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4 • FEBRUARY 2017 OIL&GAS ENGINEERING
The oil and gas industry
is more efficient than ever
Looking ahead, industry remains cautiously optimistic.
I
f you like silver linings, know that engi-
neers responding to a recent survey
believe oil and gas industry operational
efficiency did improve amid the last two
years’ cost cuts.
The study, executed by Oil & Gas
Engineering and sponsored by Trelleborg,
also found that the biggest stumbling
block to new technology and other type
projects are installation, implementation,
and commissioning costs. The notion
that software implementations cost too
much has helped lead to many interest-
ing developments, from intuitive user
interfaces to the cloud.
Nearly half the respondents said their
workplace facilities were highly auto-
mated, with only 12% of respondents
saying their facility was not automated.
The nearly 300 survey respondents
were drawn from a sample selected from
Oil & Gas Engineering readers, with an
additional sample provided by Trelleborg.
The margin of error for the survey results
is +/-5.7% at a 95% confidence level.
Money and technology
The downturn in oil prices came as a
surprise to many, the survey reports.
Respondents were witness to hiring
freezes and layoffs. They are looking
ahead, though, oil prices, they believe,
will rise to about $60 a barrel. These
expectations are very much in line with
the estimates discussed in the 2017
Industry Outlook feature in this edition of
Oil & Gas Engineering.
Asked about their familiarity with the
Industrial Internet of Things (IIoT), readers
said they were familiar, either a little or a
lot, but either needed or wanted to learn
more. About 7% said they were already
engaged in pilot projects.
COMMENT
KEVIN PARKER
SENIOR CONTRIBUTING
EDITOR
About 65% of the respondents said
they were involved in the upstream sec-
tor of the industry, while another 36%
identified themselves as employed by
engineering, procurement, or construc-
tion contractors (EPCs).
Suppliers pay heed
Related as well to the recent industry
downturn is the fact that three in 10
respondents said they have observed
improvement over the past two years
in their suppliers’ negotiations on cost,
technology and product availability,
responsiveness, and ability to provide
alternative solutions.
Respondents also said they want a
broader selection of alternative solu-
tions and more technical support, which
certainly rings true given shortages
in technical skills in many facilities.
Suppliers can step into the breach by
offering services, and they have been.
A majority of respondents said that
they are part of organizations that
prefer to work with a single vendor
and that they would rather spend
money up-front on a good product
and not assume they will be able to
upgrade later.
The challenges respondents see to
resurrecting “shelved” projects and
recharging innovation are installation
and commissioning costs (56% of
respondents), the extended lives of
current facilities (43%), and drilling and
well construction costs (38%).
We hope you enjoy this edition of Oil
& Gas Engineering. OG
I NSIDE
Cover images courtesy: Bentley Systems (left and
bottom), and Emerson (top) .

COVER STORY
12 Industry voices speak to oil and gas projects future
Multidiscipline efforts converge in 3-D reality models, even for existing facilities.

12
FEATURES
6 What 2017 holds for oil and
gas industries
Oil moves higher: growing U.S. natural gas
exports seen.

10 Why models now?

It’s not about theory, it’s about practice.

17 Reservoir models ease uncertainty

Some parameters of a good petroleum reservoir model
are reviewed.
17

21 What the oil and gas industry

needs from SCADA
Supervisory control systems aggregate data at key
points in the supply chain.

24 Operations data includes clues for automation

process improvement
Oil and gas companies cut maintenance costs and boost
efficiency—analyzing control data.

