Man and Machine: Operational Excellence in the O&G
Digitalisation is the name of the game, and for refiners, the choice is clear: Innovate or get left behind.
In today’s dynamic business environment, it is very difficult to predict what your competition will do next. Operational Excellence drives performance levels that really change the company’s competitive position in the marketplace. This requires organisations to rethink and transform their businesses by incorporating digital technologies across the value chain to gain the ability to swiftly respond to changing market conditions and thrive in times of uncertainty.
Operators need to stay ahead of the game, but how can they do so? And what tips and tricks can they use to achieve sustainable operational excellence, even in challenging market conditions?
Asian Downstream Insights recently brought together leading industry experts from across the region to compare their experiences and insights around this theme.
Technology more important than ever
“The oil and gas industry has been through many struggles,” says Cheah Wai Seng, Resources Industries Lead at Accenture, “but where we are today is different from any other cycle in the industry. Discussions are now centered around sustainability and transformation, and the time to reinvent is now.”
Technology is growing at a tremendous pace. There has been a growing consensus among business leaders that in our digital age, “all companies need to become tech companies”.
“At least 80% of industry leaders have said they need to accelerate the rate of growth for technology and advancement, but the question then becomes how to apply it in the right way,” says Franz Kufner, EVP APAC Region at Hexagon PPM. “Consider what you are trying to achieve in the short, mid, and long-term, what your business goals and projected outcome are, and how you can work on this step by step.”
Technology drives better decision-making, exposes inefficiencies, and increases collaboration. By connecting devices and equipment, operators are better able to gather and analyse data and transform it into actionable information and ultimately decisions that positively impact results. Oil and Gas organisations should ask themselves how technology will help transform their operations and their organisations, and proceed accordingly.
Nurturing a digital workforce
Changing corporate culture also requires leadership from the top to reinforce new behaviours. It is up to business leaders to continually set the tone for the transformation, keeping expectations and enthusiasm high.
“It’s not all about acquiring new technologies,” claims Supratim Mukhopadhyay, Director Asia Pacific at Hexagon PPM. “It’s about making people agile enough to adopt and adapt to new technology when it’s used. You can apply all the technology you want, but you have to consider what it’s supposed to improve, and what the business wants. In the end, the adoption of tech will be driven by the person on the ground who will be operating it.”
Organisations can easily fall into the same trap as those in other industries: allocating most of the budget to the technology itself and little to training. A common occurrence has been that operators invest in new technologies, and a year later, they are still struggling to deploy them and gain benefits for the business. What operators need to understand is that there is an investment that is coming into the industry in the form of digital technology, and they need to look to the future: How can they improve their current operations with this technology and make the most of this investment?
People are the heart of digital transformation – not the technology itself. As Kufner puts it, “look at the process, then people, then technology.”
“At Hexagon, we aim to understand how our technology is going to improve production and operations for refineries – otherwise it’s counterproductive to suggest new technology for the sake of suggesting it,” states Mukhopadhyay.
Echoing this sentiment is Tan Wei Chen, Chief Operating Officer at Hengyuan Refining Company Berhad. “When we talk about innovation and technology, the first question shouldn’t be about what’s new, but what the company needs and how this is going to help achieve it. Good solutions aren’t just about new technology; they have to have good people and process, and comes down to company culture.” Says Tan.
“If you’re not linking your tech to your people, you’re going to have a disaster on your hands.”
Perspectives from refiners
The COVID-19 pandemic impact on transportation and supply chains has also forced many companies to rethink and transform their supply chain model.
“If we can’t adjust the production line rapidly enough to cope with changing demand, we will see that the whole industry is affected as operations need to run 24/7,” says Pitak Lausangngam, Head of Digital Transformation PTT Global Chemical. “In other words, the operation line needs to be flexible enough to deal with changing needs and demands, and achieving this flexibility is what will then achieve effective operational excellence.”
“We have been through difficult times,” admits Jong Pil Ahn, VP of Refinery Innovation & Coordination Division at S-OIL. “Digitalisation was heavily accelerated during the lockdown, and there is a strong belief that the world cannot go back to a ‘pre-COVID’ way of thinking”.
According to Ahn, digitalisation is more critical now than ever before, especially as the internet age has led to more transparency of information than there ever has been.
