CSIRO FUTURES Scenarios for I CT in Minerals and Energy in 2025 Anna Littleboy, Hannah Cook, Stefan Hajkowicz, James Deverell , Stephen Giugni July 2013 Citation Littleboy A, Cook H, Hajkowicz S, Deverell J and Giugni S. (2013). Scenarios for ICT in Minerals and Energy in 2025. CSIRO, Australia. Copyright and disclaimer © 2013 CSIRO To the extent permitted by law, all rights are reserved and no part of this publication covered by copyright may be reproduced or copied in any form or by any means except with the written permission of CSIRO. Acknowledgements Important disclaimer CSIRO advises that the information contained in this publication comprises general statements based on scientific research. The reader is advised and needs to be aware that such information may be incomplete or unable to be used in any specific situation. No reliance or actions must therefore be made on that information without seeking prior expert professional, scientific and technical advice. To the extent permitted by law, CSIRO (including its employees and consultants) excludes all liability to any person for any consequences, including but not limited to all losses, damages, costs, expenses and any other compensation, arising directly or indirectly from using this publication (in part or in whole) and any information or material contained in it. Executive Summary This report outlines a number of forward-looking scenarios for South Australia to play a larger role in building an ICT (Information and Communications Technology) industry to support the global minerals and energy sectors through 2025. These opportunities could help diversify the South Australian economy and provide a stable base for job creation, innovation, and economic growth in the future. Both the minerals and energy sectors 1 play a large role in the Australian economy. The Australian “mining boom” of the past decade has seen incredible growth in the minerals sector, fuelled by rising overseas demand and high commodities prices. However, the recent softening in demand and decline in prices has led to an increased focus on the twin business drivers of increasing productivity and reducing costs in the industry. The Australian energy sector is poised to see continued growth through the development of unconventional coal seam gas and shale gas resources and the conversion to Liquefied Natural Gas (LNG) for export. However, recent development of shale gas in the United States has led to a decline in global energy prices, which is driving productivity and cost reductions in the oil and gas industry. The need to improve productivity and reduce costs has started to drive innovation in both minerals and energy. In addition, pressure to reduce environmental impact, improve worker health and safety, and the need to maintain a strong social license to operate continues to fuel new innovations in both sectors. These business drivers have created opportunities in the upstream industries that supply equipment, technology and services into the industry. As a result, a new wave of Australian growth could be fuelled by developing these industries through innovation and growth of skills, knowledge, and information. ICT is a key component of both the global Mining Equipment Technology and Services (METS) industry and the global oilfield services sector. The ICT industry is evolving rapidly in response to opportunities opened up through the ability to manage vast datasets, to connect sensors and sensor networks to control systems, to augment human operations with robotics and to communicate ubiquitously in real time. As a starting point for identifying future scenarios for ICT in the minerals and energy sectors, this report looks at both the current challenges (“pain points”) in each sector, as well as the global “megatrends” shaping the future of resources. The six megatrends identified describe some of the social, environmental, economic, and technological shifts that will affect the industry: • The Innovation Imperative - productivity decline, high costs and low prices mean that mining and energy companies will need to innovate to remain competitive; • From FIFO to LILO - changing labour markets, lifestyle patterns and skills requirements as operations move from fly-in fly-out to log-in log-out; • Tell Me More – rising demand for transparent, credible and comprehensive information regarding live sustainability performance information; • Plugged In and Switched On – increasing connectivity between people and devices in the online world is creating new functionality; • The Knowledge Economy – how and why an economy captures growth in knowledge services; and 2 • E=MC – swapping energy for matter via recycling could turn business models on their head. 1 Throughout this report, “minerals” and “mining” are used interchangeably to refer to the extraction of mineral-based resources. “Energy” and “oil and gas” are used interchangeably to refer to the extraction of petroleum resources, including unconventional gas. The term “resources” is used to collectively describe both minerals and energy. Scenarios for ICT in Minerals and Energy in 2025 | i Based on these trends and a broad survey of existing ICT technologies and research, this report identifies 11 scenarios – six in minerals and five in energy – for how South Australia could build a competitive advantage in ICT services using existing capabilities to establish a strong foothold by 2025: ICT in Minerals Scenarios • Advanced Resource Modelling – In 2025, South Australia plays a leading role in developing interoperability and “plug-and-play” capabilities across major METS vendors and SMEs in the minerals sector, which leads to new opportunities in innovation. • Interoperability for Innovation – In 2025, South Australia is a world leader in advanced resource modelling technologies allowing deeper and more difficult resources to be profitably mined, opening up a new wave of minerals exploration. • Remote Operations Hub – In 2025, South Australia hosts numerous global remote operations centres and is a world leader in the tools, skills and services required to build and maintain tele- operation centres. • Intelligent Processing – In 2025, South Australia plays a leading role in advancing the goal of a fully integrated intelligent processing plant that provides feedback into the common mine model and allows for adaptive operations. • Human/Machine Interaction – In 2025, South Australia is a world leader in developing technologies that allow human-controlled and autonomous machines to work safely together in a confined mine environment. • Crowd-sourcing Regulation – In 2025, South Australia leads the world in transparency of environmental data, which decreases the regulatory burden on the government and improves trust between industry and communities. Energy Resource Opportunities • Advanced Reservoir Simulation – In 2025, South Australia is a world leader in advanced reservoir modelling using multiphysical predictive sub-surface models to characterise oil and gas fields at both micro- and macro-scales, opening up new exploration opportunities. • Monitoring and Control – In 2025, South Australia plays a leading role in the development of the monitoring and control systems that are at the centre of the “intelligent field”, including advanced sensors, autonomous monitoring, remote operations, and failsafe communications. • Production Optimisation – In 2025, South Australia is a world leader in ICT technologies for simulating and optimising production from unconventional gas fields including real-time measurement and adjustment of flow parameters and fluid mixes. • Smart Information Platforms – In 2025, South Australia plays a leading role in developing smart information platforms for supply chain management, personnel management and risk management. • Environmental Monitoring – In 2025, South Australia leads the world by working with industry to develop standards for the transparency of environmental data, which decreases the regulatory burden on the government and improves trust between industry and communities. These scenarios are normative, meaning that they each provide an “ideal” vision which can be worked towards through strategic planning and decision making. They are also high-level and broad, with the intention of covering the entire value chain in both minerals and energy. The scenarios were presented to a range of South Australian stakeholders from industry, academia and government at a “Validation workshop” held in July. They acted as “discussion starters” for this audience and stimulated broad discussion about the role that ICT can play in enabling integration throughout the value chain for both minerals and energy. The potential of “informatics” and training and development of a workforce that is ready to operate in any or all of the scenarios were discussed at some length at these workshops. ii | CSIRO Contents Executive Summary i Contents ii 1 Introduction 1 2 Information Technology and Value Creation 3 2.1 Value chains and business drivers for minerals and energy resource development............................ 3 2.2 Models for creating value in South Australia ........................................................................................ 7 2.2.1 Developing South Australian Resources ..................................................................................... 7 2.2.2 Servicing South Australian operations ........................................................................................ 7 2.2.3 Exporting South Australian