Integrated Operations Best Practices Needed by Indian Upstream Energy Companies

International Journal of Management (IJM) Volume 11, Issue 9, September 2020, pp. 1223-1232, Article ID: IJM_11_09_118 Available online at http://iaeme.com/Home/issue/IJM?Volume=11&Issue=9 ISSN Print: 0976-6502 and ISSN Online: 0976-6510 DOI: 10.34218/IJM.11.9.2020.118

INTEGRATED OPERATIONS BEST PRACTICES NEEDED BY INDIAN UPSTREAM ENERGY COMPANIES

Rajeev Goyal University of Petroleum and Energy Studies, Dehradun, Uttarakhand, India

Dr. S.K. Pokhriyal University of Petroleum and Energy Studies, Dehradun, Uttarakhand, India

Dr. Sylesh Nechully Haris Al Afaq LLC, Abudhabi, United Arab Emirates

Dr. Sumeet Gupta University of Petroleum and Energy Studies, Dehradun, Uttarakhand, India

ABSTRACT The Upstream Energy business, in one sense, is a simple business with every operating company dealing with large amounts of information data confined to various boundaries and thus generating complexity for smarter decision making. Globally for almost a decade, Integrated Operation (IO) has been a known solution to develop an analytics based intelligent online (or near real time) system connecting decision makers to the work processes, existing software applications and the historians. Many global companies have focused very well on IO Enterprise Solution and proved its benefits to the rest of the world. But Indian upstream companies are still not able to reap the real benefits in spite of their plans to adopt IO. In this paper, author is analyzing top India upstream companies at conceptual level for various barriers in such adoption of IO Enterprise Solution as compared to some International Oil Companies (IOC’s). All leading upstream companies in India, which already have a level of instrumentation as compared to other industries without any data sharing across the organization, are highly dependent on human interpretation, making it difficult to optimize various resources in an integrated and timely manner. This paper analyses the specific business areas for data integration and analytics in order to build a smarter organization with focus on multi-billion dollar payoffs over the next decade of operations (Munier et al, 2008). IO Enterprise Solution involves monitoring Energy facilities by having an instrumented, interconnected and intelligent framework across the value chain. By combining workflow information and decision support tools with active near real time dashboards, both planned and unplanned

http://iaeme.com/Home/journal/IJM 1223 [email protected] Integrated Operations Best Practices Needed by Indian Upstream Energy Companies

shutdowns can be reduced while maximizing money, time and manpower available at hand. The degree to which it can happen will depend on the vision of the Operating Company’s leaders. Enterprise Collaboration is the key for the companies where IT vendors, strategic business partners and academicians shall be able to provide that support to drive more “smartness” into the organization. And this paper shall share that model blueprint. Key words: Integrated Operations, IO Enterprise Solution, Upstream Energy Business, Enterprise Collaboration, Data Integration, Data Analytics. Cite this Article: Rajeev Goyal, S.K. Pokhriyal, Sylesh Nechully and Sumeet Gupta, Integrated Operations Best Practices Needed by Indian Upstream Energy Companies, International Journal of Management, 11(9), 2020, pp. 1223-1232. http://iaeme.com/Home/issue/IJM?Volume=11&Issue=9

1. INTRODUCTION In the digital oilfield era, an end-to-end Integrated Operation (IO) system in which real-time data capture helps to optimize everything from production and drilling to completions and safety, is the ultimate expression of technological advancement. IO Enterprise Solution concept is about employing real time integrated data and new technology to remove barriers between disciplines, expert groups, location and companies with the objective of expediting the time dimension of decision making. But IO term is still used by different companies in different connotations with focus on just one portion of IO Enterprise Solution in reality, e.g. ERP implementation is just one small component of the IO system. The synonym term “Digital Oilfield of the Future (DOFF)” for the end-to-end Integrated Operation (IO) system was coined by Cambridge Energy Research (CERA, now IHS CERA) in 2002. The vision for IO (Crompton et al, 2010) or DOFF emphasizes new ways of working where operators, partners, and service companies could take advantage of improved data and knowledge management, enhanced analytical tools, real-time systems, and more efficient business processes.

