Managing Digital Disruption Positively

The digital enablement of the oil and gas industry underway is truly transformational. From improved methods of field development to the reduction of nonproductive time through real-time monitoring of systems and more, use of data analytics and artificial intelligence (AI) is propelling the industry into the future. One company leading this march is Baker Hughes, a GE company (BHGE), leveraging oil and gas expertise and digital know-how to deliver added value to operators.

E&P recently spoke to John Kerr, BHGE’s vice president and CTO for oilfield equipment, at the company’s annual meeting in Florence, Italy, about the impact of digital on the industry, working with Silicon Valley and harnessing the creativity of the next generation.

E&P: How are data analytics and AI changing the industry?

Kerr: Greatly, and there’s so much still to do in the space. There are digital aspects as to how we illuminate production and from those data [and] how we then offer solutions on the back of that. For example, we provide virtual flowmetering in the subsea space. It allows us to combine a series of measurements from the reservoir to wellhead/tree measurement, to manifold measurement, and through a variety of point pressure and temperature measurements, we can infer flow characteristics, which ultimately removes the need to put in physical property meters or wet gas meters. There’s a significant saving there as well at the same time as delivering value.

The other aspect of digital is asset performance management [APM]. EngageSubsea is the Subsea Connect platform for APM, and it has us looking at the operating performance of the hardware we’ve installed. A good example from a subsea tree perspective is monitoring the actual performance of the stroke and curves of actuators against expected performance.

From an electronics perspective, you can monitor temperatures, vibrations and heat, which allows you to infer availability. If you can start predicting availability, you can start scheduling routine maintenance and change-out before you start getting into a failure situation. That goes for everything on the seabed as well as in the well. That’s APM.

E&P: In regard to the disruptive nature of digital, how do you manage that disruption so it is a positive and not a negative?

Kerr: Believe you me, there’s a lot more disruption to be had than what we see now. There’s a learning phase that we’re still going through, collectively, as an industry. I think there are business elements that we have to change, but I think the community that exists in the businesses now can get their head around [those changes] very quickly.

We’ve probably had greater success with the clients that we have developed the larger digital solutions for by just being almost transparently open, sharing our learnings with them and hopefully encouraging them to share [their learnings] with us. We’ve taken a very honest approach with what we can do. We’ve even allowed our clients, in some instances, to recommend strongly into what has ultimately then become part of our strategy and tactics on digital evolution.

We can link the reservoir to the seabed to rotating production and processing through to LNG. Once you start to think about the digitalization or digitization of that, we have a not necessarily complicated but seemingly complex environment in which to deliver digital solutions. That’s only going to be successful by sharing a perspective of openness.

E&P: What are your thoughts on the inroads being made by Silicon Valley?

Kerr: Their participation was inevitable. We enjoy their participation in the space. There is a lot we will learn, just as there is a lot they will learn from us. Any industry we work with today, whether it be hardware-related or digital-related, we gain much ground by working and collaborating where appropriate. Where we end up competing, that’s to be decided and defined, based ultimately on their ambition. These companies bring a huge amount of horsepower and infrastructure from their side. We bring a huge amount of the same but from a deep-seated and wide understanding from the oil and gas production side. It’s going to be quite interesting to see how it lands.

E&P: How do you bridge the communication gap between, for example, a subsea engineer and a Silicon Valley computer scientist?

Kerr: There are so many instances of that changing culture that we have to address as an industry. We, as an organization, have to change the way that we engage and the way we talk. Irrespective of the newness of the full-scale biblical level digitalization of everything, you look at the other end even more, which is the more traditional way, to the point where we are no longer product sales individuals.

The product side is set somewhere in the context of how we engage, but the front ends of our organizations have to be a whole lot more entrepreneurially savvy and much more business savvy. There is a need to work out what a true digital entrepreneur is, as far as how that looks toward a client. We have to do it at the other end of the scale as well. The whole culture has to operate differently.

E&P: How are you capturing the knowledge of your experienced people that are nearing retirement and passing it on to the next generation?

Kerr: It’s ensuring that we have the right mix and distribution of age and experience across the function; take engineering and technology being one. It’s a challenge the industry has talked about for many years. I’ve been in this industry for 34 years, and forever we’ve talked about the big crew change. We’re well into it, I think. How much we’re in it remains to be seen. I’m an ex-apprentice from Vetco Gray of old. That’s how I came into this industry, so I’m very passionate about that and graduate programs.

It also is important that we make what we do contemporary. To be successful in digital, we can’t have a community of 55- to 65-year-old gentlemen pioneering the digitalization of the deal. Our job is to create the space, drive and the environment and commitment to bring in the next generation of individuals who will unlock the value of that throughout.