in this space add up to considerable savings.
Complexity. The world becomes more complex and keeps doing so, driven by vast amounts of data and global connectivity. We see this complexity in the oil business. Our drive to increase safety and robustness in our systems has often led to increasing levels of procedures, rules and paperwork, driving our work site supervisors behind their PCs. One successful approach that Shell has used, along with others, is to create simplified sets of life-saving rules that get back to the critical elements. Another approach is to look at how we can use technology to provide only the information needed at the moment to our staff—customized work instructions with historical data on HSE and operational issues.
The human factor. History has led us to take a very engineering-centered approach to human failings—often writing more procedures after an incident, rather than making the work more intuitive for the human in the loop. I sat through a review of an expensive well failure. We needed the driller to sit and watch the pump pressure for around 40 min., and then he had a 20-to-30-sec window to switch the pumps off, as a ball landed. An interruption at the critical moment caused the driller to fail to turn off the pumps. Only one person reviewing the incident wondered if we were not setting the individual up for a failure as the system was not robust enough to cope with an interruption or concentration lapse.
Human-centered design is well-established in driving interactions to become human-friendly and intuitive. If you look at rig equipment status panels, you will see examples where red and green coloring may both indicate a safe state and an unsafe state, or where important data can’t be read at a glance but require reading glasses; we could do a lot in this space.
Ideally, operators would clearly communicate their equipment functionality and risk tolerance to suppliers. They would then make small technical compromises and buy standard equipment. The reality of this is much more complex. Opinion engineering, i.e. requirements that may never be needed in reality, creep into functionality. Optimization requirements—those that drive small change away from standard—drive up manufacturing risk; a small increase in a part’s internal diameter is missed by a sub-supplier, as it was non-routine, leading to expensive well remediation.
Systems engineering. One defense is to use systems engineering, which attempts to capture requirements rigorously. The system engineering process can assess the current state of operations, determine potential opportunities for improved value, and define requirements for technical capabilities, to solve these challenges. The system design is then developed to meet these requirements and tested to demonstrate that it provides the value proposed. The most powerful effect of understanding the system needs is that it forces a conversation among those involved. It creates collaboration by stealth.
The low oil price has caused Shell to extend its historical drilling-the-limit methodology focus, from not just the well but to supporting operations. Using lean techniques for delivery of rig equipment, and reducing double-handling during equipment inspection, has led to material reductions in logistical costs. The next challenge is having a collaborative dialogue with more of our suppliers on mutually driving out cost.
During these continual, difficult market conditions, it is more important than ever that capital invested in development results in well-integrated, efficient systems, rather than patchworks. Two key enablers in assuring value from Shell’s technology deployments are the application of rigorous systems engineering techniques, and engaging innovative collaborations for development projects. These techniques and collaborations indicate potential for many future, significant improvements to the industry. 