Figure 1. Integrated Operations layers as per OLF

http://iaeme.com/Home/journal/IJM 1224 [email protected] Rajeev Goyal, S.K. Pokhriyal, Sylesh Nechully and Sumeet Gupta

2. LITERATURE REVIEW OF IO BEST PRACTICES The first attempt of designing any IO Enterprise Solution system was performed by Superior Oil for Real Time Drilling Operations Centre (RTOC) (Hobert et al, 20023). But the upstream leader in this space was Statoil with the first implementation of Operations Service Centre (OSC) in 2000 to support five offshore rigs. Conoco Phillips had also established an onshore drilling centre (Booth et al 1989) in 1999 though at a smaller scale. All the major global players had since been taking some IO initiative. BP, Shell, Petrobras, Chevron, ENI, BG Group, Saudi Aramco, and ConocoPhillips, IBM is members of the Smart field Consortium at Stanford University and many other standards groups and industry forums. The aim of the Smartfields (Best et al, 2011) Consortium is to develop efficient software tools for the optimization of oil field development and operations (Kjell et al, 2010), including data assimilation, fast simulation, model updating, and optimal control. However, efforts on complete IO solution implementation started in reality from 2006 by major IOC’s in developed countries. Some of the global IO success examples are highlighted below. Chevron’s IO program called “i-field” (Hauser, 2010) running since 2002 boasts of a suite of 20 advanced “tools” for Chevron operating companies worldwide. Chevron is on track to save up to a billion dollars a year when the i-field and a broader operational overhaul are fully implemented in 2016. The Norwegian Oil Industry and North Sea operators pioneered the development (Ringstad et al, 2007) of IO Enterprise Solution with a high degree of collaboration between Government, Industry, and Academia. Statoil, along with the Norwegian Government, the Norwegian Oil Industry Association (OLF), The Norwegian University of Science & Technology (NTNU), and a consortium of 20 other suppliers and institutions established IO in the High North (IOHN) in 2009, to drive further progress in IO. In early 2010, Statoil began an enterprise program to deploy their IO solution across their North Sea and international assets. As per OLF, the value of IO for Statoil represented a potential of USD 50 Billion (NVP) over an eight years period for the estimates at 7% discount rate at 2007 crude oil prices. Shell has the most successful IO program in part implementation of various IO Enterprise Solution components, with successful Smart Field implementations in the US, Canada, Europe, the Middle East and Africa. Shell has developed a holistic and comprehensive approach with sustained investment in programs such as Smart Wells, New Fields “born Smart”, Advanced Collaborative Environments (Hobert et al, 2003), and Enhanced Oil Recovery through Integrated Reservoir Management. Shell estimates that the Smart Fields program has created over $5 Billion for Shell and its partners until 2009. BP’s Field of the Future (FoF) program (Dickens et al, 2010) is one of the largest IO programs in the industry. BP has implemented its FoF technology on 80% of their Top 100 wells worldwide, they have established 35 so-called Advanced Collaboration Centers around the world, and they credit FoF with contributing over 50 mboed (million barrels of oil equivalent) gross production per year with hard dollar benefits.

http://iaeme.com/Home/journal/IJM 1225 [email protected] Integrated Operations Best Practices Needed by Indian Upstream Energy Companies

Figure 2 BP Field of the Future Overview Except Cairn India, no other Indian upstream company (Modi, 2012) has published papers on the implementation of IO. Cairn India also started presenting Digital Oil Field (Venkat et al, 2006)in some forums in the last two years but it reflects only about implementation of the selective components of IO.

Figure 3. IO infrastructure of 2nd largest Indian upstream company BG is taking some initiative globally but India assets are still limited to Maximo, ERP and niche software solutions. ONGC has spent heavily on SCADA and other instrumentation in field apart from ERP and point software solutions.

http://iaeme.com/Home/journal/IJM 1226 [email protected] Rajeev Goyal, S.K. Pokhriyal, Sylesh Nechully and Sumeet Gupta

Figure 4. IO infrastructure of 3rd largest Indian upstream company From a general observation of Indian upstream industry, it can be concluded that IO in India is still limited to few niche solution components like ERP, Real time well flow information, reservoir simulators (Cambridge Energy Research Associates, 2003), G&G softwares, RTOC, Asset Management system, DCS and other point solutions covering Finance and Logistics. There is a lack of understanding of a meaningful IO solution.

