The Integrated Digital Oilfield Operations

Enabling Profitability During the Low Oil Prices

Stephan Klein, Vice President, SAP, Germany
Arif Abdullah, Director, SAP, Germany

Agenda
The Trends in the Industry
The Oil & Gas Upstream Operations
Introduction to Integrated Digital Oilfield Operations (IDOO)

A Day in Production Operations

Radical changes in supply and expected changes in demand

Price vs. Cost
Clean Energy
Unconventional
A price of $128 per barrel of oil will be needed to support development of new resources such as
light tight oil and ultra-deep water. WEO, 2013.

And Where are we with Price Now

Shifting Demand & Supply
Patterns

Increased Governmental
Regulation

Demand continues to grow

Sustainability

in emerging economies
Supply resources shift for oil
and gas
Oil price volatility

Sarbanes Oxley
Sanction Party

compliance
Environmental
compliance

Global Market Dynamics

Resource and asset

optimization
National Oil Companies
expanding
Mergers & Acquisitions
Global business operation
models

Maximize Reserve Recovery

Operational excellence
Digital oilfields
Asset performance

Unconventional
More wells, Wider Areas
More complex accounting

dealing with multiple leases

More complex logistics to
drill/produce
More options/constraints to
delivery

Shifting market >>> Technology convergence >>> Empowerment of people

Continuous capital
investment getting to
the next barrel
More data in last 5 years
than entire history of
humankind
15 Billion connected
devices
Increasing asset
complexity enriches
technology business
1 Billion people
engaged in social
networks

Companies live in times of unprecedented pace of change

Today

1000

A CIO of a US $20
billion company will
typically have around
1000 large enterprise
applications to manage

51%

of CIOs cannot respond

timely to digital
opportunities 4

End of 2020

By 2020

40

Of data that needs to

be analyzed (40 billion
terabytes of data)

zetabytes

1
2

2015 SAP SE or an SAP affiliate company. All rights reserved.

ScienceDaily. ScienceDaily, 22 May 2013

Technology Adoption Report: Business Networks, Ardent Partners, 2014

Internet of Things (IoT) 2013 to 2020 Market Analysis: Billions of Things, Trillions of Dollars, 2013

4 Gartner,

2015

Upstream Business imperatives in the new reality

Cut in Capital Expenditure.
Tighter scrutiny of the investments in high risk projects

Optimize Capital
Spend

Optimize Production Cost / Barrel.

Maximize reserve recovery from existing fields

Optimize Production
Management

Increased focus on sustainable operations & Risk Management.

Reduce Cost across the organization e.g. Supply Chain etc.

Sustainable Operations

Talent Management
Contingent Workforce Management

Optimize Workforce
and Talent

Mergers & Acquisitions.

Economies of scale not viable for small players

Enable Mergers &

Acquisition

2015 SAP SE or an SAP affiliate company. All rights reserved.

The ever increasing business complexity is leading to higher cost, less

innovation and less growth
and needs to be tackled
is leading to to ensure business success

Business complexity
Complex decision making
Large global organizations have created so much
complexity that businesses often struggle to bring good
ideas to the marketplace profitably

Higher cost

McKinsey, 2014

10.2% or US$237 billion

of profits is lost by top 200
global companies due to
hidden costs of complexity
Global Simplicity Index, 2013

Complex business processes

Large organizations can spend between 40% and 80% of
their time on non-value-added activities
BCG, Complexity Report

Complex technology
40% executives worry that their organizations will not
keep pace with technology change and lose their
competitive edge.
McKinsey study, 2013

2015 SAP SE or an SAP affiliate company. All rights reserved.

Less
Innovation
and hence
less growth

Innovations top performer

see higher revenue
growth
leading to a 3-fold
difference in 5 years
Bain, 2015

Transformational technologies will drive business

innovation like never before
Everything in the Cloud

Platform

Applications

Networks

Advances in in-memory computing and

decline in hardware costs

Role Based, Location and ContextAware, Intelligent, Predictive, mobile

Convergence of social, business

networks

More than 60% of CEOs expect 15-50% of their earnings growth in the next 5 years to
come from technology-enabled business innovations.
McKinsey study, 2013

2015 SAP SE or an SAP affiliate company. All rights reserved.

 but most companies spend today 2/3 of their IT budget just maintaining
the status quo, leaving only 1/3 for new innovations

28%
Drive business
innovation

Innovation
Customer experience
Employee engagement
Resource optimization
Networked economy

Drive
business
innovation

organizations will not keep pace

with technology change and lose their
competitive edge.

72%
Keep the
lights on

Complexity
Decision making
Business-process
Technology

As-Is
Source: Forrester IT Survey, 2013
2015 SAP SE or an SAP affiliate company. All rights reserved.

