Industry 4.0 and its enabling technologies promise enormous value for oil and gas operators, but the sheer volume of data these systems will produce threatens to obscure this potential. Petrotechnics’ Scott Lehmann explains why getting the digital approach right is essential if operators are to achieve operational excellence in the fourth industrial revolution.
Even by the standards of the past few years, the pace of change in the last twelve months has been fast enough to give the oil and gas industry whiplash. Very simply, the world has changed – and so too have the stakes for the industry.
New geopolitical realities are disrupting common operating practices. Increasingly complex operating conditions threaten already squeezed margins. There’s relentless pressure to cut costs while simultaneously increasing productivity. And hazardous events have induced more rigorous compliance requirements and amplified public scrutiny.
All these factors, and more, make the drive for operational excellence more critical than ever. The need to simultaneously reduce risk, increase productivity and cut costs is no longer optional…it’s the new baseline for the industry.
The advance of digitalization
Achieving operational excellence requires everyone, from the boardroom to the frontline, to make the most effective decision every time. Easier said than done. The risk-cost-productivity equation is a delicate balancing act and a decision made to increase productivity without considering the impact on risk is all too easy – and all too dangerous.
Fortunately, digitalization offers major promise for the industry. In its 2016 Global Industry 4.0 Survey, PwC claimed:
“Industry 4.0 will be a huge boon to companies that fully understand what it means for how they do business. Change of this nature will transcend your company’s boundaries and lead to a complete transformation of your organization.”
Consultants at Accenture agree. In their words: “Digital technology brings more than incremental improvements to operations. It has the potential to transform plants, enable operational excellence and disrupt the competitive landscape in the industry.”
The advancement of technologies like smart sensors, digital twins, machine learning, AI and cloud-based solutions to process it all is breath-taking. These technologies promise greater IT/OT convergence, making the Industrial Internet of Things (IIoT) a reality for operators.
They also promise to unlock further business process integration within the organisation and across the supply chain. For example, armed with the ability to automatically assess current asset health, recognise patterns that lead to failure, deliver alerts and automatically trigger maintenance processes, operators can stay ahead of the risk curve and optimise productivity.
The promise of digitalization is being directly linked to better decision making that in turn improves safety and productivity, increases asset uptime and reduces costs – is there anything it can’t do?
Viewing digitalization as a silver bullet is a mistake. It’s a dangerous assumption that we can point analytics at a bunch of disparate data and apply some machine learning with the expectation that actionable insight will come out the other end. Recognising that the hype and excitement around digitalization comes with an equally large potential for disappointment – and a first class ticket to the trough of disillusionment – is an important first step to getting on the right path.
Back to basics
For those of us who were on the frontline during the hype of the dot.com era, the excitement surrounding digitization feels oddly like déjà vu. In order to avoid the same mistakes we need to make sure technology is used to solve real business problems.
To ensure digitalization delivers and operational excellence is achieved, operators need to go back to the basics of technology planning and implementation. They need to first define what they are trying to achieve for their organisation and then look at the data and insight they need to support those objectives.
For example, take risk management – an essential business goal for any organisation. The reality is that people at the frontline intervene dynamically to operate, maintain, inspect and fix equipment on an asset. By its very nature, it’s a changeable and inherently dangerous place to work. But information on the multiple components of risk is managed differently by different parts of the organisation, held in silos and, for the most part, inaccessible. As a result, a holistic, up-to-date view of risk is not automatically available to decision-makers. Instead, they are forced to resort to manual searches for relevant data and rely on their experience and instinct to judge when situations become unsafe.
Common currencies are key to better understanding
To gain visibility and control of risk and ensure operational continuity, operators need to ensure that everyone across the business understands and manages risk against the same criteria — and has a practical understanding of how their decisions directly or indirectly influence the risk picture.
Recognising the potential sources of risk, and how they can accumulate, is a key challenge that requires a “common currency” approach to managing the disparate sources of data.
The dynamic nature of risk makes it difficult to connect the performance of safety systems and processes to the operational reality of the business in a meaningful way. This is where operational excellence platforms come to the fore. They can unlock the potential in data that’s typically been hidden away in silos, and provide meaningful insights by translating, aggregating and making information available in real-time, based on a common currency. This simple, elegant approach to operational risk management connects process safety and risk-control system performance to frontline operations. The approach is practical, and makes major accident hazard risk exposure visible, prominent and available for everyone at any time.
This common currency of risk enables everyone to compare concrete, meaningful risk information, necessary for making decisions. For example, a maintenance engineer understands the impact of delaying valve maintenance – not just on his KPIs, his team’s schedule or his department’s workload for the next few days, but the likely consequences that will ripple across the organisation. It’s how everyone starts to understand that the short-term fix may create as many problems as it solves – and enables them to find the optimal solution instead.
It’s how everyone from frontline staff to CEOs understand the interrelated, interconnected nature of risk that the organisation is undertaking – and can assure themselves that their next activity stays within agreed risk parameters.
When data is presented in a user-focused way that accurately informs decisions and improves the prioritisation of facility operations, the value is clear. For example:
- Frontline operations have immediate access to easy-to-read, data-rich information on equipment and activity status, with context to make better-informed, risk-dependent decisions during each shift
- Site management and planners have access to tools that show the risk implications of scheduling decisions, protracted deviations and planned activities, as well as what-if scenarios for enhanced future planning
- Asset leadership can see accurate levels of risk and productivity as well as trends for plan-attainment. This kind of data enables them to compare asset performance and to dive into the data, to see what is generating the highest levels of risk
- Executives can take an enterprise-wide view to compare asset performance, securing for themselves greater insight into how risk is managed across the whole organisation
Connected, collaborative, excellence, operational
Technology cannot do the heavy lifting on its own. But it can enable an organisation, and provide the support for a more collaborative culture, in which a disciplined approach to everyday decision-making enables key business objectives. The crucial part is to start with the business challenges that need to be solved.
The truth is, if our industry wants to achieve operational excellence through effective management of risk, productivity, and costs, operators need to know what’s happening, when it’s happening, and where it’s happening in real-time.
Bringing together once-disparate pieces of information and adding the new data deluge gives an operator a full, three-dimensional view of every asset and facility. And when that information is made accessible to the entire organisation and in a way that makes sense to the entire organisation, everyone makes better choices. Everyone can actively participate in driving improvements to the business. And everyone contributes to operational excellence.