The oil and gas industry is changing. Supplies are tight, prices are up, investments are rising and staff is short. The pressure is on to produce more at lower cost with fewer people.

There is a real buzz about so-called "digital oil fields" as a way to ease these pressures. The industry is gearing up to embrace digital technology and to make it work - profitably. Yet there is also an underlying caution about managing the business. And rightfully so!

The recent focus on transparency and accountability, resulting from accounting scandals and Sarbanes-Oxley legislation, has made the jobs of energy executives more difficult. The clamp-down on questionable practices by the Securities Exchange Commission (SEC) makes energy executives doubly vulnerable. They want to ensure proper procedures are in place to monitor corporate performance.
Energy executives can respond to these needs using mature digital technology. They can build the desired transparency while protecting their intellectual capital, building collaborative teams, managing business risks and keeping an eye on the profits.

Much has been said about corporate dashboards, which are user interfaces that organize and display need-to-know information in an easy way, much like the gauges on an automobile dashboard. Intuitively, the idea has merit and appeal. Still, the dashboard concept hasn't caught on, and for a variety of reasons. First, it is challenging technologically. Second, it is fraught with cultural impediments. However, as the concepts behind the digital oil field catch on, the benefits of systematically displaying digital dashboards can be advanced from the control rooms to the board rooms.

With digital oil fields, we will have access to sufficient and relevant information for the corporate cockpit crew. It will take energy executives some time to embrace the concept and make it work, just as it works today in other industries.

Consistent dashboards

Airliner cockpits have dashboards that distill data from hundreds of sources. Nuclear plants have data coming from thousands of sensors into a safety parameter display system (SPDS), which shows 10 to 15 critical parameters that precisely indicate the plant's condition. Space shuttles have revisited the man-machine interface (MMI) topic after the Challenger accident, incorporating the lessons learned from other industries.

Digital oil fields are excellent candidates for accelerating the oil and gas industry into the digital century. They can embed the lessons learned elsewhere in the application of human factors engineering, feedback control systems and optimization models. Digital oil field applications will be an interim step before dashboards are used routinely by corporate executives.

By way of analogy, the training and skills of the cockpit crew (pilot, co-pilot, flight engineer) come into play every day as they perform their functions. To land the aircraft safely during an emergency it is vital to have both human intuition and embedded technology, technology that enables quick analysis of the situation and communication with external entities.

Likewise, the digital oil fields will serve to collect and present data to the management team, all the way from asset managers to corporate executives. Using highly specialized data, they can model, simulate and assess alternate strategies the company can adopt, drawing on collective corporate talent and knowledge quickly, and taking action to safely steer the company to greater profits.

It is often said that necessity is the mother of reinvention. We go further to say that it is also the mother of reinvention. Energy companies have a history of invention, and the emergence of the digital oil field is likely to change the way energy companies do business once again. And the underlying driver is the ability to get a greater "return on information."

Information value

Two business axioms that can be applied in data management are:
Axiom 1: Customer focus, quality and profits are words used by all executives in their pursuit of excellence. A well-known mantra is, "Empowered people produce quality products that generate profits from well-informed and satisfied customers." People, products and profits (the 3Ps) have been the three corporate focal points.

Axiom 2: "Quick access to corporate knowledge through a secure and reliable infrastructure will reduce business risk." Infrastructure status, business risks and corporate knowledge management are three new focal points to add to the corporate vocabulary and to navigate the corporation in today's environment.
Axiom 1 is a time-tested rule business leaders intuitively follow. Axiom 2 has become vital in the face of a rapidly changing and uncertain world. If managed correctly, the same pervasive digital networks and quick access to corporate intellectual capital can reduce business risk.

Digital data management

Human factors engineering is critical in designing a system that presents data in a manner that encourages the human mind to comprehend and take action. Extracting updated information from engineering systems, operations, financial ledgers, markets, trading and the field, and presenting it intuitively and clearly, are vital.

Today, data can be accessed instantly in executive suites to manage the original 3Ps and the three new targets of infrastructure, risk and knowledge management. With technological advances, enterprise data management is not a cumbersome chore, but a pleasant necessity one can get conditioned to accomplish. A simple well-engineered dashboard can be applied both to the corporation and at the asset level to the digital oilfield. By creating the necessary cultural fabric, we learn to apply, collect, manage, use and preserve the data under each of the six categories.

The figure "Corporate Progress" shows how a corporate dashboard may be designed. In this example, products, people, profits, knowledge, infrastructure and business risk are the six executive-facing business issues that may be monitored constantly at a digital oilfield level and fed to the corporate level. The green, orange and red represent respectively safe, alert and danger zones. A simplistic view of the progress could be shown with dials for each measure, and the comparative progress relative to the last quarter and to previous years. A visual indication, behind which millions of corporate sensors are feeding data in near real-time, also brings together data from other sources such as enterprise resource planning (ERP) systems, supervisory control and data acquisition (SCADA) systems, well-management systems, and production accounting and commodity sales receipts. The key to making the exercise valuable is to use the right metrics and to articulate the value in terms of cost and production improvements.

The level of sophistication may vary depending on well maturity. While digital systems are more easily accepted and approved in new wells, maturing wells can equally benefit from use of simple and yet elegant techniques to monitor them. The trick to implementing the corporate dashboard is to first simplify thinking and identify the 20% of the critical data necessary to gain 80% of the value.

Digital modeling

A corporate dashboard is company- or project-specific, largely customized and made fit-for-purpose. It might contain any or all of the six areas of strategic interest. It might enable employees, vendors and customers to communicate (with appropriate security access). It would allow employees and executives to monitor corporate goals, with an eye on the policies of the organization and on industry benchmarks.
The digital oilfield's advantage is in automating and optimizing operations, focusing attention on exception reports where performance doesn't meet expectations and in being able to find missing value imaginatively from the available sources. Data, an organization's most valuable asset, may be available in the form of instrument readings, model results, empirical relationships, knowledge repositories, data warehouses or experiential knowledge. The goal is to keep improving information at all levels in order to cut costs and increase recovery. The simple rule is, "if you can measure it, you can manage it."

Process simulation and modeling should be at the center of digital oilfield activities. Feedback control loops can provide continuous optimization. Operators need only see exception reports, alerting them to signals out of range, focusing attention quickly where it is needed. Automation can be relied on to operate the rest. As we become more sophisticated with our models, we can progress towards our long-range goals - more production at lower cost with fewer people.

At the leadership level, the key challenge is to create the right environment. Making data available to everyone can be threatening to knowledge workers. A corporate culture must be fostered wherein data and information availability is seen as supportive of everyone's efforts rather than as a career risk. Technology changes come with the need to change processes and behaviors. New processes will be needed as old roles fade away. Extensive training in the use of new technology using new work processes is also required. Successful organizations will attend to three key components to institutional success: technology, processes and people.

The Society of Petroleum Engineers (SPE) has taken the lead, through its annual Digital Energy Conference, in bringing attention to the evolving role of digital technologies within the energy industry. This year's Digital Energy Conference will be held March 23-24, 2005 in Houston. For more information, see www.digitalenergy2005.com, or contact Murthy Divakaruni at +1 281-330-8236 or mdivakaruni@sbti.com.

In closing

The oil and gas industry uses digital technology in its control rooms today and is familiar with performing monitoring and control functions through display boards. The digital oilfield concept is really an interim step the industry needs to take before we expect full-fledged digital dashboards usage at the corporate level. Design simplicity, confidence in data displayed and allowing time for cultural acceptance are three important elements for us all to remember as we work to make the digital oil field a reality.

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