The Integrated Digital Oilfield OperationsEnabling Profitability During the Low Oil Prices

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Stephan Klein, Vice President, SAP, Germany Arif Abdullah, Director, SAP, Germany The Integrated Digital Oilfield Operations Enabling Profitability During the Low Oil Prices

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As stable sources of oil and gas are becoming a scarce commodity, companies are driven to explore new sources and new ways to extract oil and gas. Intelligent oilfield technologies can help oil companies get the most out of their existing fieldsand establish successful new fields in remote and harsh areas

Transcript of The Integrated Digital Oilfield OperationsEnabling Profitability During the Low Oil Prices

  • Stephan Klein, Vice President, SAP, Germany

    Arif Abdullah, Director, SAP, Germany

    The Integrated Digital Oilfield Operations

    Enabling Profitability During the Low Oil Prices

  • Agenda

    The Trends in the Industry

    The Oil & Gas Upstream Operations

    Introduction to Integrated Digital Oilfield Operations (IDOO)

    A Day in Production Operations

  • Clean Energy

    Price vs. Cost

    Radical changes in supply and expected changes in demand

    Sustainability

    Sarbanes Oxley

    Sanction Party compliance

    Environmental compliance

    Increased Governmental Regulation

    Resource and asset optimization

    National Oil Companies expanding

    Mergers & Acquisitions

    Global business operation models

    Global Market Dynamics

    Demand continues to grow in emerging economies

    Supply resources shift for oil and gas

    Oil price volatility

    Shifting Demand & Supply Patterns

    Operational excellence

    Digital oilfields

    Asset performance

    Maximize Reserve Recovery

    A price of $128 per barrel of oil will be needed to support development of new resources such as

    light tight oil and ultra-deep water. WEO, 2013.

    More wells, Wider Areas

    More complex accounting dealing with multiple leases

    More complex logistics to drill/produce

    More options/constraints to delivery

    Unconventional

    And Where are we with Price Now

    Unconventional

  • Shifting market >>> Technology convergence >>> Empowerment of people

    Increasing asset complexity enriches technology business

    15 Billion connected devices

    Continuous capital investment getting to the next barrel

    More data in last 5 years than entire history of humankind

    1 Billion people engaged in social networks

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    A CIO of a US $20

    billion company will

    typically have around

    1000 large enterprise

    applications to manage

    1000

    By 2020

    Of data that needs to

    be analyzed (40 billion

    terabytes of data)40 zetabytes

    of CIOs cannot respond

    timely to digital

    opportunities 451%

    Today

    Companies live in times of unprecedented pace of change

    End of 2020

    1 ScienceDaily. ScienceDaily, 22 May 2013

    2 Technology Adoption Report: Business Networks, Ardent Partners, 2014

    3 Internet of Things (IoT) 2013 to 2020 Market Analysis: Billions of Things, Trillions of Dollars, 2013

    4 Gartner, 2015

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    Cut in Capital Expenditure. Tighter scrutiny of the investments in high risk projects

    Optimize Capital

    Spend

    Optimize Production Cost / Barrel. Maximize reserve recovery from existing fields

    Optimize Production

    Management

    Increased focus on sustainable operations & Risk Management. Reduce Cost across the organization e.g. Supply Chain etc.

    Sustainable Operations

    Talent Management Contingent Workforce Management

    Optimize Workforce

    and Talent

    Mergers & Acquisitions. Economies of scale not viable for small players

    Enable Mergers &

    Acquisition

    Upstream Business imperatives in the new reality

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    The ever increasing business complexity is leading to higher cost, less

    innovation and less growth

    Higher cost

    Less

    Innovation

    and hence

    less growth

    10.2% or US$237 billion

    of profits is lost by top 200

    global companies due to

    hidden costs of complexity

    Global Simplicity Index, 2013

    Complex decision makingLarge global organizations have created so much complexity that businesses often struggle to bring good

    ideas to the marketplace profitably

    McKinsey, 2014

    Complex business processesLarge organizations can spend between 40% and 80% of their time on non-value-added activities

    BCG, Complexity Report

    Complex technology40% executives worry that their organizations will not keep pace with technology change and lose their

    competitive edge.

    McKinsey study, 2013

    Business complexity

    Innovations top performer see higher revenue

    growth

    leading to a 3-fold difference in 5 years

    Bain, 2015

    is leading to

    and needs to be tackled to ensure business success

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    More than 60% of CEOs expect 15-50% of their earnings growth in the next 5 years to

    come from technology-enabled business innovations.

