Study reveals 10% profit improvement potential for oil and gas
By adopting advanced automation technologies and new processes, unconventional oil and gas operators can move from average to top-quartile performance, capturing up to US$7 billion in profits annually, according to a recent study conducted by Emerson and industry benchmarking firms of onshore producers in mainland USA.
In a ‘lower-for-longer’ oil price environment, many companies are turning to IIoT technologies and the promise of digital transformation to help embed expertise in work processes, improve production and begin the path to operational excellence. Emerson estimates an average operator that adopts a comprehensive improvement program could see profitability improve by as much as 10%.
The analysis shows higher production rates, lower lease operating expenses (LOE) and a reduction in safety risks have the greatest impact on overall operational improvements. Improvement in these areas matter most to liquids-weighted unconventional oil and gas operators and helps them achieve top quartile performance. Top quartile is defined as achieving operations and capital performance in the top 25% of peer companies and requires changing historic work processes across multiple functions.
For unconventional oil and gas operators, Emerson identified key technologies to quickly improve operations in a scalable way:
- Optimising production with automated production surveillance, modelling and analytics and implementing produced fluids management techniques to reduce lost and unaccounted-for production.
- Improving equipment reliability by leveraging analytics and automation diagnostics to lower LOE, providing greater visibility of costs per well.
- Using prescriptive instead of reactive maintenance to improve health, safety, security and environmental compliance (HSSE) and reduce personnel risk exposure.
By harnessing the power of the IIoT and other transformative technologies, advanced automation systems can optimise operations with real-time information from a pervasive sensing layer and securely feed that data to robust standard analytics applications. With this data, experts have better insight to respond quickly and confidently to changing conditions. This provides oil and gas operators the diagnostic capabilities and data insights to predict instead of react to issues, make better decisions and reduce risks.
“There’s broad knowledge among operators about improving production, yet understanding how to consistently achieve real, sustainable savings is not as clear,” said Chris Amstutz, vice president, oil and gas industry programs, Emerson Automation Solutions. “For example, we have the software now to help production meet targets by leveraging the latest reservoir model data that shows what’s going on in the field to avoid drilling the wrong wells.”
The digital transformation of exploration and production means higher production rates, lower LOE and reduced safety risks, among other benefits. Emerson’s Operational Certainty Consulting Group advises operators to start their digital transformation by developing a practical blueprint that leads to higher production with more actionable and timely insight into the performance of the field, minimising HSSE risk by enabling the workforce with remote field intelligence, and reducing LOE by optimising work processes and logistics.
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