Figure 5. IO infrastructure of 4th largest Indian upstream company Just a few experts tried to present the IO concept to Indian upstream companies in some oil & gas forum also but IO in India will take more time.

2.1. IO Requires Management Commitment As per one of the Chevron managers, “We used technology to change what we do, rather than optimize what we have always done.” That is the change IO has brought in the industry. IO programs are more fundamentally multi- disciplinary business process improvement and change management initiatives, requiring executive vision and commitment. From the information technology (IT) perspective, IO is always about deploying the latest technical advances which rely upon a stable IT and field automation platform, effective data

http://iaeme.com/Home/journal/IJM 1227 [email protected] Integrated Operations Best Practices Needed by Indian Upstream Energy Companies management environment, and change management issues. One of the major barriers is that all the companies guard their detailed technical strategies and proprietary data as Intellectual Property (IP) for competitive advantage which started opening up with the use of open standards. A critical link in this IO conversation between the line of business (LOB) and IT is to establish realistic business cases for monitoring the measurable business impact of these strategic investments. Each operating company must develop their own corporate, asset level and business process improvement strategies, and deploy IO programs to support these unique business issues and opportunities.

Figure 6. A View of Governance in Upstream Industry For an effective IO system, companies need to move from an applications-centric approach towards a service oriented approach to the management of information systems, utilizing a framework approach featuring improved data management and visualization, the use of automated workflows, and integrated, model based solutions.

3. IO IMPLEMENTATION BARRIERS IN INDIA Although the IO Enterprise Solution solution is intended to help the organization industry decision makers by creating new ways of working based on real time integrated data, and has been in use since 2006 globally but companies in India are still at initial stages of IO. Most of the upstream companies are struggling on full scale IO implementation due to many unidentified barriers. No detailed study has been undertaken in this respect by any upstream operating company except Cairn India. All upstream operating companies in India are running their business across production, drilling and exploration value chain with manual or partly automated business processes while dealing with large amounts of complex data coming from various field instruments, plant DCS system, plant and enterprise level data servers and software applications apart from manual data in different data formats. Managers at all levels take business decisions based on manual interpretation of these data inputs as per company’s defined key performance indicators (KPI’s) like production revenue, production & development cost and many other KPI’s as shown in Figure 3. However, lack of integration, lack of automated business processes, lack of visualization causes delay in this decision making.

http://iaeme.com/Home/journal/IJM 1228 [email protected] Rajeev Goyal, S.K. Pokhriyal, Sylesh Nechully and Sumeet Gupta

Figure 7. Integrated business information flow Due to all these gaps around data integration and lack of analytics & optimization tools, Indian upstream companies are still not falling under Smarter Oil & Gas category. There is a clear lack of understanding on the business benefits of an integrated information flow. All the upstream companies in India are struggling with basic business challenges like lack of operational insight on current happening causing business delays resulting in impact on revenue and cost all the time. Importance of the scholar's proposed research is based on the fact that India can easily target $10 Bn savings through IO initiatives over 5 years. As per scholar’s interaction with upstream oil & gas companies in India, almost all the oil & gas companies are losing huge amounts of revenue due to delayed decision making. Just to quote one example, an upstream company has only 350 wells flowing out of 1300 wells just because of lack of management control on various activities requiring remedial measures. Even getting as low as 40 Bbls per day well back on production in that area with IO solution will add $1.5Mn worth of additional revenue on an annual basis. And the basic reason for the challenging situation was the company's inability to monitor and spend the annual budgeted funds in time. In Norway, OLF had identified that the biggest challenge faced by executives in implementing IO was People related factors apart from other factors related to Technology and Organisation Processes. But in spite of the historical initiative of IO in Norway and proven application in many other developed countries by other IOC’s, those same solutions are still not being used by Indian upstream companies due to some unidentified barriers. Although various operators and service companies in India claim that they are practicing IO or Digital Oilfield philosophy but the fact is they are still confined to either instrumentation or DCS level or at the most ERP component of it. The purpose, aims and challenges of all the Indian upstream companies remain essentially the same – how to improve operational efficiency (Crawford et al, 2010) of the organization.