    McKinsey study, 2013

    Everything in the Cloud

    Networks

    Convergence of social, business

    networks

    Platform

    Advances in in-memory computing and

    decline in hardware costs

    Applications

    Role Based, Location and Context-

    Aware, Intelligent, Predictive, mobile

    Transformational technologies will drive business

    innovation like never before

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    but most companies spend today 2/3 of their IT budget just maintaining the status quo, leaving only 1/3 for new innovations

    28%Drive business

    innovation

    72%Keep the

    lights on

    Drive

    business

    innovation

    Keep the

    lights on

    As-Is Business

    expectation

    ComplexityDecision making

    Business-process

    Technology

    InnovationCustomer experience

    Employee engagement

    Resource optimization

    Networked economy

    40% executives worry that their organizations will not keep pace

    with technology change and lose their

    competitive edge.

    McKinsey study, 2013

    Source: Forrester IT Survey, 2013

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    SAP oil&gas value map

    Capital and Spend

    Effectiveness

    Capital Planning

    Portfolio and Project Management

    Strategic Sourcing and Supplier

    Management

    Procure to Pay and Business

    Network

    Operational

    Integrity

    Risk Analysis and Governance

    Workforce Competency

    Asset Integrity

    Hydrocarbon

    Supply Chain

    Hydrocarbon Supply

    and Distribution

    Hydrocarbon Processing

    Visibility

    Commercial Sales

    and Marketing

    Secondary Distribution

    and Fuels Retailing

    Convenience Retailing

    Integrated Digital

    Oilfield Operations

    Hydrocarbon Revenue Management

    Field Logistics

    FinanceFinancial Planning

    and Analysis

    Accounting and Financial Close

    Treasury and Financial

    Risk Management

    Collaborative Finance

    Operations

    Enterprise Risk

    and Compliance

    Management

    Human

    Resources

    Core Human Resources and

    PayrollTalent Management

    Time and Attendance

    Management

    Workforce Planning

    and Analytics

    Environment, Health, and Safety

    Enterprise

    Information

    Management

    Hydrocarbon Production

    Management

    Platform and

    Technology

    Data Architecture and

    Integration

    Information

    GovernanceContent Management Information Archival

    Enterprise TechnologyAnalytics

    Technology

    Mobile

    TechnologyIn-Memory Technology

    Simplify business processes

    https://rapid.sap.com/se/executive

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    Optimize the Oil

    Supply Sources

    As stable sources of oil and gas are becoming a scarce commodity, companies are driven to explore new

    sources and new ways to extract oil and gas. Intelligent oilfield technologies can help oil companies get

    the most out of their existing fields and establish successful new fields in remote and harsh areas

    Increase

    Production, Reduce

    Costs, Increase

    Safety

    Managing an oilfield requires a balance of maximizing well life and optimizing production equipment.

    Monitoring and analyzing data can help achieve this balance, but the data validation, analysis and

    diagnosis is laborious without a system. Intelligent oilfield solutions can increase production and cut costs

    while reducing the risks for its employees

    Improve Data

    Management

    While many new oilfields contain state-of-the-art monitoring equipment, older oilfields can provide only

    limited data. In fact, some critical information is still collected on paper. Even when data is electronically

    gathered, most companies store it in isolated systems that have are not easily able to talk to one another . With the intelligent oilfield, integrated systems and advanced technologies analyze raw data from oilfields

    and turn it into meaningful information

    Manage Aging &

    Dwindling

    Workforce

    Industry sources estimate that demand for hydrocarbons will continue to increase to approx. 100 MMbpd

    and labor shortage of 1Mn by 2015 (avg oil worker is older than 50 yrs). Digital Oilfield technologies

    enable productivity to close the supply gap by accelerating employee productivity, in which a handful of

    skilled people can accomplish what required a few hundred in the past

    Digital oilfield is the umbrella term for technology-centric solutions that allow companies to leverage limited resources. It allows companies to capture more data, with greater frequency, from all parts of the upstream value chain and analyze it in real or near-real time, thus optimizing reservoir, well, and facility performance

    Problem statement and objectives

    Integrated digital oilfield operations (IDOO)

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    The capability to monitor and manage all operational activities in real-time or near real-time, regardless of location

    Operators seek to leverage real-time asset data in conjunction with sophisticated analytical tools and techniques to continuously optimize field performance.

