The document discusses the digital future of the oil and gas industry. It notes that the industry faces challenges from lower oil prices, aging infrastructure and workforces, and increased environmental scrutiny. However, the long term demand for energy is still expected to rise significantly due to global population and economic growth. The document argues that the industry can overcome these challenges through increased digitization and use of industrial internet/IoT solutions. These solutions can optimize asset performance, reduce downtime and costs, improve safety and efficiency, and capture institutional knowledge as workforces age. Overall, increased digitization is presented as a key way for the industry to navigate current challenges and meet rising long term energy demand.
IIoT + Predictive Analytics: Solving for Disruption in Oil & Gas and Energy &...DataWorks Summit
The electric grid has evolved from linear generation and delivery to a complex mix of renewables, prosumer-generated electricity, and electric vehicles (EVs). Smart meters are generating loads of data. As a result, traditional forecasting models and technologies can no longer adequately predict supply and demand. Extreme weather, an aging infrastructure, and the burgeoning worldwide population are also contributing to increased outage frequency.
In oil and gas, commodity pricing pressures, resulting workforce reductions, and the need to reduce failures, automate workflows, and increase operational efficiencies are driving operators to shift analytics initiatives to advanced data-driven applications to complement physics-based tools.
While sensored equipment and legacy surveillance applications are generating massive amounts of data, just 2% is understood and being leveraged. Operationalizing it along with external datasets enables a shift from time-based to condition-based maintenance, better forecasting and dramatic reductions in unplanned downtime.
The session includes plenty of real-world anecdotes. For example, how an electric power holding company reduced the time it took to investigate energy theft from six months to less than one hour, producing theft leads in minutes and an expected multi-million dollar ROI. How a global offshore contract drilling services provider implemented an open source IIoT solution across its fleet of assets in less than a year, enabling remote monitoring, predictive analytics and maintenance.
Key takeaways:
• How are new processes for data collection, storage and democratization making it accessible and usable at scale?
• Beyond time series data, what other data types are important to assess?
• What advantage are open source technologies providing to enterprises deploying IIoT?
• Why is collaboration important across industrial verticals to increase IIoT open source adoption?
Speaker
Kenneth Smith, General Manager, Energy, Hortonworks
AI has great promise for improving operations in the oil and gas industry. It can provide 24/7 supervision of field assets through visual analytics, optimize plant performance using digital twins to run virtual simulations, and accelerate access to engineering information by capturing past work. AI can also improve morale by using robots to perform low-value tasks currently done by humans.
This document provides an overview of the Infraline Energy knowledge base on the oil and natural gas sector in India. It includes detailed coverage of upstream and downstream activities, natural gas and LNG, prices, demand and supply, maps, the regulatory framework, taxes and duties, and presentations. The knowledge base provides daily newsletters, a comprehensive library that is frequently updated, analytical articles, market intelligence, reports, and books. It offers in-depth information on topics such as exploration and production, company profiles, pipelines, reserves, refineries, petroleum products, and policies.
This document provides an overview of different types of oil and gas contracts: joint ventures, production sharing contracts, and service contracts. It discusses key characteristics of each type, including ownership, control, risk allocation, and common clauses. Joint ventures involve capital-intensive partnerships between states and international oil companies. Production sharing contracts give states ownership and control while contractors bear exploration risks. Service contracts come in two varieties - risk service contracts where contractors bear risk, and pure service contracts where states hold all risk. The document aims to facilitate understanding of intellectual and legal challenges in choosing between these contractual frameworks.
The document discusses optimization solutions for oil refinery production planning and scheduling. It describes how optimization can help refineries better manage uncertainty, take advantage of market opportunities, and cope with increasing production complexity. The solutions aim to generate executable plans that meet demand while minimizing costs. Current scheduling solutions are limited as they involve manual trial-and-error search, whereas the proposed solution uses optimization to find optimal schedules. Benefits include reduced variability, improved schedule attainment, and better ability to capture spot market opportunities.
The petroleum industry involves exploring for oil and gas deposits, extracting them from the ground, refining oil into fuel products like gasoline and diesel, and transporting and marketing these products. It is divided into upstream (exploration and production), midstream (transportation, storage, and processing), and downstream (refining and distribution) sectors. Globally, oil accounts for around 33-53% of energy consumption in different regions. The United States consumes around 25% of the world's oil production each year. The petroleum industry represents the world's largest industry in terms of revenue.
The document provides an overview of supply chain management concepts and the oil and gas industry supply chain. It discusses key elements of supply chain management including production, supply, inventory, location, transportation and information. It also outlines driving factors like information technology and relationship management. The document then provides an overview of the global energy industry including regional reserves and production/consumption trends for oil, gas and electricity.
This document provides an overview of the global oil and gas industry and markets. It discusses the history and evolution of the oil industry, current global energy usage and demand trends, key oil and gas producing regions and companies, oil and gas markets and pricing, the process for developing new oil and gas fields, and India's energy landscape and challenges. It aims to serve as an introductory guide to understanding the international oil and gas sector.
The document discusses reservoir model initialization, which involves setting the initial pressures, saturations and fluid distributions in the model to represent the state of the reservoir before production. It covers determining initial fluid contacts, performing automatic equilibration calculations to establish initial phase pressures, specifying initial solution ratios, and options for initializing the model using equilibration, restart files or explicit enumeration.
McKinsey | When Things Get Complex: Complex Systems, Challenges and Where to ...Intland Software GmbH
This talk was presented by Georg Doll (McKinsey Digital Munich) at Intland Connect: Annual User Conference 2020 on 22 Oct 2020. To learn more, visit: https://intland.com/intland-connect-annual-user-conference-2020/
Asset Performance Management in Oil and Gas Industry Arrelic
This document provides an overview of asset performance management (APM) for oil and gas assets. It discusses how APM can improve efficiency by facilitating better data flow across departments. The document also outlines how APM can be applied at different stages including design, operations, and maintenance. It describes tools like reliability centered maintenance, risk-based inspection, and digital twins that are part of APM. The goal of APM is to optimize asset performance over the entire lifecycle and increase profits.
Professional PowerPoint template for oil and gas presentations.
This is a fully customizable template with individual graphic elements and images. You are free to adjust cover, divider, and content slider header layouts.
Download at: http://www.powerpointteam.com/oil-industry-powerpoint-template.html
Available in standard and widescreen format.
Your comments will be highly appreciated. Thank you!
The Digital Twin For Production OptimizationYokogawa1
Digitalization is fundamental to the development of Repsol’s strategy for the future. To meet emerging challenges, the business units have developed an ambitious program comprising multiple projects. Within Repsol’s Industrial Business, development of a refinery digital twin leads the digitalization program. The digital twin allows the business to maximize production while optimizing energy consumption. This session will explore the digital twin project objectives to improve the accuracy and scope of the Refinery LP model that the Programming and Planning departments use to make decisions regarding crude feedstock purchasing and refinery unit operations. It will also report on the context of the business goals achieved, the technology and architecture developed, and the connectivity deployed to communicate results. It will conclude with a description of how enhancements to existing technology work with new technologies to improve value.
The document analyzes the value chain for the petroleum industry from upstream to downstream processes. It discusses exploration, drilling, and production as the main upstream processes. Midstream processes include transportation of oil via pipelines, trucks, and ships as well as refining. Downstream processes focus on transportation, storage and distribution to end consumers. The value chain is complex with many stakeholders adding value at different stages from extracting crude oil to delivering gasoline to motorists. Major challenges include depleting resources, disruptions in supply chains, and balancing environmental sustainability with increasing energy demands.
This document summarizes the application of machine learning in the oil and gas industry. It discusses how the author participated in an SEG machine learning challenge to classify lithofacies from well log measurements. Several algorithms were tested including SVM, logistic regression, random forest and gradient boosting. The top team used feature engineering, one vs one multiclass modeling with XGradientBoost and model tuning. Future work includes improving the classifier with more geological data from experts and combining algorithm and expert rankings.
Introduction to Project Economics in Oil and Gas Exploration and Production (Upstream) Industry, including basic project economics method and example of calculation.
