Andy Leonard - Digital Innovation in the Oil & Gas Industry
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Transform Digital: Aberdeen 4th February 2015 Andy Leonard, O&G UK, on the digital innovation agenda in the oil and gas sector
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Andy Leonard - Digital Innovation in the Oil & Gas Industry
- 1. Andy Leonard Oil and Gas UK Digital Technology and the UK Oil and Gas Technology Strategy
- 2. Key industry metrics CAPITAL DEVELOPMENT COST OPERATING COST PRODUCTION FORECAST
- 3. A track record of innovation http://engpetroleo.webnode.com.br/perfura caodirecional/ http://cseg.ca/student/careers/petro3.htm http://www.cgg.com/default.aspx?cid=2942 http://www.sec.gov/Archives/edgar/data/87347/000119312512380454/d 406443dex99.htm
- 4. Technology development - common issues • Lack of coherent industry prioritisation and leadership • The rush to be second • Identify, connect need, opportunity and solution • The development cost burden v’s innovators’ balance sheets • Effective and enduring sponsorship from end user • Collaboration on field trials and uptake
- 5. • PILOT Technology Work Group formed 2012: – Enhance UKCS technology development and deployment – Establish North Sea Technology Strategy • HMG Industrial Strategy 1Q 2013 highlighted need for increased technology focus • Wood Review includes consistent Technology Strategy of 5 critical technology challenges • Technology transformation is essential – requiring: – Leadership (Technology Leadership Board) – Focused Delivery (Technology Themes) – Support Organisations (OGIC, ITF, NERC, RCUK) – Funding (Various parties including Oil & Gas UK) How did we get here
- 6. Oil and Gas Technology Strategy • To ensure that the UKCS: – Has a sustainable, efficient ‘technology ecosystem’ ( innovation – deployment) – Delivers the necessary major technology themes • With the intent to: – Ensure the production life of the North Sea beyond 2050 – Deliver a further 20 bnboe of production from the North Sea – Establishing the UK as a global supplier of distinctive mature basin capability. • With these specific targets: – Increase exploration success rates to >35% – Increase average oil recovery factor to >50% – Increase production efficiency to >80%
- 7. TLB Members Paul Warwick (chair) Talisman John Pearson AMEC Glen Cayley Shell Crawford Anderson Baker Hughes Colette Cohen Centrica Charles Tavner Magma Phillipe Guys Total Paul White GE Neil McCulloch Enquest Oonagh Werngren Oil & Gas UK Simon Toole DECC Stuart Edwards BIS Prof Iain Gillespie Research Councils Prof John Underhill Universities Rob Saunders Innovate UK Lynn Forsyth Scottish Govt. Paddy O’Brien ITF Ian Phillips OGIC
- 8. TLB – drive and direction FIX THE SYSTEM • Connect and get the right support organisations in place • Direct the funds DELIVERY FOCUS • Select & lead themes • At scale impact • Disruptive • Innovative • Access funding
- 9. Learnings from other sectors and OG21 Norway
- 10. Focused delivery – Priorities Mature Field UKCS Technology Leadership Board EOR IOR Production efficiency Small PoolsExploration - Imaging & evaluation Well P&A DecommissioningExploration Field Development Corrosion & inspection Drilling technology
- 11. Digital Technology FIX THE SYSTEM • Connection & capability DELIVERY FOCUS • Focussed themes To remain a hub: • Global connection • Analysis capability • Skill and expertise Digital oil field Equipment Health, reservoirs & fluid flow • Monitoring • Analysis • Prediction • Management & Event avoidance Efficient working Logistics & ‘as built’ • Tracking • Maintenance
- 12. What is trending? More: - Sensors - Data (extent and volume) - Wireless offshore - Real-time - Remote activities - Robotics & autonomous systems - Digitally enabled working - Satellite observations
Editor's Notes
- As many of you are familiar – the North Sea is facing challenges across the value chain from exploration to decommissioning. Exploration crisis: E&A drilling has more than halved in the last 5 years Just 80 mm boe discovered compared to 520 mm boe produced Production: Production has declined by 38% in the last 3 years Production efficiency has declined from 80% to 60% in the last 10 years Expenditure: Highest level of investments and operating costs ever Operating expenditure in 2013 rose by 15.5% Average unit operating costs at £17/boe with some as high as £30/boe Low recovery factor: Recovery rate currently at 46% across oil fields across UKCS It has also changed in many other ways – not least the shift from a small number of large operators with significant technology organisations to numerous operators of all shapes and sizes (but many without internal technology capability). BUT - There is a fantastic opportunity: Large remaining resource base Significant poorly explored play areas Existing infrastructure A track record of innovation when it is needed chance to really establish the North Sea supply chain as the global centre of excellence for mature basin exploitation. Efficient and effective technology development and deployments needs to be part of the solution BUT it needs to be faster, at scale and integrated with other key drivers: fiscal, commercial etc.