    IDOO* defined a common view

    A sample set of technologies that are receiving

    universal industry acceptance include the following:

    Remote Real-Time Facility

    Real-Time Drilling

    Real-Time Production Surveillance

    Intelligent Wells

    4-D Visualization and Modeling

    Remote Communications Technology

    Integrated Asset Models

    Workflow and Knowledge Management Systems

    Production Volume Management Systems

    *Also called Digital Oilfield, Smartfields, i-Field, Field of the Future, e-Field, Integrated Operations

    Shell UPDS, Smart Field many projects worldwide

    BP - Field of the Future many projects worldwide

    Chevron - iField many projects worldwide

    KOC - Kuwait Integrated Digital Field Jurassic (KwIDF) Launched 2009

    Marathon Oil - ViewPoint

    ADNOC - Various projects DOO, Smart Fields

    Petrobras - GeDIg project Carapeba (2006) and Campos 2010

    PTTEP - Gulf of Thailand project 2010

    Saudi Aramco - Many projects

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    Exploration &

    Reservoir Mgmt.Drilling & Development Production Dispose & Abandon

    Generally, the digital Oilfield encompasses both the tools and the processes surrounding data and information management across the entire lifecycle of upstream activities

    Key scope of IDOO in upstream operation

    Long term portfolio planning 3D/4D seismic Geological Model Core data for Geostatistical Model Well logs PVT data Well testing and pressure buildup Reservoir Modeling Enhanced oil recovery programs

    Site management (Right of Way) Wired drill pipe LWD/MWD Rotating equipment EHS compliance Hazardous material disposal Field development Inventory management Procurement Project management

    Well Design Economic analyses Facility planning and mgmt. Production allocation & surveillance Production planning and mgmt. Well and field services Energy mgmt. Operational excellence Integrity & reliability Logistics and contract mgmt. Hydrocarbon logistics and storage Venture financial mgmt.

    Environmental certifications Asset disposal planning Plug and Abandon activities Remedial work & site restoration Project execution and monitoring Logistics (People, Stores &

    Spares)

    ITOT

    Big Data

    Core

    01 Year 02 years 20 years 06 Months

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    Solutions from SAP for integrated digital oilfield operations

    Promote an integrated framework for production

    allocation, planning, and maintenance, and support

    modeling of linear assets

    Hydrocarbon production management

    Validate data, perform production allocations, create forecasts,

    and capture deferment events

    Hydrocarbon revenue management

    Streamline financial, revenue, and venture processes to explore,

    develop, and product hydrocarbons

    Field logistics

    Reduce the time and effort needed for ordering, scheduling, and

    delivering field activities and services

    80%Of decision makers think access to the right

    information at the right time is critical to their

    business+76%

    Operating margin with historical and forward-

    looking views into financial and operational

    performance

    Typical results*

    *Source: SAP Performance Benchmarking.

    What do SAP solutions help customers do?

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    Well pad operations

    Operational plant maintenance on mobile devices

    Empower field workers to perform Well Pad Operations processes and access necessary context information using mobile devices

    Enable core functionality from SAP Plant Maintenance on (offline) mobile devices

    Besides performing planned maintenance activities, field workers also perform routine checks using checklists

    Immediate incident reports including integrated picture taking capabilities

    Offline-availability of (technical) documents and BOM information

    Business Needs & Use-Case

    Improve maintenance efficiency and productivity of field workers by providing and capturing plant data, when and where required lower administrative efforts

    Increased data accuracy and near real-time information in backend systems (no hunt for information)

    Avoid legal actions and reduce risk of environment, health and safety incidents

    Increase operational efficiency by utilizing new technological possibilities

    Business Value

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    Well opportunity management

    Well services activity management

    Improve WSAM proposal processing time

    Leverage SAP platform capabilities for integration of business processes

    Decommissioning of disparate legacy system

    Business Needs & Use-Case

    Effective planning and execution of well services to maintain oil and gas production levels

    Optimize usage of critical resources e.g. Hoist

    Support effective decision making process by providing consolidated information

    Scalable and Adaptable Solution based on SAP Application Portfolio

    Improve scheduling process by automating business processes to reduce manual data entry, delays and errors

    Business Value

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    Real-time prediction of drilling failures

    2013 Confidential and Proprietary, Cognilytics, Inc.

    Stuck drill problem costs the oil industry hundreds millions $

    every year

    Even when all precautions are taken, stuck pipe may occur

    Problems come quickly if corrective action is not taken as soon

    as the sticking situation is noticed

    Process is not analytical with prediction based on the drilling

    crews experience and skill

    Reduce Oil exploration and drilling costs

    Respond rapidly to changing drilling conditions

    Implement an analytical control system that alerts crew to stuck drill

    events.