The document summarizes the accomplishments and strategic objectives of Nigeria's oil and gas sector over the past two years under the country's Transformation Agenda. Key areas of focus have included increasing reserves and production, growing domestic gas utilization, sustaining domestic product supply through infrastructure upgrades, and linking gas to the wider economy through pipelines and industrialization. Going forward, plans are outlined to further these strategic goals through initiatives like frontier exploration, improved monitoring and data processing, increased pipeline capacity, and development of industrial cities.
The crude oil assay is the collection of the results of physical tests that are performed to determine the key properties (boiling point, density, viscosity, heteroatom contents, acid number, etc.) of crude oil and its fractions. It is the procedure based on laboratory and pilot plant testing for determining the general distillation and quality characteristics of crude oil. Crude oil assay is important for determining the value and processability of crude oil. This is the preliminary step before processing the crude oil in the refinery. . In order to utilize the crude oil assay data, it is necessary to understand the results and significance of some of the laboratory tests.
2015 Oil and Gas Digital and Technology Trends Surveyaccenture
The latest digital energy survey by Accenture and Microsoft reveals the resilience of digital technology investment in the oil and gas industry – despite volatile oil prices.
This document summarizes a presentation given by John Sullivan on using a Siemens S7-1200 PLC and Comfort Panel HMI to control a LACT (Lease Automatic Custody Transfer) skid. A LACT skid is used to measure oil and gas flow for custody transfer between operators. The presentation discusses how the S7-1200 and Comfort Panel provide configurable, accurate control for multiple flow meters and communication options at a lower cost than previous solutions. It also allows for common code reuse and future expansion through features like a web server, data logging, and remote connectivity. The new solution provides more functionality for less money compared to their old MicroLogix and PanelView setup.
Becoming a Data Driven Oil and Gas Enterprise with Advanced Analytics and HadoopDataWorks Summit
Noble Energy is an independent energy company that operates in several countries and has over 1.4 billion barrels of oil equivalent in proved reserves. They were facing challenges with growing data volumes from their unconventional resources operations and needing to gain insights and efficiency faster. Their approach was to treat data as a strategic asset, use advanced analytics on Hadoop to gain new insights into production dynamics, build executive support, and partner with Hortonworks. This helped them make progress on their journey to becoming a more data-driven organization with realized operational value and potential for further strategic and transformational benefits through enhanced models and new analytics.
A New Reality for Oil & Gas: Complex Market Dynamics Create an Urgent Need to...Connected Futures
A study by Cisco Consulting Services examined how oil and gas companies can survive declining prices through digital transformation. The study included a global survey of industry professionals and interviews with experts. It found that connecting people, processes, data and things through the Internet of Everything could automate up to 50% of manual processes, reducing costs by 11% annually for large companies. However, most oil and gas firms have not aligned their information technology and operational technology strategies, which is key for digital transformation.
Oil and gas companies are taking steps to become more competitive in times of low prices by integrating their IT, industrial controls, and business processes end-to-end. This allows them to break down silos, gain better visibility into operations from remote locations, securely communicate and collaborate more effectively, make faster and better decisions using real-time data, bridge skills gaps, and lay the foundation for future digital innovations. Examples include companies strengthening performance using real-time data, unifying distributed workforces, and improving safety through remote monitoring.
IFNTUOG is Ukraine's only oil and gas higher education institution with about 8,500 students. It has 17 research schools, 30 R&D labs, and coordinates research centers in cooperation with Ukraine's National Academy of Sciences. The university considers development of unconventional gas deposits in Ukraine, such as shale gas, to be important for sustainable development. As the leading oil and gas university, IFNTUOG has significant scientific, educational, staff and social potential to support research and engineering projects for unconventional gas development. It has established a Scientific-Educational Center for Shale Gas and participates in various international cooperation initiatives and European projects related to energy and innovation.
The document discusses a workshop held in Norway called "Norway Beyond Oil & Gas" about diversifying Norway's economy beyond its reliance on oil and gas. The workshop included a panel discussion on what Norway's future holds beyond oil and gas. It also promoted an initiative called "Moonwalk Tomorrow" which aims to create new jobs and industries in Norway through a crowdfunded program that supports innovators and new business ideas. The workshop involved groups brainstorming new opportunities, industries, and missions that could be pursued as part of moving Norway's economy beyond its current reliance on oil and gas resources.
Fjell Technology Oil & Gas - A passion for innovation!Njaal R. Soleng
Fjell Technology is a global innovator, with over 40 years of experience, within Process Design and EPCIC of HP Phase Separation, Fluid/Mass & Heat Transfer Equipment.
• Thermal, Mechanical, Fluid Flow and CFD Engineering
• Design of Onshore and Offshore Process Plants, Modules and Skids
• EPCIC of Topside and Subsea Pressure Vessels, Heat Exchangers, Air Coolers and Storage/Test Tanks
Material testing is a critical component in the success of many phosphate processing operations, whether a producer is looking to create a new product, improve an existing process, or otherwise.
This presentation looks at why testing is important, and what types of testing are available in the FEECO Innovation Center, as well as how the testing process works.
Cultivating a technology-driven cultureYekemi Otaru
My presentation at IoT Oil & Gas Europe 2016 in Aberdeen, Scotland. Our speakers included Maersk Oil, Statoil and MOL Group. Focus on data analytics and digital innovation, the need for cultural changes to sustain the impact of IoT/innovation
Review Schneider Electric’s innovative and efficient upstream oil and gas offer and how to optimize remote assets. Benefit from industry expertise and live demonstrations that highlight reducing total cost of ownership and turning data into reliable information to drive business.
This document summarizes a pilot study conducted on innovative companies in the oil and gas industry. The researchers interviewed CEOs from 6 small-to-medium sized businesses (STBORs) that provide specialized products and services to the industry. They found that STBORs face challenges from high investment needs, customer retention, and adapting to rapidly changing technological demands. Additionally, the study analyzed how changes in the industry have affected operating companies, contractors, and suppliers. It presents models of the innovation cycle for STBORs and the relationship between new technologies, field development, regulations, and cost effectiveness. The results showed that the sample companies did not clearly link innovation and quality, though they were trying to implement total quality management practices
1. PETROBRAS developed an LNG import terminal project to provide flexible natural gas supply to meet Brazil's growing and variable demand.
2. Two LNG import terminals were constructed - one in Pecém and one in Guanabara Bay. Both terminals were built and commissioned between 2008-2009.
3. The terminals allow for LNG to be imported via carriers and regasified using Floating Storage and Regasification Units to supplement domestic gas supply and provide flexibility for the power market.
Should the government make pornography illegalluke tocci
The document discusses whether the government should make pornography illegal. It presents perspectives from both sides of the debate. On one hand, pornography could be embarrassing for former stars, accessible to kids, and cause harm. However, others argue that some people choose to watch it, porn stars willingly participate, and it relates to personal freedom. Overall, the document outlines arguments for and against a ban without taking a definitive stance.
Social Media is about making connections, but you need to know where to look to find prospects worth your while connecting with. If you're in engineering, here are some pointers.
This document discusses internal communications strategies at GE Oil & Gas. It outlines 5 key communication objectives: 1) build market conditioning for increased market share, 2) protect and enhance reputation, 3) shape culture, 4) strengthen brand, and 5) sharpen listening capabilities. It then describes how communications can deliver value by increasing awareness, creating conditions for growth, and ensuring employees understand strategy. Finally, it discusses delivery excellence, business partnering, and strategic advice as key roles for communications and lists engagement tactics like push, pull, talk, community and engage strategies.
2016 Strategic Direction Report Natural GasPramod Singh "
The natural gas industry continues to adapt to low prices by finding efficiencies and new opportunities for growth. Economic growth in emerging markets is driving increased global demand for natural gas and presenting opportunities for suppliers. Countries in Asia seeking alternatives to oil are expected to rely heavily on imports from the US and Australia to meet rising needs. While safety remains the top concern, international market access is also a significant issue according to respondents outside North America. Managing aging infrastructure and ensuring reliability further challenge producers in this market.
Upstream Ahead - Oil & Gas Industry in India | 2021Social Friendly
The one-of-its-kind virtual summit hosted erudite and intellectual panels of more than 70 speakers from the Oil & Gas Industry. Nearly 40+ topics were presented by these best of the best speakers from across the globe, along with experts from Financial/Academic Institutions, Regulatory authorities & Central Ministries, Service providers, Consulting firms, and Institutions like NITI Aayog, World Energy Congress, MNRE, DPIIT, FICCI, etc. With registered participants reaching a grand number of 7,000 (+), the summit indeed has set a benchmark in many aspects. This is probably the first of its kind biggest summit for the Oil & Gas sector with a huge number of technocrats participating from the national/ international companies and other stakeholders. A Social Friendly Report.
