Dismantling barriers to digitalization

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Kenneth Vareide Kenneth Vareide
Digital Innovation Director, DNV GL - Oil & Gas
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Energy companies are discovering how smart data strategies can deliver cost and operational benefits

As companies generate increasing volumes of data at high velocity, many industries are turning to advanced data analysis to pave the way for greater operating efficiencies. The oil and gas industry is among those sectors anticipating deeper, timelier insights into processes, equipment performance and production.

However, a question mark remains over the sector’s current capacity and ability to connect to and analyse disparate data streams as the amount and complexity of digital information rise. There is a growing consensus that data could be better coordinated to transform decision making. DNV GL estimates that the industry could become at least 20% more efficient by making full use of digitalization to provide greater and sometimes unexpected insight to predict failures, and to time interventions more efficiently.

Industry leaders see the potential: ”Without embracing digitalization, we would not have shale oil and gas today, as we would not have the sophisticated, directed and monitored technologies that made shale extraction possible,” commented Christoph Frei, secretary general of the World Energy Council.

While digitalization has begun to make its mark on the sector, only 20% of senior industry players currently regard themselves as highly advanced in digital adoption across physical assets and operations. This picture has emerged from DNV GL’s research into the outlook for the industry in 2016.

“Our study indicates that industry professionals see the adoption of digitalization as more of an evolution than a revolution. However, we believe that change will come more swiftly and disruptively than some might think,” commented Nada Ahmed, senior consultant, DNV GL - Oil & Gas.

The critical turning point will come once the industry feels comfortable with overcoming a set number of barriers to digitalization, she predicted. According to interviews with operators, rig owners, IT suppliers and consultants for a DNV GL white paper (figure 2), these include being able to retrieve and access data, and to ensure that it is reliable and protected by robust security.

“Interviewees also commented on a lack of infrastructure in place in oil and gas sector companies, to store and analyse large volumes of structured and unstructured data, needed to exploit fully the opportunities for more effective operations and decision making,” Ahmed said. “The industry also needs certainty that it can rely on data. Levels of trust vary, reflecting the fact that data is fragmented and from multiple sources.” Rapid adoption of new, digital technologies depends too on easing concerns about cyber security.[1]

“If we can remove barriers to digitalization, we could see step-change gains sooner rather than later,” Ahmed predicted.

“Trust could improve by ensuring that data is properly sourced and meets an established standard for the quality of centralized data.” It also requires monitoring to ensure data is of sufficient quality for decision making. Stringent standards can minimize security breaches and enhance information flow within projects and with trusted partners, she said.

“We anticipate more and quicker change in the next three years as companies accept that investing in a digitalization strategy can deliver substantial cost savings and improve health, safety, security and environmental (HSSE) performance (figure 1). Some companies also recognize the potential for advanced data analytics to achieve efficient and transparent regulatory compliance.”

The sector’s interest in industries that are more advanced in the process is one sign of its growing appetite to explore digitalization benefits. Portugal’s Galp Energia is examining how the health sector uses massive amounts of data efficiently, for example. “We hope cognitive computing could be useful for us when managing our huge amount of seismic data and in our pursuit of finding global analogues,” said Thore E Kristiansen, COO exploration and production. “We are also studying how the auto-manufacturing industries manage their very efficient supply chains.”

Digitalization in oil and gas
Source: ’Industry perspective: digitalization in the oil and gas sector’, DNV GL, 2016. [2]

One company identified in the DNV GL research as an early adopter of data analytics is Woodside. The Australian operator is tackling three main challenges: the exponential pace of data analytics development; lack of industry standards for data analytics; and the requirement to keep abreast of the latest tools and methods in developing solutions. “Our strategy is to take an agile approach – think big, prototype small and on success – scale fast,” said Dr Tom Ridsdill-Smith, vice president of Woodside’s Science Division.

The company is addressing these challenges while in a good position to do so. It is moving towards a more global strategy and geographical diversification, but is currently centralized on its home region. “With Woodside’s current growth strategy, we believe we have an ideal opportunity to adopt data analytics capabilities at a time when we are increasing our global presence,” noted Ridsdill-Smith. It helps that Woodside has “deep domain expertise with the ability to sense check if data and/or analysis does not seem right”, he said.

“We have a culture of making decisions based on data rather than gut feel, so we understand how to build analytics into our business in a way people trust and can use.”

Several DNV GL customers are now seeking to use data to document the condition of components and systems to move towards performing maintenance at the right time, said Ahmed. “This could avoid unnecessary opening up of equipment, systems and structures for inspection at intervals specified or recommended by manufacturers, or by Class survey guidelines. This is a potential major cost saver. We work closely with some key customers to explore and support this.”

Analysing pipeline corrosion
Gasunie, the Dutch natural gas infrastructure and transportation company, turned to data analytics to try to match the occurrence and severity of external corrosion of onshore gas pipelines with data from pipelines and their surroundings.

It commissioned DNV GL to conduct research in which occurrences of external corrosion detected by in-line inspections of more than 5,000 kilometres of pipelines were matched to: information on pipeline characteristics; soil depth and characteristics; and cathodic protection effectiveness measurements taken at irregular time intervals since the early 1970s from thousands of cathodic protection posts.

“Patterns in the data let us determine cathodic potential for any pipeline point at any moment in the past,” said Gerard Stallenberg, senior pipeline integrity management specialist, NV Nederlandse Gasunie. “More cases of corrosion seem to occur at pipeline segments which had not always had the optimal cathodic protection.” The research showed that analysing cathodic protection history alongside pipeline and soil characteristics would allow Gasunie to estimate the probability of external corrosion occurring.

Other DNV GL data-enabled initiatives being developed in-house and alongside customers include dynamic barrier management for enhanced HSSE; a guideline for designing sensor-based environmental monitoring and modelling programmes; a subsea documentation hub to cut an estimated 15% from the lifecycle costs of a small subsea tie-in; and Nauticus Twinity, DNV GL’s simulation tool that will provide a powerful collaboration platform for delivery of future data smart services.

Analytics to cut pipeline opex and boost safety

Third-party interference, such as damages by ship anchors or trawl equipment, causes an estimated 42% of pipeline failures. External inspection of transport pipelines are estimated to cost operators in Norway about NOK140 million (USD16.5m) annually.

High uncertainty about the risk of such damage drives cost, and is hence an area of focus for DNV GL. The company has tested the ability of innovative data analytics approaches to identify anomalies in the behaviour of vessels crossing pipelines, and to predict the probability of an incident.

“Coupled with advanced inspection techniques and finite element analysis, analytics approaches such as these will enable reduced, more targeted inspections, less unplanned maintenance and continuous monitoring of third-party interference risk,” said Mansur Abbasi, senior consultant, DNV GL - Oil & Gas. “Our research will allow pipeline operators to cut their operations and maintenance costs.”

[1] Download ’Cyber security: secure, reliable and safe cyber structures in oil and gas’, DNV GL – Oil & Gas
[2] Download ’Industry perspective: digitalization in the oil and gas sector’, DNV GL – Oil & Gas


DNV GL prides itself on providing accurate information but makes no claims or guarantees about the accuracy, completeness or adequacy of contents in this publication, and disclaims liability for any errors or omissions. The authors’ views here do not necessarily reflect DNV GL’s views.