28 New Products

OIL&GAS ENGINEERING FEBRUARY 2017 • 5

The year in preview
What 2017 holds for
oil and gas industries
Oil moves higher; growing U.S. natural gas exports seen.
I
By Kevin parker n November 2016, OPEC abandoned its
strategy of using delivery of over-
abundant oil supplies to starve out shale
producers and other high-cost drillers.
OPEC and non-OPEC producers agreed
to cuts of more than 1.7 million barrels
per day.
“Looking at the promised OPEC reduc-
tion, it’s wise to keep in mind that in recent
years, in fact, for at least the last 20 years,
the record of OPEC members adhering to
these agreements has been spotty at best,”
said Laith Amin, SVP for digital enterprise
North America at Advisian.
The record, in fact, indicates about 60%
adherence to past agreements, and many
believe this is what will transpire now.
“On the other hand, the present agree-
ment is the product of fierce negotiations,”
Amin said. “Saudi Arabia’s traditional role
has been that of a swing producer. They’ve
grown tired of that role. They want to dem-
onstrate their seriousness and that of others
when it comes to production. Because this
ignoring of quotas has been a hard lesson
for them.”
In early December 2016 the International
Energy Agency (IEA) said it sees global
demand growth of 1.4 million barrels per day
in 2016 and of 1.3 million barrels per day in
2017. The energy watchdog group said that
global inventories should start to shrink in
the first half of 2017.
If the OPEC-brokered agreement is taken
seriously, it will demonstrate a high level of
cooperation not only within OPEC but also
with non-OPEC members such as Russia,
Amin said. “To a degree, this reflects the
lessened influence of OPEC itself.”
6 • FEBRUARY 2017 OIL&GAS ENGINEERING
What follows from it
If the biggest producers with the lowest
costs per barrel of oil, “limit their
production so that the price of crude oil,
already up to the $50 a barrel range, rises
further, that will initiate supply coming from
sources higher up the cost curve. These
include a portfolio of U.S.-based assets,
such as shale, that do have higher costs,”
Amin said.
Amin says the ensuing market shift will
mean that more supply will be coming
from the U.S. “In fact, more quickly than
we thought would happen, rig counts and
increased activity in the U.S. are already
happening,” said Amin.
The rising price and expanded activity
may be a surprise to others as well. As late
as early December 2016 the U.S. Energy
Information Administration (EIA) said U.S.
crude oil production averaged 9.4 million
barrels per day (b/d) in 2015, and it is fore-
cast to average 8.9 million b/d in 2016 and
8.8 million in 2017, with an on going com-
mitment to lower costs.
If OPEC-based cooperation holds good,
Amin believes oil prices will increase to the
$60/b+ range. “But with the increased sup-
plies, probabilities the price will rise to as
high as $90 or $100 a barrel are slim,” he
said.
Gas goes its own way
Substantial increases in natural gas prices
were seen in the U.S. in the last year, but,
as Amin noted, there is still a long way
to go. “Fundamentally speaking, natural
gas is not as shippable or as tradable as
liquids. For the present, we’ll continue
to be very well supplied except where
the needed piping network and other
infrastructure isn’t evident, such as in the
northeast U.S.,” he said.
It wasn’t that long ago in the U.S. that
no significant increase in natural gas pro-
duction was anticipated. What was looked
for were significant imports. Now all that
import infrastructure that was being built
is being converted to export infrastruc-
ture. “In the next four to five years both
U.S. coasts will be exporters of liquefied
natural gas (LNG),” said Amin. “Where
importation was to occur, there is a lack
of infrastructure for distribution of domes-
tic production. Shale oil and gas took the
industry by surprise.”
International prices for liquefied natural
gas will be more generally of interest to
U.S. producers in future. As the export ter-
minals come on line, “International prices
for LNG and greater levels of LNG export
will tend to support international natural
gas prices from falling too far.”
In many international markets, oil
is indexed to LNG, and, “As oil prices
increase LNG prices will recover from their
lows of the last three or four years ago,
exposing opportunities for arbitrage,” said
Amin, “These exporters will be very com-
petitive, price-wise, under different market
conditions.”
Per the U.S. EIA report, natural gas
marketed production is forecast to aver-
age 77.5 billion cubic feet per day (Bcf/d)
in 2016, a 1.3 Bcf/d decline from the 2015
level, which would be the first annual pro-
duction decline since 2005. In 2017, natural
gas production is forecast to increase by
an average of 2.5 Bcf/d from the 2016
level.
The report further states that growing
domestic natural gas consumption, along
with higher pipeline exports to Mexico and
LNG exports, will contribute to the Henry
Hub natural gas spot price rising from
an average of $2.49 per million British
thermal units (MMBtu) in 2016 to $3.27/
MMBtu in 2017.
NYMEX contract values for March 2017
delivery traded during the five-day period
ending Dec. 1, 2016, suggest that a price
range from $2.20/MMBtu to $5.04/MMBtu
encompasses the market expectation of
Henry Hub natural gas prices in March
2017 at the 95% confidence level.
Administrations and regulations
In 2017 the Environmental Protection
Agency (EPA) will be finalizing regulations
related to fugitive methane emissions from
on-shore oil and gas wells. It isn’t clear yet
what means producers will use to meet
these standards, and they are looking for
innovation from industry suppliers.
Scott Pruitt, who will be the head of
the EPA for the Trump administration, will
bring a new look to regulation of the oil
and gas industry of which he is a part.
“It will be interesting to see how the
appointment will change policy and how
the industry believes these fugitive emis-
sions can be cost-effectively controlled,”
Amin said.
Per its news release, the EPA is final-
izing a set of standards that will reduce
methane, volatile organic compounds
(VOCs) and toxic air emissions in the oil
and gas industry. The final standards, the
agency says, will significantly curb meth-
ane emissions from new, reconstructed,
and modified processes and equipment,
including sources not covered in the agen-
cy’s 2012 rules.
These sources include hydraulically frac-
tured wells, some of which can contain
a large amount of gas along with oil, and
equipment used across the industry that
was not regulated in the 2012 rules. In
May 2016 the agency issued a request for
information to the industries that includes
inquiries as to what technologies industry
players foresee being used to limit emis-
sions.
While it may not prove easy for the new
administration to actually roll back existing
regulation, agency approval processes may
be accelerated. Reports indicate that if the
administration normalizes relations with
Russia and lifts sanctions, we may see
increased petroleum exports from Russia
in the second half of the year.
Digital world
The “digitization” of oil and gas production
and distribution is underway across the
OIL&GAS ENGINEERING FEBRUARY 2017 • 7
THE YEAR IN PREVIEW
industry’s value chain, to the point where it
has no news value: because it’s everywhere.
What’s less clear, said Amin, is what will
be the form and function of the systems
involved. They will begin gathering data
during the construction and procurement
and proceed to operations and manage-
ment, that’s clear. “But one more good
question is,” Amin added, “what kinds of
technologies do we see in the consumer
world, or in industries outside oil and gas,
that may be more advanced, that are rel-
evant to oil and gas today?”
A technology that may quite soon sound
familiar to all our ears is “machine learn-
ing.” In machine learning, algorithms that
detect patterns in large amounts of data
support the identification of truth.
With machine learning, instead of writ-
ing applications with limited range, the
idea is to collect the data and to learn the
necessary algorithms from the data, writes
Ethem Alpaydin, author of “Introduction to
Machine Learning,” part of the MIT Press
Essential Knowledge Series.
Machine learning is the most important
driver in artificial intelligence research
today, and it is pushing computers into
new areas where they may rely heavily
on machine vision, sound, or other areas
where context most matters.
“The data contains instances of what
is to be done, and the learning algorithm
modifies a learner program automatically in
such a way as to match the requirements
specified in the data…. Although the data
is big, it can be explained in terms of a
In December 2016, the U.S. Energy
Information Administration predicted:
• Brent crude oil prices to average $43 per barrel (b) in
2016 and $52/b in 2017. West Texas Intermediate (WTI)
crude oil prices are forecast to average about $1/b less
than Brent prices in 2017. The values of futures and
options contracts indicate significant uncertainty in the
price outlook.
• Retail gasoline prices are forecast to average $2.14/gal-
lon in 2016 and $2.30/gallon in 2017.
8 • FEBRUARY 2017 OIL&GAS ENGINEERING
relatively simple model with a small num-
ber of hidden factors and their interaction,”
Alpaydin said.
“Look at Twitter and how it is used
by humans,” said Amin. “It may not be
verifiable information all the time, but it
is fast. One tweet brings other tweets in
response. A kind of learning is occurring,
proliferating to the participants. It’s an
example of learning and adaptation in real
time.”
A learning program is different from an
ordinary computer program in that it is a
general template with modifiable parame-
ters. By assigning different values to these
parameters, “the program can do different
things. The learning algorithm adjust the
parameters of the template—which we
call a model—by optimizing a performance
criterion defined in the data,” Alpaydin
said. To anyone involved in process control
or automation, this is not really a foreign
language. The shifting of the parameters
to better match the data is what is called
“learning.”
Emerging as commercial
Some first instances of these emerging
systems are now available as commercial
solutions. To take just one example, energy
management and automation supplier,
Schneider Electric, said its recently
announced SimSci SimCentral for Process
Utilities will prove an important piece in
plant digitization. The model combines fluid
flow, steady state, and dynamic simulation
in a single environment, with process
utilities as only the first function or unit
to be modelled in the environment, which
will eventually extend to a large set of the
means of production found in a plant.
Users streamline process utility design
and simplify modeling complexity. Benefits
include reduced time and cost, appealing
user experience, and accelerated process
simulation and design.
Simulation tools used today by process
engineers in the oil and gas, refining, and
chemical industries trace their origins to
legacy architectures, operating systems,
and user interfaces. Schneider Electric said
SimCentral for Process Utilities is the first
release in decades with a process simula-
tor built from the ground up. Schneider
emphasizes that the platform takes full
advantage of current web and cloud tech-
nologies.
Users will include engineering, pro-
curement and construction (EPC) firms,
operating companies and process licensor
organizations. WorleyParsons, an EPC pro-
fessional services company, was an early
adopter, having recognized an acute need
for a better process simulation work envi-
ronment.
“By removing complexity from engi-
neering process modeling, SimCentral for
Process Utilities lets WorleyParsons deliver
more value and respond faster to our cli-
ent’s needs,” said Loïc Coyot, principal/lead
process engineer at WorleyParsons.
“SimCentral gives process engineers
a comprehensive application to visualize,
test and implement process improvement
at a speed and quality never seen before
in our industry,” said Tobias Scheele, senior
vice president software, global solutions at
Schneider Electric.
Features contributing to these results
include:
• Unified lifecycle simulation – a model
can be taken through all stages of the
plant lifecycle, including design, train-
ing and operations
• Ease of use – a modern user interface
puts user first, showing relevant fea-
tures and libraries; role-based library
views ease navigation, equation views
are easier to see and change
• Expanded problem solving – an intui-
tive model writing environment unlocks
new operations and equations model-
ing to solve simulation challenges pre-
viously considered unsolvable