- Global energy investment is set to fall by 20% or nearly $400 billion in 2020 due to the Covid-19 pandemic, representing the largest decline on record. This is a reversal from pre-crisis expectations of modest growth.
- Investment activity has been disrupted by lockdowns and project delays, but the oil and gas sector in particular has seen cuts to spending of around one-third due to much lower oil prices and demand.
- While no sector has avoided impacts, utility-scale renewable power projects have proved more resilient than oil and gas supply or efficiency improvements, which rely more on demand growth. The effects of the crisis on energy investment vary significantly between countries.
Majid Al Moneef - Former Governor of the Organization of Petroleum Exporting Countries, Saudi Arabia
ERF Conference on “Arab Oil Exporters: Coping with a New Global Oil Order”
How Could Arab Oil Exporters Respond to the New Global Oil Order: Graduate to Rule-based Macroeconomic Institutions
Kuwait, November 26-27, 2017
www.erf.org.eg
The document summarizes Gail Tverberg's views on peak oil and limits to growth compared to other forecasts. Some key points:
- Tverberg believes the limits to growth from the 1972 Club of Rome report are being reached in the next few years, which will cause government funding problems, debt defaults, and inadequate oil to sustain economic growth.
- She disagrees with views that renewable energy and efficiency will automatically replace fossil fuels or that high energy prices will accelerate efficiency. Instead, high energy prices of all kinds will sink the economy.
- EROEI calculations do not adequately capture issues with intermittent renewables like needing batteries and the debt required. This overstates their potential.
-
Outlook for Energy and Minerals Markets - for the 116th CongressRoger Atkins
TESTIMONY OF KEVIN BOOK MANAGING DIRECTOR, CLEARVIEW ENERGY PARTNERS, LLC
BEFORE THE
U.S. SENATE COMMITTEE
ON ENERGY AND NATURAL RESOURCES
FEBRUARY 5, 2019
The document outlines a roadmap for accelerating development of new and renewable energy in Indonesia from 2015-2025. It discusses Indonesia's changing energy situation from being an oil exporter to importer, and the need to develop alternative energy sources like geothermal, solar, and bioenergy. The roadmap estimates that achieving 23% renewable energy by 2025 will require an investment of 1.6 trillion rupiah. It identifies policy, technology, funding, and capacity challenges across different renewable sectors and argues that business as usual approaches will not work. Paradigm shifts and innovative solutions are needed across areas like planning, financing, and governance to successfully implement the roadmap's goals.
Quarterly analyst themes of oil and gas earnings, Q1 2022EY
Financial questions continued to attract the most attention of the analyst community, with major focus on how companies will respond to the war in Ukraine, elevated commodity prices and improved cash flows. Strategic questions focused on how the changing geopolitical environment will affect capital allocation in the short and long term. Operationally, all eyes were on the capacity of companies to step up asset utilization and bring new projects to market quickly. Explore the latest EY quarterly analysts themes.
The document summarizes the key procurement trends for 2015 based on a report by GEP. Major trends include lower oil prices reducing transportation and commodity costs; economic slowdowns in China and Europe increasing supply chain risks; a focus on sustainability initiatives and renewable energy; demands for faster delivery of value to customers; and increased use of cloud, mobile, analytics and e-commerce technologies. The report recommends strategies for procurement leaders to capitalize on these trends such as renegotiating transportation contracts, implementing sustainability requirements for suppliers, ensuring agile procurement processes, and leveraging new technologies to drive decisions.
This document provides an overview and introduction to BP's Energy Outlook 2030 report. It discusses key drivers of growing global energy demand such as population and economic growth. The power sector experiences the largest growth in energy demand. Non-OECD countries account for over 90% of the projected growth in energy consumption and production. Energy efficiency improvements are necessary to limit the growth in energy demand required to fuel economic growth. The report examines trends in global energy supply and fuel mix out to 2030.
This is the booklet that accompanies BP's Energy Outlook 2030 presentation.
We hope that sharing this outlook contributes to the wider debate on global energy issues. It identifies long-term energy trends, building on our Statistical Review of World Energy, and then develops projections for world energy markets to 2030, taking account of the potential evolution of the world economy, policy, and technology.
The outlook reflects a ‘to the best of our knowledge’ assessment of the world’s likely path from today’s vantage point, drawing on expertise both within and outside the company. It is not a statement about how we would like the market to evolve.
The outlook highlights the growing role of developing economies in global energy consumption, and the increasing share of non-fossil fuels in global energy supply. It emphasizes the importance of both improving energy efficiency and expanding energy supplies to meet the energy needs of billions of people who aspire to better lifestyles, and doing so in a way that is sustainable and secure. This year’s edition has a special focus on the role of shale gas and tight oil in supporting the growth of gas and oil supply. It also notes the uncertainties attached to any long term projection. The discipline of building a numerical projection sharpens our thinking, but the precise numbers are less important than the underlying story of the challenges we all face and the choices we make in producing and consuming energy.
For more information and to download summary tables in Excel format, please visit: http://bit.ly/BPEO2013
Why Policy Matters - Renewable Energy Market Momentum at Risk - June 2015Scott Clausen
The U.S. has implemented policies that have successfully attracted hundreds of billions of dollars in private investment to the renewable energy sector. This investment has enabled rapid scaling of the industry and significant cost reductions. However, continuing uncertainty around policies like the PTC and ITC is jeopardizing future investment and growth in the renewable energy sector by making long-term planning difficult. Extending these policies would provide certainty and allow the U.S. renewable energy momentum to continue.
The results of the global Energy Architecture Performance Index (EAPI) 2017 highlight key trends in the energy transition moving towards more sustainable, affordable and secure energy systems around the world, as well as the challenges countries continue to face, individually and as cohorts. Looking back at five years of data from the EAPI, this report also distils insights from countries that have shown significant improvements in performance or remained consistently high performers
Il World Energy Focus, nuovo mensile online della WEC's community, una e-publication gratuita per essere sempre aggiornato sugli sviluppi del settore energetico. Il World Energy Focus contiene news, interviste esclusive e uno spazio dedicato agli eventi promossi dai singoli Comitati Nazionali.
Etude PwC/Strategy& sur les fusions-acquisitions dans le secteur de l'énergie...PwC France
http://bit.ly/TransactionsEnergie2015
L'étude « Power & Renewables Deals » comprend une analyse de l’ensemble des transactions mondiales dans les domaines de l’énergie, des énergies renouvelables et des technologies propres. Sont couvertes les transactions portant sur la production d’énergie, son transport et sa distribution ; le transport, la distribution, le stockage et les pipelines de gaz naturel ; la vente au détail d’énergie et le nucléaire. Les transactions portant sur les opérations situées en amont de ces activités, comme l’exploration et la production de gaz, sont en revanche exclues de l’étude. L’analyse des énergies renouvelables englobe pour sa part les biocarburants, la biomasse, la géothermie, l’hydraulique (notamment marin), le solaire et l’éolien. Sont couvertes les transactions portant sur l’acquisition de projets de chantiers ou d’exploitation visant la production d’énergie renouvelable ainsi que des entreprises produisant les équipements destinés au secteur. Les transactions portant sur les technologies propres, enfin, sont celles liées à l’acquisition d’entreprises développant des produits à haute efficacité énergétique destinés aux infrastructures des énergies renouvelables.
Notre analyse se fonde sur les transactions publiées dans la base de données « M&A Global » de Dealogic et portant sur l’ensemble des fusions-acquisitions dans les domaines de l’électricité, du gaz et des énergies renouvelables. Cette base de données englobe les transactions annoncées (celles en attente de clôture financière et juridique) et les opérations terminées. La valeur inscrite est celle de la contrepartie annoncée a priori ou posteriori et tient compte des éventuelles dettes ou autres passifs estimés. Les données de comparaison (années ou trimestres précédents) peuvent présenter des différences avec celles de nos précédentes éditions ou autres publications de l’année en cours en cas de mise à jour des informations ou d’affinements de la méthodologie ayant entraîné des modifications de la base de données.