3.1. IO Value Proposition IO Enterprise Solution approach provides the integrated information flow connecting decision makers to existing software applications and the databases through seamless work processes, by having all data flow through instrumented, interconnected and intelligent system. Streamlining flow of data from field to boardroom with various stages of IO, shown in Figure 8, is the only solution to becoming a Smarter Oil & Gas company.

http://iaeme.com/Home/journal/IJM 1229 [email protected] Integrated Operations Best Practices Needed by Indian Upstream Energy Companies

Figure 8 Integrated Operations (IO) layers Technology provides answer to most of the challenges apart from enabling people and modifying business processes. The concept of IO offers an environment where all decision makers at executive, managerial and operational level can have total asset awareness and can monitor and manage all operational activities in real-time or near real-time, regardless of location. Establishing an integrated infrastructure that connects people and processes helps provide smooth access to information, collaboration tools and business applications. If this integrated infrastructure spans across the operations including drilling, production and maintenance in oil fields, it is possible to provide a platform that integrates communications and applications so that oil and gas companies deliver significant improvements in field collaboration; production awareness and achieve operational excellence.

3.2. Technology In the oil and gas industry, return on investment depends heavily on asset availability. If the overall facility or sub-systems fail, production will cease but costs will continue. Assets may include offshore drilling rigs and production platforms, land-based fields, pipelines and storage facilities. Technologies for remote monitoring & measurement, operational video and mobile work management help provide operator visibility or sensing to respond to downtime and increase oil flow. Remote monitoring helps to provide a platform for contextual awareness solutions and enhance field efficiency (Wahlen, 2002) by operating from offsite locations. This reduces the dependency on 24x7 field monitoring and minimizes human errors. The applications available for remote monitoring and measurement also help to support the acquisition of previously unavailable or isolated data and transmit that data (to a central location or multiple sites) for analysis and decision-making. It can also communicate a response back to the assets. Monitoring over video helps in disaster response and helps develop analytics that can be used to gauge the level of failure. Video monitoring solutions can be easily used for field operations and to monitor platforms, pipelines, marine vessels, machinery and other assets. With the wide availability of mobile devices such as Smartphones, PDAs and Tablet PCs, oil companies can leverage mobile work management solutions designed to improve workflow management, productivity and process compliance. Applications for work management permit management, mobile maintenance and testing help to support rapid staff and contractor intake programs such as shutdowns and turnarounds, where instant access to information and enforcement of process compliance is essential.

http://iaeme.com/Home/journal/IJM 1230 [email protected] Rajeev Goyal, S.K. Pokhriyal, Sylesh Nechully and Sumeet Gupta

3.3. People Professionals in the oil and gas sector spend a lifetime honing skills, accumulating experience, acquiring tacit understanding of specific basins and reservoirs and developing functional skills, such as directional drilling (Booth et al 1989) . Oil and gas companies need to exploit it from remote areas, often far away from where this expertise resides. This requires a huge shift from organizational demarcation lines and old siloed ways of working. Through the integration of unified communications and presence technology, employees can use any combination of voice, video, data, mobility applications and devices for communicating with each other regardless of whether they are working on-shore or offshore. Unified Communications brings the problem to the experts, rather than the other way round. It provides them with complete situational awareness and the ability to collaborate and share information in real time, with those who need the expertise. Thus the staff on the ground becomes the eyes and hands of the remotely-based expert, helping to solve a problem as quickly and cost-effectively as possible.

4. OPERATIONAL EXCELLENCE PROCESS Cost management, efficiency and safety remains a constant business imperative for oil and gas companies. Companies are also looking to consolidate facilities to increase availability, reduce costs and improve data security. At the same time, health, safety and environment concerns are top priority within the industry. By its very nature, the production area is a hazardous space in which movement and activity of all personnel needs to be closely tracked and controlled. Workforce safety can be significantly improved by optimizing the availability and delivery of applications so that employees receive the right information they need to safely go about their work. By leveraging the wireless network investment to introduce new capabilities for the real- time tracking of people and assets it is possible to increase the safety limit. Through asset tracking, any Wi-Fi device or Wi-Fi (RFID enabled) tag that connects to the wireless network can have its associated contextual information captured. In addition to improving visibility of assets, this information can be used to rapidly account for personnel working in hazardous zones or when there is an evacuation order.