• Unprecedented interactivity and
control – a “continuously solved”
approach is possible whereby changes
to input variables can directly update
all output variables
• Faster calculation speed – an
advanced design accommodates public
or private cloud computing environ-
ments to scale performance speed as
needed
• Collaborative engineering – as a
productivity feature, users can concur-
rently work on the same model across
regional time zones, departments, or
other organizations.
Final words
In the future, for any production plant,
there will be a digital equivalent. For
each production asset, as well, there
will be a digital twin. “More and more
these abstract, digital objects will
communicate with each other,” Amin said.
“If these objects can establish Twitter-like
communications, the system is in a much
better position to treat with anomalies. The
operator, on the other hand, is looking at
only the limited set of parameters visible to
him. Ultimately the equipment will inform
the operator based on diagnostics already
performed.”
The value for Amin is clear: “You don’t
want people fooling around with settings.
You don’t want people to leave the control
room to spend time in less secure areas.
You don’t want to have to shut things off
or turn things down to perform diagnos-
tics. Rather you rely on the machines to
become a Twitter-like community and learn
from that.”
What you end up with is an algorithm
of considerable value. “The idea of an
algorithmic model for the plant is become
more practical and less theoretical,”
said Amin. “Machine learning is the first
instance of a kind of algorithmic model.
Models will focus on plant optimization,
but also on how humans interact with the
plant. Safety won’t be reactive but embed-
ded in activities. Models will warn us when
we’re going astray.”
Across the value chain, assets will be
enriched via machine learning. The algorith-
mic model will become an integral part of
the plant’s value. And we’re moving very
quickly to that. OG
Kevin Parker is the senior contributing editor for
Oil & Gas Engineering.
OIL&GAS ENGINEERING FEBRUARY 2017 • 9
 Simulation and analySiS
Why models now?
It’s not about theory, it’s about practice.
I
By Kevin Parker t’s been noted that scientists and engi-
neers don’t talk about theories the way
they used to. Instead they talk about mod-
els. Not only that, but even in everyday
talk, theory sometimes seems to imply
just words, while a model is only a step
away from action and value creation.
Making models begins in childhood. The
taxonomy on your laptop or PC for storing
documents is a kind of model, and industrial
process control is about logic models to its
core. The trend to talk about modern sci-
‘an
entific and engineering projects in terms of
analytic modeling has been happening for at least 75
years.
model The difference today is that we’ve entered
describes the era of model-based solutions.
As Laith Amin, SVP for digital enterprise
mathematical North America, Advisian, says elsewhere in
relationships, this issue, “The idea of an algorithmic model
for the plant has become more practical and
such as less theoretical. Machine learning is the first
instance of a kind of algorithmic model.”
differential Two kinds of models are discussed in this
equations issue of Oil & Gas Engineering: reservoir
models, widely used in oil and gas explora-
that support tion and production; and 3-D reality model-
quantifiable ling, used to model plant infrastructure and
much more.
analysis about
Thinking with models
a system’s
’
The back of a napkin is a kind of model
parameters. that connects visual and verbal thinking in
an important way, said David Goldberg, an
author and an expert on higher education.
A model is a system that represents one or
more facets of another system, Goldberg
said. Typical types include solid, prototype,
graph, equilibrium and dynamic equations, and
computer simulations. He also notes that good
modeling involves knowledge about more than
just engineering and science.
A physical model is a concrete representa-
tion that it is distinguished from mathemati-
cal models, which are more abstract, and
10 • FEBRUARY 2017 OIL&GAS ENGINEERING
may be descriptive or analytic. A descriptive
model is about a system’s logical relation-
ships such as the whole-part relationships
that define a parts tree, interconnections
between its parts, and functions that its com-
ponents perform—these then would include
3-D geometric representations.
An analytic model describes mathematical
relationships, such as differential equations
that support quantifiable analysis about a
system’s parameters. Analytic models can
be further classified into dynamic and static
models. Dynamic models describe the time-
varying state of a system, whereas static
models may represent the mass-properties
estimate or reliability prediction of a system
or component.
Workflow makes it go
The engineering modelling solutions being
introduced commercially into the process-
production and discrete-manufacturing
industries will combine multiple kinds
of simulators into a single modelling
environment.
This is important because in the multidisci-
pline collaboration needed to design, develop
and construct, for example, a utility plant in
an oil-and-gas industry facility, it is hugely
efficient if the workflow of the multiple
design iterations involved is fast and efficient.
This is just the case with Schneider
Electric Software’s just-introduced SimSci
SimCentral for process industries, which
combines fluid flow, steady state and
dynamic simulation in a single environment.
“These independent simulation tools
have established use cases and work-
flows,” said Tobias Scheele, SVP soft-
ware, global solutions, Schneider Electric
Software, “but unifying them in a single
environment takes the complexity out of
the workflow. The translators used in the
past to allow combined use of the simula-
tors resulted in loss of fidelity.” OG
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EntErprisE assEt managEmEnt
Industry voices speak
to oil and gas
projects future
Multidiscipline efforts converge in 3-D reality models, even for existing facilities.
T
By Bob Vavra he hum of a drone can just barely
Content Manager, be heard floating above a working
Plant Engineering oil refinery. A camera is attached
to the drone, generating the digital
photography needed to build a 3-D
reality model, a virtual representa-
tion of an existing facility.
Once on the ground, the photos are
converted into the reality meshes that
culminate in the plant’s 3-D model. Other
photography and digital inputs will make the
model an immersive environment that mir-
rors the plant’s most important means of
production.
With fluctuations in oil and gas prices
slowing investment in industry capital
projects, owner-operators are emphasizing
increased efficiency of their existing assets.
Making better use of digitization is one way
of addressing the inherent challenges. As
upstream, midstream, and downstream oil-
and-gas industry companies make more use
of 3-D reality modeling, what are they get-
ting into and what is their mind-set?
“Business as usual isn’t good enough,”
said Alec Miljkovic, a Shell project man-
ager working on its capital project-delivery
model, ProjectVantage. “We have to stretch
ourselves.”
Shell’s ProjectVantage was just one
of several oil and gas industry initia-
tives featured at Bentley Systems’ Year
in Infrastructure 2016 Conference, held
in London in November of 2016. Several
speakers at the event’s oil, gas, and chemi-
cals forum acknowledged a gap in capabili-
ties for brownfield and greenfield projects,
12 • FEBRUARY 2017 OIL&GAS ENGINEERING
as well as a need for increased efficiency in
turning digital assets into operational mod-
els that can succeed in daily use.
Shell’s ProjectVantage simplifies work
packaging for engineering, construction,
and installation while adhering to the
Construction Industry Institute’s advanced
work packaging methodology.
Shell says it selected ProjectWise
ConstructSim as the foundation of its con-
struction management solution to support
its ability to visually plan and execute work
safely, avoid premature mobilization and
downtime, and remove constraints that can
impact safety, logistics, materials, labor
availability, permits, and documentation.
Moreover, the solution supports engineering
readiness through advanced work packag-
ing to improve constructability and improve
field productivity.
Criteria for success
“We talk about outcome-based engineering.
Efficient execution also is an outcome,”
Miljkovic said. In other words, the criteria
for success must include more than if an
asset is in production.”
Miljkovic added, “A project is something
tolerated to get increased capacity, but
the project has to be executed efficiently.
We must focus on where the value leak-
age is, and how we address those leaks.
With data-centric solutions, we get
improved collaboration between contrac-
tors and suppliers.”
Success calls for collaboration among
enterprise functions, production units, and
even regions, said Ken Douglas, BP informa-
tion technology and services (IT&S) direc-
tor of global projects. “It wasn’t that long
ago that we ran our capital projects on a
business-unit-oriented basis. You could visit
the same capital projects in two parts of the
world, and they would be very different.”
In 2009, BP established its Global Projects
Organization to bring standardization to the
company’s design-and-build projects. When
the group started its work, cloud-based
computing was just beginning to have an
impact. Its proliferation and the advent
of the Industrial Internet of Things (IIoT),
particularly for better asset management,
changed the project standardization equation
once again.
In the future, “data considerations will
drive decisions we make about standardiza-
tion,” Douglas said.
Beauty and the industrial beast
Videos of 3-D mesh designs bring out
industrial infrastructure’s beauty in a much
different way than does, for example, black-
and-white photography. Moreover, users
“fly” through models to observe equipment
and peer into processes. It has the facility
of a video game—except that’s not what’s
important.
“Even though reality modeling is beauti-
ful, it’s not really the key point. This is a
vehicle for communicating information,”
said Phil Christensen, Bentley Systems vice
president for analytical modeling. “The inter-
esting thing is the crossover to engineering.
Yes, you can get operational data, but to
help people make decisions, the real job is
analysis and simulation.”
David Philp, consultancy manager for
AECOM’s oil and gas business, said that to
take full advantage of digital models, the
discussion must extend beyond design and
construction. AECOM provides engineering
consulting and project management ser-
vices for infrastructure projects.
Within operations, Philp said, “We’re an
output-based industry, and we need to focus
more on outcomes. We’re thinking about
how to improve asset performance, and
we’re learning from real-time data. We can
start to evaluate how the plant is going to
perform right from the very beginning.”
‘ You measure the
success of software by
whether people really
use it. If people find it too
hard, they’ll just send an
email.
’
It’s important to note, Philp added, that
operational expenditures (OpEx) are about
80% of a project’s total lifecycle cost, even
though capital expenditure (CapEx) projec-
tions tend to determine which projects are
approved. “We’ve got to think more about
OpEx right at the very beginning of proj-
ects,” Philp said. “We’ve got to think about
organizational performance. We’ve got to
start by thinking about asset management
and maintenance strategy.”
Outcome-specific data
Management’s desire to make greater use
of complex models in day-to-day operations
reflects the value of data associated with
valuable oil and gas commodities. “Asset
management is not about managing assets;
it’s about creating value,” said Ian Bush
of Black & Veatch, a global engineering,
procurement, and construction (EPC)
contractor active in energy markets. “You
tend to value those assets in economic
terms; it’s really about outcome-based
engineering. It’s about having the right
information throughout the life of that
asset.”
In the future, asset values will be held on
balance sheets in ways much different than
they are today, Bush said. “If you’re not
maintaining information about your assets,
you’re stripping your company. You’re actu-
ally causing a devaluation in your company.”
Interest in the right use of modeling for
installations in production has led to the
acronym, BIM, for business information
modeling. “BIM is all about creating and
maintaining a virtual asset,” Bush said.
OIL&GAS ENGINEERING FEBRUARY 2017 • 13
 ENTERPRISE ASSET MANAGEMENT