“It is increasingly important for operators to increase workers’ technological ability to keep up with advancements in the field,” he shares. “With the energy transition gaining pace, refiners have to find their competitive edge instead of relying on traditional methods. As far as operational excellence is concerned, S-OIL is looking seriously at digital transformation and acknowledging it critical to achieving our goals.”
At PETRONAS, as far as downstream is concerned, aggressive discussions about technology and how to accommodate change and maximise profit must be held. Muslisham Omar, Head of Asset Performance Management (Downstream) at PETRONAS, divides technology into two sections – process vs digital – when focusing on the issue at hand.
“Any technology that can support the reduction of waste and bring valuable products has to be on the table for discussion, especially since companies want to make sure they are competitive enough,” he says.
“The beauty of operational excellence is that everyone is working together to elevate the company and increase productivity and performance, which then has a positive impact on efficiency and safety. When we look at silo-based knowledge, digital technology will help operators to monitor data from start to end of the value chain, which lets them see at any segment if there is a glitch or an error in the data.”
Breaking down silos with digital twins
Today, operators face the problem of information silos, which can shift towards more open, advanced technology, particularly grueling. Breaking out of these silos is an essential step towards higher productivity and safety by allowing complete oversight of operations.
To smash silos requires a system capable of uniting operations, maintenance, safety, engineering, and real-time data – which is where the digital twin comes into play. A digital twin can feed all of these systems with consolidated, evergreen, and consistent data, filtered and maintained for the specific needs of each application.
“It is imperative that organisations work on this step by step,” asserts Kufner. “Number one is to ask yourself why you need a digital twin; what do you want it for, what’s the purpose, the business case? And then it depends a lot on where you are in your journey and where the digital start point is. If it’s a completely new developed plant, like a greenfield project, you use data-centric solutions to design and construct it, you do all this already in a digital environment, so you capture and use this data in existing 3D models, and then you have a digital twin.” He explains.
Digital twins grow with the project and eventually get handed off to operations and maintenance.
“That’s the ideal scenario when you have a greenfield project,” claims Kufner. “When you have a brownfield project, typically, the first thing we would recommend is that people have to look first at the data. You won’t want to boil the ocean; you don’t want to do everything at once, so you have to prioritise the data by their importance in terms of safety or operations.”
The next step is “cleaning up,” as a lot of this data is on paper or spreadsheets, somewhere in silos.
“It’s not duplicated,” explains Kufner, “so you need to make sure all this is clean, then you go and scan the facility so you have a 3D image of the asset or facility, then you put the information into the model and there you have your digital twin as well – and then you go back and build more data into that digital twin as you need it.
If you do a revamp or extension of the plant, then you build it into the digital twin and expand it too. It’s like a living thing, almost, because it’s supposed to be like a representation of the real world as its digital twin.”
“It’s daunting, absolutely, but you need to break it down into small steps,” he advises.
Cybersecurity in the digital era
The advent of digital technology is not all it’s cracked up to be. Dangers lurk in the digital sphere.
For Muhittin Hasancioglul, Chief Information Security Officer and Head of Cyber at PETRONAS, these threats are a new development and will continue evolving over time.
“The oil & gas industry as we know it is at an inflection point, and we are moving forward in an environment that is totally different. 15 to 25 years ago, there was no such thing as cyberattacks like we know them today, but now new problems have been created in the space of cybersecurity, and we must think about these. The next five years will probably see more of such activity, probably more digital than physical crime.” Says Hasancioglul.
The world has grown exponentially more connected, and while serving as a boon to many who have taken advantage of the benefits a smarter industry can bring, such connectivity and digitalisation can also be a double-edged sword. Such openness can increase the risk of threat and vulnerability for operators, and Hasancioglul stresses the need to enhance resilience – both cyber and personal.
“The reaction to the pandemic is recoverable, but the assets of the industry are being threatened, and there has been a major shift that we cannot afford to ignore. Business is changing, and it is not enough to improve efficiency but to think about how to move forward.” He says.
Be they boon or bane, digital technology – and the transformation it promises – heralds the dawning of a new age for the oil & gas industry, especially as it rallies to recover from a paralysing pandemic. However, in the rush to implement, industry leaders must remember that it is all hands on deck and leave no man (or woman) behind.
Digital transformation may be the industry’s new favourite buzzword, but the phenomenon has seen its time around the block. People and technology – and through technology, advancement – are intrinsically linked, and operators must acknowledge that through allowing for upskilling and continuous improvement.
Indeed, data is king – but what’s a king without his people?