The document discusses key findings about the oil and gas industry and energy transitions from an IEA analysis. It finds that:
1) The oil and gas industry faces the challenge of balancing short-term returns with its long-term license to operate as societies demand reductions in emissions alongside energy.
2) No company will be unaffected by clean energy transitions, so every part of the industry needs to consider how to respond.
3) So far, investment by oil and gas companies outside their core business has been less than 1% of total capital expenditure.
The BP Energy Outlook document explores various scenarios for the global energy transition out to 2040. In the Evolving Transition scenario, global GDP more than doubles driven by rising prosperity in developing economies like China and India. This lifts billions out of poverty and increases energy demand by around a third, with renewables becoming the largest source of power. However, carbon emissions continue rising, highlighting the need for further policy and technological changes to achieve emissions reduction goals.
Over the next 25 years, oil demand is expected to increase by 11 million barrels per day, with over 90% of the additional oil coming from the Middle East and North Africa. This will require $2.7 trillion of investment in the region's oil exploration and production as existing oil fields decline and new sources are harder and more expensive to access. The oil and gas industry also faces acute shortages of skilled workers like petroleum engineers and geologists as experienced employees retire, which could lead to operational challenges if not addressed. Skills development and training programs are needed to ensure continued supply of expertise.
Energy power shift 04 2015 rallis vasilis Vasilis Rallis
Webinar, Manchester Business School, MBA Energy and Industry Club
A general outlook on the energy industry and changes shaping the future. The presentation describes the shifting trends in Oil, Gas, Power (Electricity and RES), Climate Change and emerging business models
Initial Resource Estimate:
74.9Moz at 980 G/T AgEq
Focused on Discovering High-grade, Quality Ounces.
The initial resource estimate on the high-grade silver “Waterpump Creek” zone of our 100% owned carbonate replacement deposit (CRD) was published in February 2024.
Our intact mineral system encompasses the past producing Illinois Creek gold-silver mine, the Waterpump Creek deposit, and the Honker gold prospect, which make up the CRD system in focus. 25 kilometers northeast of the Illinois Creek CRD are the Round Top copper and the TG North CRD prospects. All prospects were originally discovered by Anaconda Minerals Co. in the 1980's. Since 2010, WAM reassembled the Anaconda land package and has been actively exploring the district. WAM’s 100% owned claims cover 73,120 acres (114.25 square miles).
WAM brings together a team of seasoned professionals. Our strategic approach is underpinned by innovative exploration techniques and a deep understanding of the geological intricacies of the region.
Anton Grutzmache- Ominisient: The Data Revolution in Banking: From Scoring Cr...itnewsafrica
Anton Grutzmache, Co-Founder at Ominisient on The Data Revolution in Banking: From Scoring Credit Invisibles to Fraud Prevention at the Digital Finance Africa 2024 conference.
9 Lessons From Jeff Bezos’ ONLY Podcast AppearanceLevership
If you lead an organization (CEO or management), this podcast is a much-watch.
Lex Fridman did a brilliant job getting the best out of Jeff Bezos.
It is a masterclass in strategic decision-making, business strategy, and execution.
Follow Levership/Symplicity CEO and founder Matt Symes on LinkedIn for more: https://www.linkedin.com/in/matt-symes-8328a765/
Don’t Get Left Behind: Leveraging Modern Product Management Across the Organi...Aggregage
https://www.productmanagementtoday.com/frs/27009164/don-t-get-left-behind--leveraging-modern-product-management-across-the-organization
The challenge of delivering the right product at the right time while aligning with strategic objectives is more pressing than ever. Product management is evolving and gaining greater recognition as the means to creating this connection.
Join our upcoming webinar and learn how to streamline your product development processes, infuse product thinking across the organization, and bridge the gap between vision and delivery. During this webinar, we will discuss the nuances of product management in a rapidly evolving landscape, and provide insights into fostering collaboration, managing complexity, and driving efficient execution from strategy to delivery.
You’ll walk away from this webinar with insights into how you can:
• Increase customer value by strengthening alignment across your organization.
• Reduce costs by making small bets and cross organizational funding decisions.
• Ensure a synthesis between planning and implementation to quickly deliver value.
Andrew Wilmot- Ecentric Payment Systems: Macro Trends Shaping Payments in Afr...itnewsafrica
Andrew Wilmot, Customer Experience Executive at Ecentric Payment Systems on Macro Trends Shaping Payments in Africa - the Next 10 Years at Digital Finance Africa 2024 conference.
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Foodgasm Restaurant & Bar: A Vegetarian Oasis Where Flavor Explodes
Foodgasm Restaurant & Bar isn't your average vegetarian joint. We're a vibrant hub where innovative vegetarian cuisine meets a lively atmosphere, creating an unforgettable dining experience.
A Complete Guide of Dubai Freelance Visa and Permit in 2024Dubiz
Dubai warmly welcomes professionals from every field, including freelancers. The city’s strong economy provides a fertile ground for freelancers to thrive and succeed. With the rise of digitalization and changes in employment trends, many people are choosing freelance careers for the independence and flexibility they offer. And where better to start your freelancing journey than in Dubai? However, to begin your journey, you will first need to get a freelance permit and a freelance visa Dubai.
Let’s begin by exploring the opportunities for freelancers in Dubai and learn how to obtain the necessary visa and permit, including associated requirements and costs.
Test Bank For Principles Of Cost Accounting, 17th Edition Edward J. Vander...kevinkariuki227
Test Bank For Principles Of Cost Accounting, 17th Edition Edward J. Vanderbeck Chapters 1 - 10, Complete
Test Bank For Principles Of Cost Accounting, 17th Edition Edward J. Vanderbeck Chapters 1 - 10, Complete
Connected Small Boat Protection Solution | July 2024
Digital Future of Oil & Gas
1. GE Oil & Gas
Digital Future
of oil & gas & energy
Marco Annunziata, Chief Economist, GE
2. Contents
03 Executive summary
04 A growing need for energy
Macro background
Energy demand
Regional opportunities
07 Meeting rising energy needs
Oil
Natural gas
10 Challenges to the industry
12 Digital revolution
The Future of Work
The digital future of oil and gas
How will digital deliver value?
Lessons from the past
16 Conclusions
3. The oil and gas industry is facing
a new frontier. The sharp fall in
international oil prices is putting
intense pressure on margins,
leading operators to reassess their
capacity and investors to reassess
their strategies. The interplay
of economic, technological and
geopolitical forces has created
an environment of increased
uncertainty and volatility.
Lower oil prices have reduced the revenue accruing to oil-producing
countries, limiting the resources available for investment in the
energy sector. Some countries have cut energy subsidies to the
population, a move that improves the sustainability of public
finances—but that will also change the demand response once
prices recover.
Coping with lower prices and revenues in a way that does not
jeopardize future performance is the most immediate challenge
for the oil and gas industry, but it is not the only one. The industry
has to also contend with a more complex asset mix, which brings
a wider range of technical, logistical and operational challenges.
Workforces and infrastructure are aging—exacerbating the risk that
the industry might suffer lower productivity when it needs more.
The industry also faces increased scrutiny and concerns over health,
safety and environmental impact. Last but not least, a structurally
more volatile and uncertain environment requires a higher degree of
flexibility and adaptability.
These multiple challenges mean that industry operators are under
pressure to find ways to reduce downtime and lower operational
costs, to improve operational efficiency and equipment reliability,
to increase safety, to build a stronger pipeline of talent and avoid or
at least mitigate the impact of the retirement of more experienced
workers, and to optimize their capital expenditure (capex) strategy
in a more uncertain and volatile environment with increased funding
pressures.
The answer, we believe, lies in realizing the digital future of the oil
and gas industry. Industrial Internet solutions—combining sensors
and cloud-based, big-data analytics—enable a shift to optimized
performance and maintenance, which can substantially reduce
unplanned downtime, yielding major cost savings and profitability.
New digital solutions go beyond asset optimization; increased
visibility over entire networks of industrial assets leads to system
optimization and better prioritization of capital and human
resources, which reduces operating and maintenance costs. The
Industrial Internet’s digital solutions provide a bridge between
information technology and operations technology, extending
efficiency improvements across enterprises. Asset optimization and
improved operations management can yield important increases
in efficiency and productivity. Moreover, a deeper understanding
of assets will lead to a stronger capex strategy that optimizes the
trade-off between the life of the assets and their performance.