‘ considerations
In the future, data
will drive
decisions we make
about standardization.
’

Models are emerging as

the single best means to
accomplish multi-discipline
coordination. Image cour-
tesy: Bentley

“We’re delivering two outcomes. One is a
physical asset; the other is a digital asset.
We ought to be handing over digital informa-
tion that is meaningful.”
Digital and physical asset convergence is
driven by the need to extend assets’ useful
lives through better resource maintenance
and management. Modeling for existing
operations has evolved slowly, but mesh
technology’s growth and development
means that drones now efficiently create
as-operating models of a brownfield facil-
ity. Cloud computing means the computing
resources needed are easier to come by.
14 • FEBRUARY 2017 OIL&GAS ENGINEERING
“Our infrastructure is living well beyond
its initial projected life. The only way we
can close the deficit between what we
need and what we can afford is by getting
smarter. We need intelligent infrastructure,”
said Bhupinder Singh, Bentley Systems
chief product officer.
How smart is it?
Intelligence can be embodied in an
as-built model generated with today’s 3-D
technologies. “Data is vastly more valuable
when it’s live and connected,” Singh said.
“We’re talking about taking a digitally

created reality mesh and bringing it into the
construction phase, and then the design file
can be taken into actual construction. Then
we can compare what was designed with
the as-built model.”
One aspect of data’s power is that it
enables collaboration, said Christensen.
“It’s not just about crunching the numbers,
it’s about sharing that number-crunching
with your colleagues.”
Christensen cited an oil and gas com-
pany with 265 platforms in the Indian
Ocean, all of which had reached the limit
of their 25-year design life. Data modeling
of the platforms captured each one’s
actual structural integrity as the basis
for determining each platform’s future.
“Once the platform was examined,”
Christensen said, “they could decide
what to do next based on the structural
analysis rather than just on an assumed
parameter.”
The next step is sharing data across
the enterprise, and that’s where the
shoe still sometimes pinches. “Some
data is on the desktop; some things are
in the cloud. But there still is way too
much manual data,” said Christensen.
“It is really about extending asset life
and improving performance. You’re
making decisions: Do you decommis-
sion the asset, try to limp by, or do you
recommission?”
The means exist to cost-effectively
model the facility, to use the cloud
advantageously, and to incorporate an
account of all the assets and resources
involved into the base model and
thereby embody as-built and operational
data in a single version of the truth. But
there is one more crucial step in the
process—the operators.
Christensen cut to the chase on this
issue. “You measure the success of
software by whether people really use
it,” he said. “If people find it too hard,
they’ll just send an email.”
Four steps to success
There are four steps, Eckard Eberle,
CEO, Siemens Process Control, said in
a conference keynote, for successful
use of a common data platform. The
four steps are:
1. Integrated engineering: Eberle cited
Tulip Oil in Germany as a company
that had integrated its processes
from the acquisition of feed stock to
production. “They use digitized main-
tenance, repairs, and operations,” he
said. “They lowered CapEx and OpEx
costs by about 20% and shortened
commissioning time by about 70%.”
2. Commissioning: “This is most
expensive time we have,” Eberle
OIL&GAS ENGINEERING FEBRUARY 2017 • 15
ENTERPRISE ASSET MANAGEMENT

said. “All the equipment is paid for,

Reality modeling goes mainstream but nothing is being produced. Your
personnel have to be prepared for
Hybrid inputs embrace scans, as well as photos commissioning.” At Total Oil’s plat-
for increasing sophistication. form in Angola, immersive operator

R eality modeling is become a mainstream technology for infra- training, including using an avatar,
structure project and industrial asset performance, said Bentley brought situational training to the
Systems’ CEO Greg Bentley at the company’s Year in Infrastructure workers. “They will be able to run
2016 Conference in London this past November. processes they have trained for in
Reality modeling has advanced to the point where engineers, simulation,” Eberle said.
geospatial professionals, and owner-operators can contemplate
having the “as-operated” conditions of infrastructure assets con-
3. Optimization: “We have enough
information. The question is, how
tinuously captured for creating reality meshes and producing
do you collect this data and put it
attention-grabbing visuals.
in an environment and a dashboard
Laser scanners are widely used to capture an object’s digital
so someone really can work with
profile because they are fast, versatile, and accurate. However, the
it,” said Eberle. By optimizing data,
large point cloud datasets generated from laser scanning needs to
Eberle said, one operator virtually
be processed to convert them into manageable 3-D reality models. eliminated overdue safety orders at
Photogrammetry, an alternative approach to building a reality one of its operations. “No matter
model, is gaining attention by leveraging digital photography, what the source of the data, there
ubiquitous location information, and endless computing power in was a significant gain in plant reliabil-
the cloud. Photogrammetry is software that automatically turns ity,” said Eberle.
digital photographs into a compact 3-D reality model.
In 2015, Bentley saw this trend emerging and subsequently 4. Plant lifecycle management: The
acquired ContextCapture software, which generates a 3-D reality virtual reality (VR) screens are a prac-
mesh that turns the photography into a reality model. tical way to combine the 3-D model-
Greg Bentley says photogrammetry software supplements ing and operational data to better
more expensive laser scanning, and in many instances, will guide repair and maintenance opera-
replace it. For example, photography can add more detail to an tions. “We are enriching the virtual
existing model or be used to document change. At the confer- model with real data,” Eberle said.
ence, Bentley Systems announced that that the latest version of “Bringing this virtual information into
its ContextCapture software combines laser-scanning-generated the plant also is available on site
point-clouds with photos, as “hybrid inputs,” for reconstruction when you go into the plant. You can
into a compact reality mesh format. provide wearable VR work instruc-
“Embedded” ContextCapture software licensing is rapidly tions, and then you can guide people
to what they have to do.”
expanding from the specialized processing centers of leading 3-D
city mapping specialists to leading industrial drone suppliers, it
Final words
was further noted.
Companies embrace modeling
The conference technology keynote highlighted performance
technologies for their operational value.
gains in immersive viewing of reality meshes, including access to
Compelling reasons exist for those who
geo-coordinated digital engineering model information, from any
have to-date been skeptical to make the
browser-ready device. leap soon. “It’s doable today. It’s not
“Drones, mixed-reality devices, the Industrial Internet of science fiction; it’s fact,” said Singh.
Things—and in fact, “digital natives”—will converge to advance “When you have business processes
infrastructure engineers, project delivery, and asset performance,” that are paper-centric, you’re losing
Bentley said. something. If you send an inspector into
Founded in 1984, Bentley Systems has more than 3,000 col- the field with a paper form, you’re losing
leagues in over 50 countries, more than $600 million in annual something.” OG
revenues, and since 2009 has invested more than $1 billion in
research, development, and acquisitions. Bob Vavra is the content manager for Plant
Engineering.