5. CONCLUSIONS All major operating companies in Indian upstream energy sector need to automate business processes with an integrated IT infrastructure to reduce operational time (Lileng et al, 2010). A piecemeal approach to IT must be avoided because it becomes cost prohibitive to implement the technology. To increase the success rate, this review should seek to identify and leverage industry best practices. However, the key success factors which Indian upstream companies must take into account while designing and implementing IO Enterprise Solution are as follows:  Establish an effective, balanced approach to Research and Development, deployment and value realization (OLF, 2006). Technology is not the major focus. It has to be ensured that any technology research and development is very focused on specific gaps that could generate competitive advantage.  Develop clear linkage to business needs and functional priorities as the basis of engaging the business.  Focus on deployment: Deploy solutions that have proved effective in one asset across multiple locations – get the most value out of what is already proven before launching new initiatives.

http://iaeme.com/Home/journal/IJM 1231 [email protected] Integrated Operations Best Practices Needed by Indian Upstream Energy Companies

 Use good project management: Use a phased approach and/or quick wins to deliver some early value and get user buy-in to a wider program.

REFERENCES [1] Booth, J.E., & Hebert, J.W., II (1989), Support of drilling operations using a central computer and communications facility with real time MWD, Petroleum Computer Conference, San Antonio, Texas [2] Wahlen, M., Sawaryn, S., Smith, R., & Blaasmo, M. (2002), Improving team capability and efficiency by moving traditional rig site services onshore, European Petroleum Conference, Aberdeen, Scotland [3] Hobert, M., Pederson, J., & Pedersen, T. (2003), A step change in collaborative decision making – onshore drilling centre as the new work space, SPE Annual Technical Conference, Colorado [4] Cambridge Energy Research Associates (2003), The Digital Oilfield of the Future : Enabling Next Generation Reservoir Performance [5] Venkat, Sekhar, Feblowicz, Jilll and Nicholson, Rick (2006), Demystifying the Digital Oilfield, Energy Insights E1202344 [6] OLF, (2006), Potential value of IO on the Norwegian Shelf, http://www.olf.no/english/news/?32101.pdf [7] Ringstad, A.J. & Andersen, K. (2007). IO and need for a balanced development of people, technology and organization [8] Munier, Rob and Haaland, Kurt (2008), BP GoM: Next Generation Offshore Fiber, ON&T, magazine [9] Lileng, Trond and Sagatun, Svein Ivar, (2010) , IO Methodology and Value Proposition, Society of Petroleum Engineers, SPE 128576 [10] Kjell, Lejonand, Karl, Johnny Hersvik, (2010), Multi-asset Production Support Centre - Generating Values, Society of Petroleum Engineers, SPE 127730 [11] Dickens, Jeff., Latin, David., Verra, Graeme., Blosser, William., Edmonds, Greg., and Grimshaw, Greg., (2010), The BP Field of the Future Programme: The Continuing Mission to Deliver Value, Society of Petroleum Engineers, SPE 128672 [12] Smartfields Consortium Homepage, School of Earth Sciences, Stanford University. [13] Crompton, Jim. and Gilman, Helen, (2010) The Future of IO, Society of Petroleum Engineers, SPE 127715 [14] Hauser, Mike (2010), i-fieldTM: the Integrated Field – Applying Predictive Technologies to Operational Transformation, CERA [15] Crawford, Mark L. & Morneau, Richard A. , (2010), SPE134107 : Accelerating Progress Toward Achieving Digital Oilfield Workflow Efficiencies, SPE Annual Technical Conference, Florence [16] Best, Leo de, (2011), Smart Fields: Setting the Standards of the Future, IO Conference, September [17] Modi,R., (2012), SPE 153485 : IO, SPE Oil & Gas India Conference, New Delhi

http://iaeme.com/Home/journal/IJM 1232 [email protected]