Industrial Internet solutions can also capture the knowledge and
experience of an aging workforce, preserving it and transmitting
it to incoming generations, avoiding the risk of lost expertise and
productivity.
Industrial Internet solutions for the oil and gas industry are already
being deployed. The coming years will see a rapid acceleration in
the pace at which new solutions are deployed and scaled, largely
thanks to Predix™, the newly created operating system for the
Industrial Internet. Predix will not only enable the secure and
efficient adoption of Industrial Internet solutions but, by attracting
the efforts of third-party developers, it will also foster the birth of
an industrial-app economy that will act as an accelerator.
This new level of digital capability will help the oil and gas
industry navigate current and future challenges, and leverage the
opportunities offered by the growing need for energy to fuel the
global economy in the decades ahead.
The remainder of this paper is organized as follows:
• Section 1 assesses the macroeconomic and demographic trends
that will shape energy demand in the years ahead;
• Section 2 discusses how the supply of oil, gas and other fuels will
likely evolve to meet demand;
• Section 3 analyzes the main challenges currently facing the oil and
gas industry;
• Section 4 illustrates how the Industrial Internet revolution can
help to successfully surmount these challenges; and
• Section 5 concludes.
Executive summary
4. 4
Oil prices have fallen sharply. From a level of about $100 per barrel
in mid 2014, the benchmark WTI crude oil price fell to about $50
per barrel at the end of 2014. The price held broadly above $45 per
barrel through most of 2015, but then experienced another sudden
drop to around $30 per barrel in January 2016.
A number of factors have contributed to this sharp and protracted
decline. Investments and advances in production technology
have significantly boosted U.S. supply over the past few years;
OPEC production has remained elevated; geopolitical factors have
contributed to stronger supply prospects; and the growth slowdown
in China and other emerging markets has raised concerns on
the demand outlook. Financial investment flows might also have
magnified price movements.
Industry operators have come under pressure, as margins have
been squeezed and investment strategies put in doubt. Oil-
exporting countries in turn face the challenge of adapting their
public finances to the significant loss in oil revenues. On the other
hand, lower energy costs have provided a windfall for consumers
and governments in oil-importing countries—a beneficial impact to
the world economy that should countervail, at the global level, the
adverse effect on oil companies and oil exporters.
Given the number of complex factors at play, it is difficult to
predict how oil prices will evolve in the near term. The heightened
uncertainty is one of the major challenges that the oil and gas
industry has to face. However, an analysis of macroeconomic factors
suggests that, over the medium and long term, demand conditions
should prove supportive.
In this section we provide a brief assessment of macro trends
and how they will shape future demand for oil and gas and other
energy sources from global, region-specific and sector-specific
perspectives.
a. Macro background
China’s economy, a major consumer and importer of oil, has
slowed. Oil prices are substantially below their mid-2014 levels,
and other commodity prices have also declined significantly. A
marked pessimism characterizes the public debate on global growth
prospects—and colors the discussion on the outlook for the global
energy market.
1
International Monetary Fund October 2015
2
International Monetary Fund, http://www.imf.org/external/pubs/ft/weo/2015/02/weodata/index.aspx
1. A growing need for energy
However, this pessimistic lens does not show the whole picture.
Since the world economy started recovering from the Great
Financial Crisis in 2010, global growth averaged an estimated 3.8
percent per year.1
This pace compares favorably with the 3.4 percent
average of 1982-2002, and was only surpassed by the credit-fueled
and unsustainable pre-crisis pace of 2002-2007.
Growth slowed down to a little more than 3 percent in 2015, but
is projected to recover to 4 percent by the end of the decade2
.
There is a significant degree of uncertainty, and much will depend
on the performance of the two largest economies—and largest
energy consumers—the United States and China. The U.S. recovery
has proved resilient so far, and the labor market is close to full
employment. China’s economy has been losing momentum, with
gross domestic product (GDP) growth slowing to about 7 percent
from 10 percent of 2010-2011. However, this lower rate of growth
now applies to a much larger economy—the additional GDP created
every year in dollar terms is even higher than in the past. Moreover,
this slowdown is a necessary part of China’s rebalancing, which
makes its growth more sustainable—though less energy intensive.
Global GDP Growth (%PPP)
3.7
3.3 3.4 3.3
5.1
4.0
3.7
1983-1987 1988-1992 1993-1997 1998-2002 2003-2007 2010-2014 2015-2020
0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
5. 5
3
International Monetary Fund, http://www.imf.org/external/pubs/ft/weo/2015/02/weodata/index.aspx
b. Energy demand
At this projected pace of growth, consistent with historical norms,
the world will need a lot more energy. By 2020, the global economy
will be one-fifth larger than today3
, in real terms, and the global
population will have increased by about one billion people. By the
latter part of the century, the world population is projected to reach
11 billion people, a 50 percent increase from the current 7.3 billion.
These additional billions of people will need access to electricity and
to clean cooking fuel. Already today, approximately 1.2 billion people
around the world have no access to electricity—that is one person
in six.
Source: IEA
In line with these economic and demographic forecasts, the
International Energy Agency projects that total energy demand will
rise by one-third through 2040, from about 13.6k million tonnes
of oil equivalent (MTOE) to nearly 18k MTOE, corresponding to
a 1 percent compound annual growth rate over the period. An
additional 1.2k MTOE will be needed in just the next five years. The
power sector will be the main driver of demand growth, followed by
total final consumption (TFC).
The increase in energy demand will be front-loaded, rising at about
1.5 percent per year at the beginning, and slowing to below 1
percent towards the end of the forecast horizon.
World Population
6.1
6.9
7.3
7.8
8.5
9.2
9.7
10.2
10.5
10.8
11.1 11.2
BillionPeople
2000
0
1
2
3
4
5
6
7
8
9
10
11
12
2010 2015 2020 2030 2040 2050 2060 2070 2080 2090 2100
Source: United Nations Populations Projections
Total Primary Energy Demand
MTOE
2013
0k
2k
4k
6k
8k
10k
12k
14k
16k
18k
2020 2025 2030 2035 2040
Source: IEA
MTOE
2013
2020
2025
2030
2035
2040
2013
2020
2025
2030
2035
2040
2013
2020
2025
2030
2035
2040
0k
1k
2k
3k
4k
5k
6k
7k
8k
9k
10k
11k
12k
Other energy 0.6%
Power sector 1.4%
TFC 1.1%
CAGR
Other Energy Power Sector TFC
6. 6
c. Regional opportunities
The geographical distribution of energy consumption will also be
shaped by the macro factors discussed above. Both population
growth and economic convergence will shift the center of energy
growth toward emerging markets; China and India will be the main
sources of energy demand, though with different dynamics.
China is already—and will remain—the largest consumer of energy;
it is set to become the largest consumer of oil by 2030, surpassing
the United States. However, as its economy rebalances toward
domestic consumption and services, it will become less energy
intensive, and the pace of Chinese energy demand growth will slow.
In India, on the other hand, the process of industrialization is about
to accelerate, driving a much steeper increase in energy demand. Its
oil consumption will increase nearly threefold by 2040. Africa, the
Middle East and Latin America will also see significant increases in
demand.
European energy demand, on the contrary, is projected to decline,
driven by a combination of slower economic growth, demographic
changes, and faster improvements in energy efficiency. Energy
demand in the United States is expected to stabilize close to current
levels.
The geographic distribution of energy consumption will have
important implications for the mix of energy sources. Strong
economic growth across emerging economies will create a large and
rapidly growing middle class, aspiring to a lifestyle and consumption
levels similar to those currently enjoyed in developed economies.
This will include substantially stronger energy consumption, and a
fast rise in car ownership and gasoline consumption.
TPED Growth
Source: IEA, World Energy Outlook 2015
7. 7
2. Meeting rising energy needs
Meeting this sustained increase in energy demand will require
a holistic approach across energy sources, including fossil fuels.
Today, oil accounts for 30 percent of total energy demand; oil, gas
and coal together account for nearly 80 percent. Fossil fuels have
maintained the lion’s share of global energy supply throughout
the last 30 years. By 2040, fossil fuels will still account for three-
quarters of energy demand, with the share of oil declining only
marginally to 26 percent, according to the IEA’s central scenario.