16 • FEBRUARY 2017 OIL&GAS ENGINEERING

PRODUCTION OPTIMIZATION
Reservoir models
ease uncertainty
Parameters of a good petroleum reservoir model reviewed
A
By Raj Damodaran s the use of petroleum for energy
Emerson Process grew over the last century, engi-
Management neers and scientists sought to bet-
ter understand the nature of oil and
gas reservoirs. Their efforts have
been rewarded.
Immense data sets related to reservoirs are
today transformed by some of the world’s most
powerful computers into highly detailed 3-D
geological and simulation models. Moreover,
many reservoir modeling capabilities are avail-
able on PCs and laptops. The models help
develop new fields and keep wells productive.
While models embody positive knowledge
about a reservoir, often what they offer are
probabilities. Reservoir management itself is a
dynamic process that recognizes the uncertain-
ties in reservoir performance resulting from the
inability to fully characterize reservoirs and
QUICK ARTICLE flow processes. The model addresses the
SYNOPSIS uncertainties that ensure accessing the
• A wide range of pa- reservoir remains as much art as science.
Let’s briefly review some of the mea-
rameters relative to
surable parameters and uncertainties
a petroleum reser-
involved.
voir come together
in a model. The where and how of it
• In developing a mod- A reservoir is a place where fluid
el, what’s important collects. A petroleum reservoir is a
is the purpose it will subsurface hydrocarbon pool found in
serve. the micro-spaces of porous or fractured
rock formations. The naturally occurring
• Uncertainties of
hydrocarbons, including crude oil or natural
interpretation are
gas, found in a “conventional” reservoir,
evident in even well- are trapped by overlaying rock having
developed models. less permeability than that holding the
• A properly integrated hydrocarbons.
workflow can ensure Exploiting any reservoir requires an
a model remains in-depth knowledge of its geology. This
relevant over time. includes depositional history, reservoir
layering, relations among its various ele-
ments, rock attributes and fluid content, as well
as fluid behavior within the geological setting.
Other types of measures relevant to the
reservoir are derived from scientific and engi-
neering disciplines that include geography,
geology, geophysics, petro-physics, geo-
mechanics, petroleum engineering, and pro-
duction economics.
These various measures come together
in the reservoir model, where the relation-
ships among the parameters are discovered,
explored and optimized. Rather than leave a
project dependent on the engineers’ intuitive
grasp of the details documented in a large
body of paper documents, the interactive
model exists as a single source of truth for all
things reservoir, integrating multiple kinds of
reservoir data acquired or generated by the
engineering disciplines.
As such, the reservoir model is the basis for
estimating a reservoir’s production-recovery
potential and for deciding the methods of
exploitation to be pursued, including invest-
ments and other important decisions.
Evolution of a tool
A well-made model is key to effective reservoir
management. Geological and simulation
models are used in hydrocarbon exploration,
delineation, development, and production and
are decision-making tools for geology and
geophysics professionals, as well as oil and
gas industry reservoir engineers and asset
managers.
Since the introduction of simulation models
as a tool for upstream oil and gas production
environments, they have evolved from a 2-D
form—in other words, a 2-D stacked approach—
to the now common 3-D form. In fact, the latest
models encompass a fourth dimension, tracking
changes in reservoir attributes over time. Finally,
OIL&GAS ENGINEERING FEBRUARY 2017 • 17
Production oPtimization
Figure 1: A wide range of
parameters relative to a
petroleum reservoir come
together in a simulation
model. All graphics cour-
tesy: Emerson Process
Management
increasing input of real-time data into models
increases their value.
Models support decisions on where to drill,
what production strategies to adopt, and how
to maximize oil and gas recovery from opera-
tor assets. Accurate reservoir models form
the basis for increased recovery rates. A good
model not only reflects the reservoir accurately,
it supports assessment of the environment’s
inherent uncertainties and risks.
Users are challenged to keep reservoir
models current, whether in oil and gas or else-
where. Ease in model construction and updat-
ing alleviate this challenge and prepare the way
for increased use of modelling. A cost-effective,
pragmatic approach to modeling is especially
important in today’s low-price oil and gas envi-
ronment.
Team work
As noted, good reservoir models are based on
interdisciplinary knowledge. Before building
a reservoir model, asset team members first
work together to confirm the model’s purpose.
Questions to consider include the following:
• Is the model for short-term volume
analyses only or is it meant to be a sec-
tor model? A sector model is smaller and
18 • FEBRUARY 2017 OIL&GAS ENGINEERING
carved out of a larger regional model. It
supports quick-look scenarios when trying
to understand near-well-bore and drive-
mechanism effects.
• Will the model be a foundation for the com-
plete field lifecycle?
• Will the model be flexible enough to
expand the areas of investigation? Based
on production data, for example, can exist-
ing layers be modified and new layers and
faults incorporated easily?
• What if some barriers are not structural
but lithological? (Editor’s note: the lithology
of a rock unit is a description of its physi-
cal characteristics visible at the outcrop, in
hand or core samples or with low magnifi-
cation microscopy, such as color, texture,
grain size, or composition.)
The answers dictate the approach. A good
model addresses each discipline’s concerns
and is flexible enough to accommodate new
data and goals.
Incorporating uncertainties
Flexibility also means incorporating
uncertainties into the model when they
matter. Uncertainties enter the model’s
workflow at different stages. At each stage
they are analyzed, qualified, and if need be,
incorporated. If two or three geophysical
interpretations are postulated, all three
would be incorporated into the workflow.
This could lead to three or more structural
models, likewise incorporated. Ultimately,
the workflows must include those
uncertainty parameters that impact reservoir
volumes.
Kinds of uncertainties include the following:
• Measurement uncertainties arising during
data collection, due to tool calibration or
operation specification.
• Interpretation uncertainties relating to data
analysis. For example, identical data is
interpreted differently by different petro-
physicists, giving rise to varying results.
Similarly, geophysicists’ interpretations
differ.
• Workflow uncertain-
ties can be introduced,
for example, during the
upscaling of a fine-
resolution geological
model to a coarser-reso-
lution simulation model
due to the upscaling tech-
niques used or geological-
grid orientation relative
to the simulation grid.
Upscaling is necessary to
overcome model-size or
hardware limitations.
Uncertainties also arise due to discrep- Figure 2: In developing a
ancies between the scale at which data is model, what’s important is
measured and that at which it is applied. For the purpose it will be put to.
example, in a reservoir model, initial uncer-
tainty may arise when upscaling from the log
resolution (typically well-log data is measured
in half-foot increments) to the geo-model reso-
lution. Typically, the data is transferred to 5 to
10 feet geo-modeling cells in the vertical direc-
tion and to several magnitudes—that is, 50 to
200 feet—in the x and y direction.
Similar uncertainty arises when upscaling
core data to the geo-modeling grid or upscal-
ing geo-modeling grid data to the simulation
grid, coarser in resolution than the geological
grid.
Uncertainties due to sparse conditioning Figure 3: Uncertainties of
data must be accounted for in modeling dif- interpretation are evident
ferent geological scenarios. For example, in even well-developed
fluvial channel characteristics are rendered models.
OIL&GAS ENGINEERING FEBRUARY 2017 • 19
Production oPtimization
Figure 4: A properly inte-
grated workflow can ensure
a model remains relevant
over time.
20 • FEBRUARY 2017 OIL&GAS ENGINEERING
different ways when the well data is too
sparse to guide the volume fraction param-
eter, or if there is not enough seismic data
to establish the channel width and azimuth
parameters. These are called “parameter
uncertainties” and can result in the scenari-
os shown in figure 3.
Uncertainty example
The same input data can yield narrow or
wide channels as traversing the same wells.
Stochastic techniques also derive multiple
realizations or outlooks using the same input
data.
In fact, many narrow-channel realizations
or outcomes are possible by changing the
seed number to produce the corresponding
realization, giving rise to the “random seed
uncertainty.”
In simple terms, a seed number is an
integer (a whole number) that introduces
a random element into the calculation of a
predicted outcome. Different seed numbers
realize different narrow-channel outcomes.
Uncertainties can be reduced, however, by
characterizing the model using data inputs
drawn from a wider range of disciplines.
Thus, if a seismic attribute contains a chan-
nel system imprint to condition a reservoir
model, it eliminates scenarios of width and
azimuths that deviate from that channel
imprint, reducing uncertainty.