- The industry has a track record of innovation – we do remarkable things. We actually don’t blow our own trumpet enough BUT – distinctive at scale innovation tends to driven by: Absolute necessity for something new to get resources out of the ground or to maintain license to operate -Clear, driven competitive advantage – usually driven by resource access (eg seismic technologies) Elsewhere – innovation and its application is slow (eg the use of remote monitoring and advanced control systems in base operations) As Sir Ian Wood and others have said – the North Sea needs to up the technology game. Technology may need to happen on mutli-field, multi-operator level. What do we hear about the North Sea – from those in the industry and those trying to get in?
- There are things getting in the way: Some of them cultural -some because we haven’t put the right organisations in place. We have plenty of organisations (the landscape is very cluttered) – but we don’t necessarily have the right ones (or the industry doesn’t know about them) - some because of the way the industry is structured. Collaboration isn’t easy, JV structures can get in the way
- Since early 2013, at about the same time that the Government’s Oil and Gas Industrial Strategy was published, under PILOT we have been working with a diverse group from industry, academia and the TSB to consider what needs to be put in place to move North Sea technology forwards in a more effective way. Two closely linked objectives: - support the recovery and performance of the North Sea business - help establish the capability and knowhow of the technology supply chain As stated here – the transformation needed requires: - clear visible leadership - focussed delivery - support organisations - targeted funding
- Our observation in the UK is that the industry (and its suppliers) are crying out for clear leadership, direction and prioritisation of the key needs across the industry. This will guide Government funding, focus technology organisations onto the most important areas and encourage offshore application.
- Establish Technology Leadership Board – This is the confirmed membership of the Board. Great senior representation across the sector – operators, suppliers, Govt, public funding bodies and the University sector. Bring a high level / UK plc overarching perspective and drive to collaborative intervention Be the focal point for driving technology in the North Sea Connect into the government’s existing R&D funding and support mechanisms at the highest level First meeting 25th June
- In giving this direction and leadership the TLB needs to do two things: Ensure that main players in the technology system are rowing in the same direction. We understand many of the chokes in the system – we need to help get the right things in place to remove the chokes wherever possible. We need to be clear on the key technologies that can make a material difference and throw our weight behind making them happen.
- We are reaching out to other sectors, and we will hear from Gavin in a few minutes about the UK aerospace sector, and to our colleagues in Norway.
- We asked operators and suppliers for their perspectives on the top industry technology needs – we are analysing what we have heard. A number of things will guide our choice. We know there are short term imperatives that need to be fixed. The cost and inefficiency of our current operations is not sustainable – for example inspection of pipes, vessels etc is technical difficult, slow, expensive and stops other activity. We need to be able to do this in a radically different way. We are already seeing some moves to support this with both OGIC and ITF pulling together activities to focus on this specific problem. We also know that there are big challenges to the long term survival of the basin. We may need to be radical in thinking about solutions here. Considering exploration – in simple terms we want to know if a structure contains hydrocarbons or not. To do this in the north sea today – a $100m well failure is not acceptable. Similarly developing the bulk of small pools and extensions are not feasible without radically changing well costs – we need a $20m well. We need to line up the finest minds lined up to solve these challenges. That is what we intend to do and will be clear on the priorities early in the new year.
- In terms of the technology themes – this is a high level view as we saw it a few months back and is consistent with perspective in the Sir Ian Wood Review. It is worth noting that two PILOT work groups are making good progress in driving EOR and Exploration technologies and the TLB won’t alter what those groups are doing. In the other areas we need to get more specific about the specific priorities. To help us do that we have gone out to industry asking for their perspective (next slide)