    Enable real time prediction to failure with low latency

    Improve automation/execution speed & efficiency of drilling operations

    and reduce drilling cost

    Avoid lost revenue due to down time of drill

    Use SAP Predictive Analysis on HANA to :

    Detect and predict upcoming events and potential

    failure in real-time to enable corrective action

    Use data from multiple sources including the drill

    string, earth model, historic data etc

    Aggregated to build models, pattern recognition, and

    simulation

    Business Needs & Use-Case Objectives

    Solution Approach

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    A day in production operations

    The IDOO StoryA field produces primarily Oil , with some water production. The oil field makes extensive use of ESP (electric

    submersible pump) due to the low pressure Oil being produced. There are more than 1000 producing wells on this

    field.

    In a certain year Oil production seems normal.

    In the next year, the Production Manager notices that monthly Oil production is falling below plan. Investigation

    also reveals that failure rates for ESP have increased. Deeper investigation reveals a root cause as Bearing Pack

    (Oils-Sealed) failures & manual adjustments to pump operational parameters for Optimum operating conditions

    (Water cut, BHP, Vibration, Temperature) for optimal operational

    A new maintenance program is designed to replace the worst performing bearing pack more frequently

    Real Time Operation Monitoring and Reporting, Operations Management based on Predictive Analysis

    Effect of well outage on Production Plan is simulated, assessed and a new Production Plan is created

    Maintenance Plan is executed This also intimates Procurement and MOC activities

    Maintenance Executed and completed

    An incident is reported and managed whilst maintenance was being performed

    All costs associated to the program are captured and allocated to JV partners

    Company Execs are able to see / measure the positive Impacts of the program in due course

    What

    Change

    Consequences

    Impact

    Application &

    Platform

    Network

    Application

    Application, Network

    & Platform

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    Run Simple with SAP

    Intricate Business Models

    Pace of Change

    Complexity in Business & IT

    Speed of Innovation

    Pioneering Business Models

    Faster Time-to-Value

    Reduced TCI & TCO

    Enabled Growth

    AcceleratedInnovation

    SimplifiedBusiness & IT

    SustainableEngagement

    Simple to do Business with SAP

    One Recommendation (Solution Center)

    Simplified, global Portfolio, Contracting & Pricing

    SAP MaxAttention

    as the foundation

    New Business Models

    Innovation Roadmap

    Co-innovation onSAP HANA Cloud

    Streamlined Processes & Decision Making

    Real-time business via SAP HANA

    Choice of deployment (OnPremise, Hybrid, Cloud)

    Landscape Optimization

    Focus on Outcome & Value Realization

    E2E Engagement

    Long-term Relationship

    One Accountable Lead

    Run Simplewith Service and Support

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    SAP platforms and solutions reflect unmatched industry expertise

    >50% Of the worlds oil movements are

    managed with

    SAP solutions*

    800+ oil and gas customers worldwide

    Industry-driven, robust advisory

    councils help ensure alignment

    Deep industry-specific capabilities with

    clear industry road map

    40 years of delivering value to oil and

    gas

    Overall, 6,000+

    customers run SAP

    software worldwide

    *Source: SAP Performance Benchmarking

    Largest oil and gas companies

    in Forbes 2000 rankings

    85%

    ExxonMobil

    Royal Dutch Shell

    PetroChina

    Chevron

    Gazprom

    British Petroleum

    Petrobras

    Total

    Sinopec

    ENI

    SONANGOL

    Statoil

    Rosneft

    Lukoil

    ConocoPhillips

    CNOOC

    Ecopetrol

    Schlumberger

    Reliance Industries

    Phillips66

    YPF

    NNPC

  • Thank You

    ENERGY LIVES HERE!

    Stephan KleinGlobal Vice President

    Energy and Natural Resources Ind.

    T +49 351 4811 4800

    E [email protected]

    Arif AbdullahGlobal Director

    Energy and Natural Resources Ind.

    T +49 622 7768 304

    E [email protected]

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    The IDOO Story