Natural gas should experience rapid growth, arriving to match the
share of coal in global supply by 2040—today the share of natural
gas is one-third lower than that of coal.
There are different views, and a significant margin of uncertainty,
on how the shares of different fuels will evolve. The IEA’s central
forecasts envision a marginal increase in the share of nuclear energy
and a five-point increase in the share of renewables. Technological
advances in one area could skew the balance somewhat in favor
of a specific energy source. It is difficult to envision, however, that
the large and growing energy needs of the global economy could
be met over the forecast horizon without persistent reliance on a
substantial contribution from oil and other fossil fuels. This is even
more so in the near term, when any major technological changes
would have less time to exert an impact.
a. Oil
The oil market is going through an especially complex rebalancing
process. Oil prices have declined sharply from around $100 per
barrel in mid-2014 to under $40 per barrel at the end of 2015.
Technological, strategic, geopolitical and economic factors have all
played roles: the rise in tight U.S. oil supply, OPEC’s failure to agree
on supply cuts, the prospect of additional supply from Iran, and
concerns on the economic slowdown in China and other emerging
markets.
There is significant uncertainty on how these factors will evolve and
interact in the coming months and years. Some trends, however,
are emerging. First of all, the price decline seems to have been
largely driven by a supply increase that outpaced demand, even as
oil demand continued to grow. Current low prices are now curbing
production and investment. The U.S. rig count, which had tripled
between 2009 and 2011, has fallen by about 50 percent from its
peak. The reduction in drilling activity was initially partially offset
by an increase in productivity, as production became concentrated
in the higher-yielding rigs. More recently, however, productivity is
re-stabilizing, which should contribute to the ongoing reduction in
tight oil supply.
Key oil demand indicators have remained robust, with vehicle miles
travelled in the United States growing at the strongest pace in a
decade, and a rebound in vehicle sales in China. Demand conditions
also appear resilient in the European Union (where vehicle sales
grew at about 3 percent in 2015, double the 2014 pace), Japan and
India—which, together with the United States and China, account for
nearly 60 percent of global oil demand.
These trends should support sustained growth in global oil demand.
For example, the IEA’s central scenario sees oil demand increasing
from 90.6 million barrels per day (Mbd) in 2014 to 103.5 Mbd in
2040—a 15 percent increase. The rise in demand would be front-
loaded, rising on average by 900 thousand barrels per day over
the next five years—led by China, India and the Middle East—while
demand should continue to decline in most OECD countries, leveling
off thereafter.
Oil demand is also rapidly picking up pace in Africa. At the moment,
per capita oil consumption in Africa is still much below the world
average, owing to lower levels of industrialization and vehicle use,
so that fast consumption growth does not yet translate into a
substantial addition to global demand in absolute terms. Looking
Global Oil Demand by Region
Source: IEA, World Energy Outlook 2015
8. 8
towards the longer-term, however, Africa’s economic development
will undoubtedly bring a powerful boost to oil consumption—
especially given Africa’s extremely buoyant demographic prospects.
The bulk of oil consumption is in the transport sector, which
accounts for 55 percent of global oil demand. With rising living
standards in China, India and other emerging markets, the transport
sector is projected to add over 10 Mbd to global oil demand,
increasing its share to about 60 percent—even as more stringent
fuel-economy standards come into place.
To get a sense of the potential increase in demand, consider that the
United States has 82 cars per 100 inhabitants; China has only 7 cars
per 100 inhabitants, and India only 4. Even without assuming that
China and India will fill the gap with the United States, the pent-up
demand for road transportation that will be unleashed by continued
economic growth is apparent.
After road transport, aviation will remain a substantial source of
rising oil consumption within the transport sector, especially in
passenger travel. Passenger air travel has increased at an annual
rate of nearly 5 percent over the past decade and a half, double the
pace of average per capita income growth over the same period, and
revenue-passenger kilometers are now double the 1998 level. Asia,
and China in particular, are set to drive further substantial growth in
passenger air traffic.
Global Oil Demand by Sector
Source: IEA, World Energy Outlook 2015
Oil consumption in industry is also set to keep growing, notably
in the petrochemical sector, but also as fuel for off-road vehicles
in mining and construction—a range of uses for which there is
currently no viable alternative to oil.
A complex set of factors will continue to shape oil demand in the
coming decades. The decline in the oil intensity of global growth
has been driven by various elements, including emission controls
and fuel efficiency standards. These in turn have been shaped
by both economic and environmental considerations. The trend
towards greater efficiency is expected to continue; China is slated to
adopt fuel economy standards for passenger vehicles; a number of
countries have reduced subsidies for fuels and other oil derivatives,
taking advantage of lower price levels but also responding to the
need to reduce pressure on public budgets. Future trends in oil
prices and other economic variables could affect some of these
decisions, and therefore influence the pace of growth of overall oil
demand.
Underlying this, however, the main driving force remains the
sustained growth of the global economy, and notably the rise in
per capita incomes in emerging markets, where large and growing
populations see their living standards gradually rise towards
advanced countries’ levels.
b. Natural gas
Natural gas production and consumption have increased strongly
over the past years, driven by major advances in hydraulic fracturing
technologies that have opened up the exploitation of large reserves
of shale gas. This “shale gas boom” is set to continue in the decades
ahead.
Natural gas offers a number of advantages: it is clean relative to
other fossil fuels; it is cheap—though with very important regional
variations—and it is the ideal complement to renewable sources
like wind and solar: supply of wind and solar energy is very volatile,
contingent on atmospheric conditions and with limited storing
possibilities. Gas can act as a complement, stepping in to meet
demand at times of low output from renewables.
The IEA expects natural gas demand to increase by about 1,600
billion cubic meters (bcm), to 5,160 bcm by 2040—representing a 1.4
percent compounded annual growth rate.
The main driver of rising natural gas demand will be power
generation, which should account for about 40 percent of the
additional consumption, increasing by about 160 bcm to 590 bcm
by 2040. In the OECD, over the next 10 years, natural gas could
overtake coal as the single largest source of power generation. In
the United States, which enjoys the lowest prices, natural gas is also
playing a greater role in industry, notably petrochemicals—whereas
industrial use will continue to decline in Europe, where prices remain
9. 9
significantly higher. The buildings sector will add about 170 bcm to
gas demand over the period. The increase in demand in this sector
will be held back by more stringent energy efficiency standards in
advanced economies, as well as the fact that the most rapid growth
in the building sector will take place in warmer countries, with less
need of gas-generated heating.4
Gas demand will also increase in
the transport sector, although this will continue to account for only a
small share of overall consumption.
From a geographical perspective, demand for natural gas will rise at
a fast pace around most of the globe, with the notable exception of
Europe. The fastest and most substantial increases in natural gas
consumption are expected in China and the Middle East.5
4
About 60 percent of gas consumption in the building sector is attributable to heating Source: IEA, World Energy Outlook 2015
5
IEA, 2015 World Energy Outlook
Global Natural Gas Demand
Source: IEA, World Energy Outlook 2015
Global Natural Gas Demand by Region
Source: IEA, World Energy Outlook 2015
10. 10
3. Challenges to the industry
The analysis developed in the previous section makes it clear
that the world will need more energy in the decades ahead, to
keep lifting a growing number of people out of poverty and to
improve living standards. This rising energy demand will need to be
satisfied with continuous improvements in energy efficiency and
emission controls, to guarantee both economic and environmental
sustainability.
Greater productivity and efficiency can only be achieved through
innovation. Fortunately, the oil and gas industry has a rich history of
innovation. Advances in production technology have led to unlocking
reserves previously thought to be beyond reach. Just over the past
few years, hydraulic fracturing has nearly doubled U.S. oil production
from about 5 Mbd in 2008 to about 9 Mbd in 20146
. Efficiency
gains in unconventional drilling and completions have allowed
many U.S. producers to systematically lower break-even costs and
continue production in the face of the substantial oil price decline.
Breakthroughs in technology have also allowed the industry to
pursue more challenging reserves such as those in ultra-deep water.
These same technological advances, however, are at the root of
one of the most pressing current challenges, namely low oil prices.
The rise in U.S. oil production has contributed to the glut in supply
that has many analysts and forecasters expecting that oil prices will
remain below $50 per barrel throughout 2016.