More about workflow
A good reservoir model can be updated
quickly and efficiently. User friendliness must
be evidenced in appropriate model-building
steps that are documented in detail. When
new data arrives and updates are called for,
modeling tasks must be easy to comprehend
and execute.
The workflow and attendant documenta-
tion inform asset team members about the
model’s construction, which uncertainties
were considered, and parameter cutoffs and
algorithms used to calculate model attri-
butes. Workflow notes capture the “custom”
aspects of the model.
A correct workflow allows model attributes
to be reproduced time and time again. When
new data is added, quick, automatic updates
save time. A properly integrated workflow
encompasses the contributions of many
disciplines and synchronizes the geological
and dynamic models. New input permeates
throughout the entire workflow, from seismic
to simulation and beyond.
We’ve looked at some reservoir model
attributes that ensure its use as a manage-
ment decision-making tool. Several things
are needed to benefit: to gather knowledge
across the engineering disciplines; to under-
stand the model’s purpose from the get-go;
and to address by means of simulation the
uncertainties that most impact reservoir
behavior.
A user-friendly workflow and a focus on
integration from seismic to simulation are the
best way to address uncertainty through sim-
ulation modeling. Get these elements right
and reservoir modeling secures its rightful
place as a focal point for decision-making and
a crucial tool in helping operators develop
and produce resources. OG
Raj Damodaran is chief geoscientist for Roxar at
Emerson Process Management.
INDUSTRY SUPPLIERS
What the oil and gas industry
needs from SCADA
Supervisory control systems aggregate data
at key points in the supply chain.
T
he last two issues of Oil & Gas Engineering
included feature stories on supervisory control
and data acquisition (SCADA) systems in the oil
and gas industry. That coverage culminates in
this issue and with this listing of SCADA suppli-
ers to the industry. A brief synopsis of what’s
been said previously begins the piece.
SCADA implies a highly configurable set of industrial
software applications that can be used to support man-
agement of almost any form of process production.
SCADA is widely applied in the upstream, midstream and
downstream oil and gas sectors. In the upstream sec-
tor, its role often is stereotyped as being largely in sup-
port of remote data transmission. There are reasons to
believe this will change. One reason to believe so is the
wide and varied use of SCADA in other industrial sectors.
In addition, owners and operators are recognizing how
IT-based automation can productively address even the
unique challenges of the upstream oil and gas sector.
“SCADA’s ability to collect data at remote oil and
gas sites reduces personnel visits and leads to route
and dispatch optimization. But the profile of SCADA
is changing in oil and gas. Today, as is already seen in
other process industries, SCADA is a platform technolo-
gy used to control and supervise many types of industri-
al processes but also to optimize complex coordination
of operations among multiple business partners,” said
Darren Schultz, director, SCADA, oil, gas, and chemical,
ABB Inc.
Continuing role
Advances in the scope and scale of oil and gas
SCADA implementations are seen in upstream
environments, including fast-paced shale fields. These
SCADA instances face industrial processes while also
intersecting with business operations. In other words,
besides being a medium for process control, SCADA
supports the vital operations-coordination role. It does
so by being a single source of truth.
“The investment climate in the oil and gas industry
the last two years has been challenging. But a focus on
integration and automation continues to be relevant,”
said Doug Rauenzahn, global product line director at
Weatherford International. “A pause in rapid expan-
sion has given engineers a chance to plan. In low-price
markets, productivity gain from automation has greater
impact on the bottom line.”
Automation and service companies and small entre-
preneurial suppliers are betting that SCADA will be a
powerful platform solution for streamlined operations
at many different points in the oil and gas supply chain.
Better control and coordination of complex site opera-
tions means lower costs to produce oil or gas.
SCADA technology has been under constant develop-
ment for about the last 30 years. During this time, the
SCADA concept footprint grew from a boxed applica-
tion for engineers fiddling with a PC, to become—when
used in conjunction with PLCs, devices and device driv-
ers—a paradigm for distributed industrial control.
Cautious innovation
“While new automation technologies can enable
quantum gains in upstream productivity, the industry
has been conservative in their deployments, preferring
what it considers time-tested production methods and
technologies,” said Michael Day, oil and gas market
development manager at Siemens Industry Inc., in a
posted industry whitepaper entitled Drill Bit to Boardroom.
Oil and gas exploration and production companies must
increase productivity via integrated operations. Going
forward, rigorous management of new projects and day-
to-day operations are likely to be critical components, and
development of infrastructure needed for a field or region
will be streamlined and less bespoke. Lower returns in all
sectors of the market will place a premium on integration,
scale achieved by technology.
“SCADA effects a significant transformation in when,
where, how and by whom work gets done,” said Stan
DeVries, senior director, architecture solutions, Schneider
Electric. “When workers are at a premium or are highly
valued specialists, a SCADA solution is part of any reorga-
nization meant to make them more productive.”
OIL&GAS ENGINEERING FEBRUARY 2017 • 21
INDUSTRY SUPPLIERS
ABB
SCADAdvantage
ABB oil and gas solutions include midstream offerings,
rotating machinery, electrical systems, and plant electrifi-
cation. Purpose built for oil and gas, platform applications
range from production and gathering to transmission and
distribution.
Baker Hughes
InForce surface control system
Combines the hydraulic power to activate downhole tools
and the control logic to govern an intelligent well system.
Fully automated, PLC controls system functions for more
complex completion configurations. Used where remote
operations must be done through existing SCADA.
Bentek Systems
SCADAlink Systems
Includes enterprise software for documenting measure-
ment schematics for upstream exploration and produc-
tion. Specialized systems engineered to integrate into
operations, including controllers, communications, remote
power, and wireless.
Emerson Process Management
OpenEnterprise SCADA
Smart Process oil and gas application suite; gas applica-
tions include well optimizer manager and automated choke
control; oil apps include injection controller and gas lift for
oil; others include surface control, tank, and pipeline man-
ager. Includes integrated historian with backfill, reporting
and trending, and alarm and event management.
Iconics
Genesis64 HMI/SCADA Automation Suite
For data connectivity, aggregation, and visualization, soft-
ware suite bridges sites and facilities to corporate busi-
ness systems. To manage and control operations while
meeting regulatory requirements. Production and trans-
portation companies, equipment suppliers, and others can
monitor and control from a single location.
22 • FEBRUARY 2017 OIL&GAS ENGINEERING
‘Automation and service
companies and small
entrepreneurial suppliers are
betting that SCADA will be a
powerful platform solution for
streamlined operations at many
different points in the oil and
’
gas supply chain.
Inductive Automation
Ignition
An industrial application platform with fully integrated
development tools for building SCADA and IIoT solutions.
Scalable software can be employed in different archi-
tectures because it is modular; provides the benefits of
server-based SCADA with web-launched clients.
Outlaw Automation
ICScada
Application solutions include oil well, production pipeline
leak detection, man-down and safety systems, well test-
ing, tank monitoring, asset data management and main-
tenance management. Per site applications manage and
maintain single well sites. Multiple sites managed from a
centralized system, or from any web-enabled workstation.
PetroCloud
Cloud oilfield monitoring platform
Oilfield monitoring, surveillance, methane detection,
remote gate access control, SCADA as a service that sup-
plies field devices, data telemetry and cloud-based auto-
mation under a subscription model. Fully integrates with
existing SCADA systems and PLCs such that users needs
nothing more than a browser to control their automation
system and oil devices.
 Quorom Business Solutions
Quorom SCADA
Field operations suite includes water management field-
data capture, production management, PGAS measure-
ment and allocations; software platform includes solutions
for upstream, midstream, and pipeline. Optimize oil and
gas production with integrated data; manage production
with role-based dashboards and gain insight with compre-
hensive reports.
Rockwell Automation
FactoryTalk production and
performance suite
For offshore drilling and production platforms, subsea sys-
tems and FPSOs; onshore drilling, oil production, artificial
lift, gas production and water treatment, pipeline, and
transportation. Remote operations solution monitor assets
such as well heads, pipelines, ESPs, PCPs, rod pumps,
