From technology to transformation

Artificial intelligence

According to our CEO Survey, 80% of global oil and gas CEOs say they agree or strongly agree AI will significantly change the way their companies do business in the next five years. What’s more, 65% said they plan to implement or have already implemented some aspects of AI in their operations.

Remote well-site monitoring: An intelligent visual monitoring platform that creates alerts and reports based on the data gathered from field devices is finding wide acceptance with more than 30 oil and gas companies, mostly in Western Canada. Operators report the technology has reduced routine well-site visits by 50% by using the site-inspection tool.
Artificial lift and well-optimization technology: A major Canadian producer launched a three-month pilot, installing sensors remotely connected to an optimization system on 60 wells. The pilot resulted in around CA$1.50-per-barrel savings in operation costs. The producer has since implemented the technology across the field and is looking to use it in other areas across Western Canada.

Blockchain

Blockchain is quickly finding uses in the oil and gas industry. In early 2018, a company and its partners performed the first blockchain transaction for freehold royalties in Alberta. The company expects to be using blockchain for all freehold royalties by the end of 2019 and has set its sights on transforming its accounts receivable next. Several other large Canadian oil and gas producers report they’re testing blockchain, with the goal of implementing it in the near future.

Digital twins, drones and virtual reality

Large Canadian operators are using digital twins to help manage high capital costs. Nearly 90% of large oil and gas projects go over budget. And they experience an average 17% schedule delay and 30% cost overruns, according to the Construction Owners Association of Alberta. This leads to unplanned on-site rework, as parts and equipment don’t fit as expected.

The technology provider documented a digital “site reality” using drones and laser scanners. It then digitally matched project components like blueprints with that site reality, so fit errors could be detected and communicated to the fabrication shop or the engineering team.

What is a digital twin?

A digital twin is a continuous learning system of digital copies of assets, systems and processes that can be automatically queried for specific outcomes, letting you predict asset behaviour and the capacity to deliver within given parameters and cost constraints.

A growing innovation gap

While technological advances have kept the Canadian industry competitive over the past decade, its technological advantage is at risk, as regulatory and pipeline uncertainty results in investment moving to the United States.

The large scope of activity in the United States is creating economies of scale, making innovation more likely to occur there than in Canada, according to the leader of one of Canada’s largest drilling contractors. This view is echoed by the leader of an environmental service company, who said a gap exists in the Canadian technology development ecosystem when it comes to scaling up technologies. Canadian companies are investing money in the early stages of technology development (testing and validating the technology) only to have other countries commercialize it.

If history repeats itself—especially if industry is unable to get more market access—these innovation challenges will grow as investment and activity stagnate. But the industry has a number of options available to maintain and build on Canada’s innovation advantage in the face of these challenges:

Partnerships

One avenue involves partnering with government and other organizations to find solutions to shared challenges like greenhouse gas reductions and market access.

Scaling up

Take the opportunity to help fund and work with technology start-ups to move potential solutions through development to scale-up.

Collaboration

Encourage a culture of collaboration among industry sectors. The low-bid procurement process in the Canadian oil and gas industry often limits the uptake of new technologies. Bidding is done on one-off projects based on price, limiting opportunities to collaborate on integrating new technologies into supply chains. Creating a more collaborative contracting process over multiple projects could let technologies improve over time and become integrated into supply chains.

Balancing risks and rewards

Technology providers often say they’re assuming most of the development risk while their clients capture most of the reward. Clients often claim the opposite is true: they work with the technology provider only to have them take the technology to competitors once proven. Transparency is needed to balance the risks and rewards between parties and create successful relationships.

Take a long-term view of technology development

When times are good in the oil and gas industry, companies put their capital into growing production rather than technology development. In bad times, capital to invest in technology is limited. Companies should invest in technology development throughout price cycles to stay resilient in any price environment.