To meet the goals of greater productivity and enhanced
sustainability in an environment characterized by a high degree
of uncertainty and volatility, the oil and gas industry will need to
surmount a number of challenges:
• The most immediate challenge is that of coping with low
oil prices without jeopardizing future performance. This
is especially daunting as it comes after an extended period of
very high prices, during which the industry had adjusted to a
much more forgiving financial environment. The cost of projects
ballooned over the past 10 years, imposing a substantial cost
burden on oil and gas companies. Oil producing countries
have also taken advantage of booming oil export receipts to
expand public spending, so that most of them would require oil
prices closer to $100 per barrel to balance their budgets. For
governments, the adjustment will require greater discipline
on public expenditures as well as efforts to diversify their
economies. For oil and gas companies, the adjustment will
require targeted investments to greatly increase efficiency
and productivity. These efforts could be best pursued though
partnership, an essential feature of the new wave of digital
innovations.
• The second challenge is posed by the increasing technical
complexity of the asset mix that oil and gas companies
are developing and operating. This has evolved to include far
more complex facilities—e.g. unconventional fields, liquefied
natural gas (LNG) and floating liquefied natural gas (FLNG)—
that demand higher levels of engineering and operations
expertise. LNG and FLNG add to an already very diverse asset
mix. Upstream fields have different resource types, different
reservoir characteristics, different operating environments,
and were developed at different time periods over the last 100
years. As a result, every field is unique and presents distinct
technical and operational challenges. Even the midstream
and downstream industries, which generally enjoy more
homogenous conditions than upstream industries, have a great
equipment diversity with specific operational challenges—the
result of costly capex investments made at different points in
time.
• The third challenge is posed by the aging and turnover
of the industry’s workforce, and the attendant difficulty
in securing technical talent and preserving accumulated
experience and knowledge. The demographics of the industry’s
workforce have, for some time, pointed to an impending
generational change; this has been a hot topic of debate in the
industry over the past decade. The turnover has now arrived,
and low oil prices are accelerating retirements and departures
by experienced workers. By some estimates, as much as 50
percent of the workforce will have retired by 2025, taking
decades of domain knowledge and experience with them.
The industry does not have a comparable pipeline of younger
workers to fill the gap, and the current financial pressures
are curbing hiring and making the industry appear as a less
obvious prospect to new entrants into the labor force. Securing
a stronger influx of qualified human capital is a priority; but
so is preserving the accumulated knowledge and experience
embodied in the outgoing workforce to transmit it to newer
generations.
6
According to data from the U.S. Energy Information Administration, see https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MCRFPUS2&f=A
11. 11
• Fourth, the industry’s concerns around health, safety and
the environment, as well as the regulatory environment
added pressure to the operations. From practices around
emissions to water reinjection to transportation, health, safety
and environmental concerns, all present the industry with
challenges of significant complexity and cost, which are set to be
a permanent feature of the operating environment. The industry
has a strong commitment and focus on health and safety of its
operations and its workers. There is also strong interest across
the industry in identifying new technologies and techniques that
will improve the impact it has on the environment.
• Last but not least, the oil and gas sector needs to cope
with a global environment characterized by much higher
uncertainty and volatility. These are generated by a number
of different forces. Technological innovation can suddenly
change operating conditions, costs, prices, and the relative
competitiveness of different fuel sources—as well as opening up
new operating environments. Cyclical fluctuations in the global
economy can profoundly affect demand at global and regional
levels. Regulatory changes can affect the mix of demand and
supply, the relative price of inputs and products, and impose
new costs and technical restrictions. Geopolitical events can
also cause swings in supply and prices, and affect risk appetite
in financial markets and in the oil and gas industry itself. Trends
in geopolitics, economics, and technology suggest that this
heightened volatility and uncertainty are here to stay. The
industry will need to achieve a greater degree of flexibility and
adaptability in order to cope.
12. 12
4. Digital revolution
As the industry begins to cope with these new realities, and goes
in search of the next big opportunities to drive productivity and
efficiency, there is a digital revolution on the rise that could prove
to hold a set of answers to these challenges when industry needs
them most. There can be little doubt that the industry needs to
shift from a mindset of increasing production to one of maximizing
productivity—lowering operating costs while maintaining operating
flexibility.
The Industrial Internet holds the key to unlocking the productivity
that operators need to flourish amid growing volatility. In fact,
the productivity that the world’s economies realized during the
computerization era of the 1990s, and the disruption that occurred
from the rise of the consumer internet in the 2000s, will be dwarfed
as we enter the age of the Industrial Internet—no longer a dream,
it is here today, and investments in Industrial Internet technologies
are accelerating at a staggering pace. Fueled by a proliferation of
low-cost sensors, we are seeing enormous volumes of data come
online. In fact, by 2020, we project to see the GE installed base
generating one exabyte (one billion gigabytes) of data every day.
The investments and advancements made in cloud computing
technology are now allowing us to efficiently collect, store, and
analyze this data at speeds and costs to which we have never before
had access.
The Future of Work
In 2014, GE examined three disruptive forces of innovation that
together drive the Future of Work—a technological revolution that
focuses on speed and collaboration, accelerates innovation and
change, and redefines economies of scale. Those three mutually
reinforcing trends are:
• The Industrial Internet merges big data and cloud-based
analytics with industrial machinery, resulting in greater
efficiency and increased operating performance.
• Advanced manufacturing weaves together design, product
engineering, manufacturing, supply chain, distribution, and
servicing into one cohesive intelligent system, delivering greater
speed and flexibility at lower costs.
• The Global Brain, through digital communication, integrates
the collective intelligence of human beings around the world,
resulting in crowdsourcing, open collaboration, and a much
faster pace of innovation.
The digital future of oil and gas
Today, breakthroughs in oil and gas digital technologies are part of
this broader, far-reaching transformation in global industry: the rise
of the Industrial Internet. Enabled by the convergence of powerful,
advanced computing, analytics, low-cost sensing, and new levels of
connectivity, it holds the promise of delivering economic value to all
industries by driving productivity and efficiency across operations.
The exponential increase in digital information has provided
industries around the world with a plethora of data, together
with the ability to capture, store and analyze it to obtain clear and
actionable insights. In fact, the following three observations help
us conclude that the Industrial Internet will in fact have profound
impact on industry as a whole.
1. The last several years have seen a sharp reduction in the cost
of sensors, and in the cost of collecting, storing and processing
data, thanks to cloud-based technologies. The instrumentation
of existing infrastructure has therefore become more cost-
effective, and data-driven insights can be obtained at lower cost.
2. A first generation of Industrial Internet solutions has already
demonstrated the ability to deliver substantial efficiency gains
with important economic impact. We have estimated that
the industrial solutions already delivered and deployed by GE
across a number of industries are yielding an average 20 percent
performance improvement for our customers.7
Efficiency
improvements of this magnitude, whether delivered via cost
savings or greater uptime and output, make a massive difference
to competitiveness and profitability.
7
Annunziata, Marco (2015). The time for industry. Retrieved from,
http://gereports.cdnist.com/wp-content/uploads/2015/09/29153350/Annunziata_Moment-for-industry_Final1.pdf
10,000
20,000
30,000
40,000
‘Big Data’ Brings Unprecedented Scale
Challenge: From controlled to chaos at 40% CAGR
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Exabytes
50XGrowth
Digital Information Created
1 Exabyte = 1 billion Gigabytes
Source: IDC’s Digital Universal Study, April 2014
13. 13
3. We are now seeing the birth of an “industrial-apps economy.”
In the consumer space, apps have played a major role in
accelerating the growth and geographical spread of new
solutions, leading to an exponential rise in revenues. GE has
now developed Predix, the operating system for the Industrial
Internet. This cloud-based, secure and industrial-strength
platform will be open to third parties to develop apps for
industrial use. We have estimated that, by 2020, more than
100,000 software developers will be building apps on Predix,
and generating some $225 billion in economic value. The
industrial-app economy will generate a rapidly growing number
of Industrial Internet apps, accelerating the pace at which
efficiency gains can be delivered.
How will digital deliver value?