well test equipment, and other systems.
Schneider Electric
OASyS DNA SCADA
Gas suite: gas day operations, real-time gas, gas measure-
ment and analysis; liquids suite: liquids management sys-
tems; and pipeline energy management suite. Integrated
platform within its own architecture, enabling operations
from the field to the enterprise. Additional software for
Smart O&G field, enterprise pipeline management, and
LNG and natural gas.
Siemens
SIMATIC PCS 7, SIMATIC WinCC
Flexibly integrates remote terminal units into a central
process visualization system via a WAN and supports the
most important tele-control protocols. Just as multi-well-
pads lead to economies of scale, automation helps gather,
consolidate and analyze real-time data, combining electrifi-
cation, automation, and digitization.
SKKYNET
SkkyHub service, Data Hub
Data Hub OPC Tunneller is an easy and reliable way to
securely communicate among networked computers.
Middleware tools and C library tool kit combines with
SkkyHub services for real-time data connectivity. Service
makes it easy to connect to and network with industrial
systems and data sources to visualize real-time data.
Technical Toolboxes
Petroleum, Pipeline & Process Toolbox
Petroleum, pipeline, and process tool kit embodies
expertise in critical disciplines, including multi-phase flow
hydraulics, flow assurance, artificial lift, internal corrosion,
pipeline leak detection, and ac/dc migration. Partnered
with SCADA vendor that offers subscription-based field
monitoring services to independent oil and gas operating
companies in Alberta and British Columbia.
Weatherford
CygNet Enterprise Operations Platform
Gas transmission SCADA, gas production SCADA, gas
applications suite, gas measurement suite, and liquid
transmissions suite. Integrates with field office software
suite to help regulate production operations for any well
type. Software modeling and planning engineering apps
combine real-time and mathematical simulation models.
Wonderware Software by
Schneider Electric
InTouch, System Platform
InTouch empowers operations to optimize their routine
human interactions with industrial automation systems.
System Platform is an integrated, unifying platform integral
to business processes and systems. Maximizing hydrocar-
bon screens while minimizing capital costs requires three
types of model-based tools: design, real-time optimization
and training.
ZTR
One i3
Reports on run hours, battery health, location, engine
data, and fault coders are key to remote monitoring. Add
sensors or integrate with the engine controller to monitor
pumps, hydraulics, belts, leaks, pressures, temperatures,
and more. Oilfield wellhead monitoring solution with
telematics integrates real-time communications between
well sites and business systems.
OIL&GAS ENGINEERING FEBRUARY 2017 • 23
PROCESS OPTIMIZATION
Operations data includes
clues for automatic
process improvement
Oil and gas companies cut maintenance costs and boost efficiency—
by smartly analyzing control data
C
By Sidney Hill Jr. urrent market conditions are forc-
ing oil and gas companies to do
some corporate soul-searching.
They are seeking ways of doing
business that will not only help
them stay afloat, but also allow
for continuously boosting profits in the face of
persistently low product prices.
There is no shortage of people offering
advice on how to reach that particular state
of equilibrium. Industry analysts, consultants.
and even a few media people have studied
and weighed in on the topic. It appears all of
these deep thinkers have reached the same
conclusion: perfecting the use of digital tech-
nologies offers the best path for oil and gas
companies to thrive in this new environment.
QUICK ARTICLE SYNOPSIS
Problem: In the new era of low prices, oil and gas compa-
nies need tools and techniques that can reliably support con-
tinuous improvement strategies.
Solution: Effective management of operational data can
lead to strategies for automating and optimizing processes.
This can provide multiple benefits—from cutting time to per-
form tasks related to exploration and production—extend-
ing the life of assets and boosting productivity by reducing
equipment downtime.
Action to take: Explore solutions that help with organizing
and analyzing operational data. These can include distributed
control and SCADA systems and data historians.
24 • FEBRUARY 2017 OIL&GAS ENGINEERING
Those holding that opinion include oil and
gas industry experts with the global business
consulting firm McKinsey & Co., which has
published a series of reports on this sector
since prices began their precipitous slide in
2014.
“Our research finds that the effective use
of digital technologies in the oil and gas sec-
tor could reduce capital expenditures by up
to 20%,” McKinsey stated in an August 2016
report titled, The Next Frontier for Digital
Technologies in Oil and Gas.
The report also stated these technologies
could cut upstream operating costs by 3%
to 5% and downstream costs by at least half
that much.
Clearly such cost reductions would improve
the corporate bottom line, and McKinsey
argues those results are possible because
inserting new digital technologies into their
operations allows oil and gas companies
to squeeze more value out of their existing
assets, rather than expending funds on new
ones.
This argument obviously applies to the
equipment used to find, produce, and trans-
port oil and gas. However, it also applies to a
not so obvious—but equally important—asset:
the data generated during the exploration and
production processes.
Aids process automation
In fact, some industry observers believe this
era of low prices has made data an oil and
gas company’s most valuable asset because it
constantly provides clues on the most efficient
ways of managing all of the enterprise’s other
assets—from exploration and production
equipment to people.
Perhaps the biggest positive impact the use
of data can have on an oil and gas company
is as an aid to process automation. McKinsey
stated as much in an August 2014 report
titled, Digitizing Oil and Gas Production.
In that report, McKinsey advised oil and gas
companies to explore the use of Big Data and
advanced analytics as a process automation
tool, arguing that this approach promises both
micro and macro benefits.
The micro benefits could include the auto-
mation of routine tasks that are expensive,
dangerous, or error-prone. The macro benefits
could include tackling a myriad of challenges
confronting companies across the industry,
including the following:
• Managing operations in increasingly com-
plex and hostile environments, such as oil
and gas fields located in arctic, offshore,
or geographically remote areas
• How to better monitor conditions that can
lead to health, safety, or environmental
incidents that ultimately could drive an
operator out of business
• Retaining knowledge that is being lost
as experienced workers retire from the
industry in the major demographic shift
known as “the great crew change.”
For a novice, embarking on a Big Data and
advanced analytics project could prove an
overwhelming task, but many oil and gas
companies have been laying the groundwork
for such endeavors, often unknowingly, for
many years.
For instance, field engineers have been col-
lecting and analyzing complex seismic data—
starting with 2-D pictures and moving into 3-D
images—to locate oil and gas deposits since
the 1980s. For just as long, oil wells, pipe-
lines, and refineries have been outfitted with
control systems consisting of sensors and
other devices that feed operators information
about the operational status of various types
of equipment.
For many oil and gas companies, taking the
next step to applying Big Data and advanced
analytics to process automation is simply a
matter of understanding which processes
could benefit most from such automation.
PLACES TO START:
Emerson Automation Solutions:
www.emerson.com/en-us/industries/automation/oil-gas
INTECH Process Automation:
www.intechww.com
OVG Group:
www.ovsgroup.com
McKinsey’s analysis indicates that automat-
ing processes related to production opera-
tions are likely to yield the greatest return on
investment.
While the exact processes that should
be automated first may vary depending on
the production environment, most industry
experts agree that two things will hold true in
almost every situation:
1. Using data to not just automate—but
also optimize—any production-related
process will prove worthwhile
2. Using automation to practice preventive
maintenance will produce significant
financial returns.
General process optimization entails creat-
ing strategies for constantly improving any
process deemed critical to the company’s
profitability. This happens by collecting data
generated in the process, analyzing the data
to uncover process flaws, and implementing
changes to correct those flaws.
Preventive maintenance, as the name
implies, is analyzing data on the operational
status of individual pieces of equipment and
using that information to keep that equipment
functioning at maximum capacity for longer
periods of time.
“The potential impact of using advanced
analytics for preventive maintenance is a
decrease in maintenance costs of up to 13%,”
McKinsey stated in its August 2016 report.
“At one company, where maintenance costs
accounted for 25% of operating expenses,
this enabled preemptive equipment mainte-
nance—in effect, vital equipment could be
repaired before it broke down. This effort
reduced costs by up to 27% while increasing
reliability and uptime.”
OIL&GAS ENGINEERING FEBRUARY 2017 • 25
Process oPtimization