Industrial Internet solutions deliver benefits to the oil and gas
industry in the following three tiers of value:
1. Asset performance management: minimize cost, increase
reliability, and optimize performance for an individual piece of
equipment
2. Operations optimization: system-wide improvements (e.g.
across a production facility, LNG plant, offshore vessel, or oil
field), and optimized life cycle management with increased
production, reduced operating costs, and reduced risk
3. Enterprise optimization: connection of demand and supply
operations to optimize portfolio of cash-generating assets
Asset Performance Management
One of the clearest and greatest benefits of Industrial Internet
solutions is substantially reduced equipment downtime, through
preventive, condition-based maintenance. Advances in predictive
analytics can now indicate when a piece of equipment is likely to
experience a specific failure, so that maintenance can be performed
ahead of time. This prevents the failure and resulting downtime, and
allows time to efficiently adapt operations in cases where the asset
needs to be taken off-line for maintenance.
Condition-based maintenance can deliver substantial cost savings in
the oil and gas industry. Consider for example:
• It costs between $10 and $16 million to surface a blowout
preventer for maintenance. Predictive maintenance could save
drilling companies millions in unplanned downtime and repairs.
• An average, mid-size LNG facility is currently losing about $150
million every year due to unplanned downtime.
• Each week that a subsea well is out of commission, translates
into over $3 million in lost revenue for the well’s operator, based
on industry averages.
These are just selected examples of sizable savings that can be
achieved through Industrial Internet solutions enabling preventive
maintenance and reducing unplanned downtime.
Source: VisionMobile, OECD
2013
0
1
2
3
4
5
6
7
8
2014 2015 2016 2017
2.3
5.5
6.3
7.1
8
Developers (M)
2008
0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
2009 2010 2011 2013 2014 2017
0.06 0.1
0.5
0.7
1.5
2.6
4
Apps (M)
Internet Retail Spend ($B)
2011
200 0
210
5
220
10
230
15
240
20
250
25
260
30
270
280
290
300
310
2012 2013 2014 2015
M-commerce: +5X
E-retail: +50%
Social Networks Sales: +14X
14. 14
Operations Optimization
The largest value-creation opportunity lies in operations
optimization, specifically creating an integrated approach to
optimize the hydrocarbon process. Today’s typical operations
landscape consists of a high degree of fragmented point solutions
that each satisfies a specific operational need. For example, there
may be a system that manages logging data during a drilling process,
another system that manages logistics and fleet for supply chain,
another for monitoring and diagnostics of artificial lift equipment,
and so on. However, the real value-creation opportunity exists in
connecting these silos and driving collaboration across upstream,
midstream, or downstream workflows. Example benefits would
include:
• Lower operating and maintenance costs. Improved
data management and analytics deliver enhanced visibility
over an entire network of operations. This can enable more
efficient capital and human resource allocation and improved
maintenance decisions. For example, a better understanding of
the performance of different onshore wells can help optimize
the deployment of crews, dispatching them to the locations
where interventions can be most beneficial, while avoiding
wasteful transit routes from well to well. In a similar manner,
better visibility and understanding of risk factors across a
pipeline network can allow operators to deploy crews and
physical assets most efficiently to mitigate risks in a targeted
and cost-effective manner.
• Increased workforce productivity through shared
knowledge. As previously mentioned, the industry is at risk
of losing a significant portion of its expertise to retirement
over the next few years. In many instances, multi-million
dollar operations are dependent upon too few individuals
whose domain knowledge can be very difficult to replace.
Digital knowledge capture and case management capabilities
give companies the ability to retain knowledge that they
would otherwise lose when these experts retire. Additionally,
knowledge can be shared more effectively throughout the
workforce, across different divisions, business units and
locations.
• Stronger operational performance through scaled best
practices. Digital tools can give oil and gas companies a
connected view across various business units, locations and
divisions. This would allow companies to identify top performing
operations in order to improve operations globally. For example,
a company may have one facility operating at 97 percent uptime
while another facility operates at 83 percent. With a connected
view of global operations, an operator can identify what
practices are driving the stronger performance and then apply
those practices to the lesser performing facilities.
Enterprise Optimization
The final value tier is optimization across the operator’s enterprise.
As equipment, processes, and operations come online, the
operator is able to leverage this near real-time knowledge of
the status of operations to make more informed decisions that
impact the financial performance of the firm. Imagine being able
to make constraint-based decisions on whether to run an offshore
production hub harder to capitalize on surge in spot price. Imagine
now being able to weigh the same decision across a fleet of assets
constrained by safety and reliability. If an operator can use data
to drive a 1% improvement in fleet reliability, the impact can be
measured in millions of dollars per year.
15. 15
Lessons from the past
The oil and gas industry has witnessed previous attempts at
digitalization. A number of industry players had started to deploy
sensors and upgrade communication infrastructure to enable
remote monitoring of operational performance. Those efforts,
however, have not delivered on the full potential of digital—since
they have not delivered a “enterprise scale”, and the ideal of a “digital
oil field” has not yet become a full reality.
In our view, past attempts at oil and gas digitalization have failed to
achieve their full potential for the following reasons:
• They encountered a complex set of challenges, including (i) the
cost of retrofitting sensors and controls to an extensive legacy
field infrastructure; (ii) the difficulty of changing business
processes so as to take full advantage of the digital possibilities;
(iii) the difficulty of changing the mindset of management
teams and workforces to put data and analytics at the center of
business strategies and day to day operations.
• Past attempts followed a silo approach rather than a
comprehensive strategy. Technologies meant for enterprise
IT have not been able to deliver outcomes at scale when
implemented in OT environments. Operators dealing with costly
obsolescence needed to rethink their approach to the digital
oil field. Additionally, decisions were often decentralized to
regions and operations teams with insufficient consideration
for standardizing technology to scale across the enterprise.
This resulted in solutions that were difficult and expensive to
maintain.
All of this created huge adoption challenges where solutions
implemented in one facility could not be easily replicated in other
facilities without complex integration, data management and
change management. At the same time, structuring the multi-
layered, complex data, and using it to form a holistic view of
operations has also proven to be a challenge—one example showed
that operating decisions on an offshore platform were being based
on analysis of less than 1 percent of data collected with 30,000
sensors.8
Today, the industry has new tools and technologies to help
overcome challenges like that. It now has Predix, the world’s
first and only cloud-based operating system built exclusively for
industrial companies. As the only industrial strength operating
system, Predix allows for familiar, frictionless connectivity, yet offers
the security, regulation and certifications that industry demands.
It also now holds the ability to effectively utilize and integrate the
masses of disparate data being collected—which was lacking in
previous efforts—provided by the emergence of data lakes.
This, coupled with big data and analytics, provides us with the ability
to link individual technology applications and build a cross-asset
integration and optimization system—a single environment to turn
real-time operational data and production statistics into powerful
insights that drive outcomes. Secure software platforms also
provide a unified user experience, allowing operators on the ground
as well as engineers, factories and supply chain leaders, to gain
visibility and understanding of the system-level trade-offs of their
decisions and to develop innovative services and products without
the high-resource integration tasks.
The merging of digital and physical technologies marks a profound
transformation of the industry. Traditional industrial assets become
interconnected machines, where performance can be improved
along new dimensions. Asset optimization can yield substantial
efficiency gains; but the game-changer will be operations
optimization, which requires a holistic approach to how wider
networks of assets are managed thanks to data-driven insights and
digital tools.
The new digital technologies and platforms now available are
true game changers. By leveraging their potential, the oil and gas
industry today has a chance to move to the forefront of the digital-
industrial revolution, securing efficiency and productivity gains that
have never before been within reach.
8
The Internet Of Things: Mapping The Value Beyond The Hype, McKinsey Global Institute, McKinsey Company, June 2015, www.mckinsey.com/mgi
16. 5. Conclusions
The oil and gas industry is at a critical juncture. Coping with lower oil
prices in a way that does not jeopardize future performance is the
most pressing challenge, but it is not the only one. A more complex
asset mix; an aging workforce; health, safety and environmental
concerns; and an environment of structurally higher volatility and
uncertainty are equally powerful headwinds.
At the same time, the medium and long-term demand outlook
remains very favorable. The global recovery has proved resilient so
far, and robust growth in emerging markets fuels the rise of a larger
and energy-hungry middle-class.
The Industrial Internet revolution offers the tools to meet the
industry’s challenges and to exploit the opportunities ahead. A
number of digital solutions can already provide substantial cost
savings and improvements in operations management, asset
management and investment strategies. Finally, the digital future
of oil and gas is truly within reach.