Condition-based maintenance maintenance solution, we first have to collect

Babar Iftikhar calls this phenomenon all of the data from the instrumentation and
devices into a central location. Most often that
“condition-based maintenance.” He also said
will be a data historian located in the plant.
he is seeing it practiced with greater frequency
Then we can write logic for how to process
in his work as a product development manager
for Intech, a global provider of processthat data on top of the historian.”
automation solutions and services. Typically, this logic, or program code, is writ-
ten to instruct the historian to issue an alarm
Regardless of what’s it’s called, this type of
if the equipment being monitored shows
maintenance involves the constant monitoring
readings outside of certain parameters. If,
of critical data sets on the equipment being
for instance, a compressor displays a low-
maintained, and having the ability to transmit
pressure reading times number of times in
that data, ideally in real time, to people who
a day for more than 10 minutes, the system
can step in and fix the equipment before what
will trigger an alarm. In a true condition-based
appears to be an imminent problem occurs.
monitoring system, that alarm will go to a
Once again, the oil and gas companies that
Automation’s impact: dashboard connected to the preventive main-
have laid a technology foundation—in this
tenance module of an ERP system, which
case those that have installed distributed con-
Research has shown that the
automatically issues a work order dispatching
trol systems connected to data historians—are
biggest potential for return
on investment for using data a technician to the machine.
a step closer to putting this practice in action.
to drive process automation
“Various types of control technology— “When the maintenance team receives this
lies in upstream production
type of work order—which is not a preven-
PLCs, distributed control systems and SCADA
operations. Graphic
tive or corrective work order—they visit the
systems—accumulate different types of data,”
courtesy: OVS Group
site and diagnose the problem based on the
Iftikhar explained. “To create a condition-based
listed symptoms,” Iftikhar said.
Process AutomAtion WorkfloWs “One gas production facility
in Pakistan implemented this
Forecasting See the future of your production assets. strategy on seven giant com-
Access data sources to compare pressors, and immediately
saw its incidents of production
Production data analytics variables and analyze trends through shutdowns disappear. That is
charts or maps. the value of condition-based
Automatically compares real-time field maintenance.”
data to the most recent iteration of com- Iftikhar also has helped
Compressor surveillance oil and gas companies with
pressor models, alerting to deviations
what could be considered
from nominal operating condition. general process optimization.
In this case, it was helping
Monitors electronic submersible pump
ESP surveillance them optimize alarm manage-
optimization.
ment. Such optimization often
Uses real-time field data, historical data becomes necessary after a
plant has been using a control
and well models to predict the perfor-
Well performance analysis mance of wells based on the current system for a number of years,
and the nature of the business
operating parameters. has shown some alarms to be
more critical than others.
Monitors and manages financial costs,
Expenditure surveillance “You can find operators
budgets, and expenditures.
being distracted by alarms
that never actually lead them
Evaluate the impact of well interventions
Uplift analysis to a problem,” Iftikhar said.
on production.
“In one facility in Nigeria,
Integrated operational insights in a con- operators were receiving as
Executive dashboards many 5,000 alarms a day. The
text-aware solution.
ISA standards say operators
26 • FEBRUARY 2017 OIL&GAS ENGINEERING
should never receive more than six alarms an
hour, or roughly 140 a day. We can rational-
ize those alarms by pulling four to six weeks’
worth of data from the historian and analyzing
to determine which ones have not required
any corrective action. We then present the
results to the customer and go about the pro-
cess of disabling or changing the set points
for non-critical alarms. That typically reduces
the alarm response workload by 40% to 60%,
and it represents a quick win for the customer
on the use of technology.”
Surveillance by exception
Using data for this type of optimization can
go much deeper, according to Jose Jimenez,
director of global oil and gas solutions at
Emerson Automation. He helps companies
employ a strategy called “surveillance by
exception” that can aid in optimizing almost
any aspect of oil and gas production—from
tracking and improving well performance to
boosting the output and reliability of refinery
equipment.
The surveillance by exception strategy
involves building models for how you expect
operations to perform and then develop-
ing means of collecting and analyzing data
that can reveal if the actual performance is
meeting those expectations. If actual perfor-
mance is not within expected parameters, it
is labeled an exception warranting immediate
corrective action.
For this strategy to work, Jimenez says a
company must be able to view and act on
data “as it becomes available,” as opposed to
reviewing and reacting to reports generated
at monthly, weekly, or even daily intervals.
Jimenez said companies that have SCADA
systems in place are collecting the necessary
data to operate in this fashion, they just need
a way of making that data readily available to
operators who can recognize and act on the
exceptions.
“When you’re doing this type of surveil-
lance, you’re tapping into either a data histori-
an or directly into a SCADA system,” Jimenez
said. “So, as the data becomes available,
you compare it against your model and do a
trend analysis or projection to see if anything
needs to be examined more closely.” The data
sources could be based on the actual process
being observed. If the goal is to boost well
performance, for instance, the system would
be instructed to pull four to six different forms
of data, such as maintenance records, produc-
tion history and real-time output data from the
field.
A ‘no-regrets move’
Jimenez said growing demand for these
capabilities recently prompted Emerson
to enter a partnership with OVS Group, a
Houston-based company that has created a
library of prepackaged tools that automate
the process of organizing data from various
points of an oil and gas operation—from
reservoirs to wells, pipelines and refineries—
so that it can be easily analyzed.
“The foundation of the partnership is OVS’s
ability to link into multiple data sources very
quickly and without duplication,” Jimenez
said. “A lot of oil and gas companies have
purchased and installed a lot of sensing and
control products. That provides a good inflow
of data from the field, but they don’t have the
ability to evaluate that data against their per-
formance models on a timely basis.”
Sebastiano Barbarino, CEO of OVS Group,
says companies seeking to use data for pro-
cess improvement should be looking, first
and foremost, for solutions that can help
them identify which data they should be
analyzing to achieve their specific business
goals.
“We know Big Data is a trendy topic
in the industry,” Barbarino said, “but the
amount of data you collect is not important.
What matters is how you use the data. If
you want to do gas leak optimization, you
may need 10 points of data. Optimizing
another process may require even fewer
data points. We created our workflows to
lead the users to those conclusions, show-
ing them the exact data they need to get
the result they’re seeking.”
Solutions like these are why McKinsey
called an investment in digital technology—
including big data and analytics solutions—a
“no-regrets move” that all oil and gas compa-
nies should quickly embrace. OG
Sidney Hill Jr. is a graduate from the Medill School
of Journalism at Northwestern University. He has
been writing about the convergence of business
and technology for more than 20 years.
OIL&GAS ENGINEERING FEBRUARY 2017 • 27
 The World’s
Most Advanced
LIGHTNING NEW PRODUCTS
PROTECTION Offshore illuminator
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Clark-Reliance’s Jerguson LumaStar EPL-
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With its all-316 stainless steel construc-
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environments. Its LED lights are essen-
tially maintenance-free and are rated
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Sales@NLPcorp.com Input #200 at www.controleng.com/information

I/O platform for improved connectivity

in hazardous areas
Rockwell Automation’s Allen-Bradley Bulletin 1719 Ex I/O platform is
designed to allow users to access data from field devices and more
easily control process operations in hazardous areas. It is part of the
PlantPAx distributed control system (DCS) from Rockwell Automation,
the Bulletin 1719 Ex I/O allows users to monitor operations using a
common platform that communicates with the DCS or other automation
systems. The I/O platform operates in a wide temperature range and is
designed for use in industries with hazardous applications, such as oil and gas and chemical. In addition, an EtherNet/IP device-level-
ring (DLR) adapter enables DLR topology to help improve network resilience, and an optional N+1 power supply provides power redun-
dancy. Three chassis models are available, providing scalability for anywhere from eight to 45 I/O modules on a single adapter.
Rockwell Automation
www.rockwellautomation.com
Input #201 at www.controleng.com/information

ADVERTISERS’ INDEX
COMPANY PAGE NO. RSN WEB
ABB Inc 1 101 www.new.abb.com/apw/CE
CFE Media’s New Products
11 www.oilandgaseng.com/NP4E
for Engineers Database
Danfoss C3 103 www.danfoss.us
Siemens C2 100 www.siemens.com/communications-for-oil-gas
WAGO Corp. C4 104 www.wago.us
WELDBEND 2, 3 102 www.weldbend.com

28 • FEBRUARY 2017 OIL&GAS ENGINEERING

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