40% executives worry that their

Keep the
lights on

Business
expectation

McKinsey study, 2013

Simplify business processes

SAP oil&gas value map

Capital and Spend
Effectiveness

Integrated Digital
Oilfield Operations

Hydrocarbon
Supply Chain

Operational
Integrity

Capital Planning

Hydrocarbon Production
Management

Hydrocarbon Supply
and Distribution

Risk Analysis and Governance

Hydrocarbon Processing
Visibility

Workforce Competency

Commercial Sales
and Marketing

Asset Integrity

Secondary Distribution
and Fuels Retailing

Environment, Health, and Safety

Portfolio and Project Management

Strategic Sourcing and Supplier
Management

Hydrocarbon Revenue Management

Procure to Pay and Business

Network

Field Logistics

Convenience Retailing
Enterprise
Information
Management
Human
Resources

Finance

Platform and
Technology

Data Architecture and

Integration

Information
Governance

Content Management

Information Archival

Core Human Resources and

Payroll

Talent Management

Time and Attendance

Management

Workforce Planning
and Analytics

Financial Planning
and Analysis

Accounting and Financial

Close

Treasury and Financial

Risk Management

Collaborative Finance
Operations

Enterprise Technology

Analytics
Technology

Mobile
Technology

In-Memory Technology

Enterprise Risk
and Compliance
Management

https://rapid.sap.com/se/executive
2015 SAP SE or an SAP affiliate company. All rights reserved.

Problem statement and objectives

Integrated digital oilfield operations (IDOO)
Optimize the Oil
Supply Sources

As stable sources of oil and gas are becoming a scarce commodity, companies are driven to explore new
sources and new ways to extract oil and gas. Intelligent oilfield technologies can help oil companies get
the most out of their existing fields and establish successful new fields in remote and harsh areas

Increase
Production, Reduce
Costs, Increase
Safety

Managing an oilfield requires a balance of maximizing well life and optimizing production equipment.
Monitoring and analyzing data can help achieve this balance, but the data validation, analysis and
diagnosis is laborious without a system. Intelligent oilfield solutions can increase production and cut costs
while reducing the risks for its employees

Improve Data
Management

While many new oilfields contain state-of-the-art monitoring equipment, older oilfields can provide only
limited data. In fact, some critical information is still collected on paper. Even when data is electronically
gathered, most companies store it in isolated systems that have are not easily able to talk to one another
. With the intelligent oilfield, integrated systems and advanced technologies analyze raw data from oilfields
and turn it into meaningful information

Manage Aging &

Dwindling
Workforce

Industry sources estimate that demand for hydrocarbons will continue to increase to approx. 100 MMbpd
and labor shortage of 1Mn by 2015 (avg oil worker is older than 50 yrs). Digital Oilfield technologies
enable productivity to close the supply gap by accelerating employee productivity, in which a handful of
skilled people can accomplish what required a few hundred in the past

Digital oilfield is the umbrella term for technology-centric solutions that allow companies to leverage limited resources. It allows companies to capture more data, with
greater frequency, from all parts of the upstream value chain and analyze it in real or near-real time, thus optimizing reservoir, well, and facility performance
2015 SAP SE or an SAP affiliate company. All rights reserved.

IDOO* defined a common view

*Also called Digital Oilfield, Smartfields, i-Field, Field of the Future, e-Field, Integrated Operations

The capability to monitor and manage all operational activities in real-time or near real-time, regardless of location
Operators seek to leverage real-time asset data in conjunction with sophisticated analytical tools and techniques to
continuously optimize field performance.

A sample set of technologies that are receiving

universal industry acceptance include the following:

Shell UPDS, Smart Field many projects worldwide

Remote Real-Time Facility

BP - Field of the Future many projects worldwide

Real-Time Drilling

Chevron - iField many projects worldwide

Real-Time Production Surveillance

KOC - Kuwait Integrated Digital Field Jurassic (KwIDF) Launched 2009

Intelligent Wells

Marathon Oil - ViewPoint

4-D Visualization and Modeling

Remote Communications Technology

Integrated Asset Models

Workflow and Knowledge Management Systems
Production Volume Management Systems
2015 SAP SE or an SAP affiliate company. All rights reserved.

ADNOC - Various projects DOO, Smart Fields

Petrobras - GeDIg project Carapeba (2006) and Campos 2010
PTTEP - Gulf of Thailand project 2010
Saudi Aramco - Many projects

ITOT
Big Data
Core

Key scope of IDOO in upstream operation

Exploration &
Reservoir Mgmt.

Drilling & Development

01 Year

02 years

Long term portfolio planning

3D/4D seismic Geological Model
Core data for Geostatistical Model
Well logs
PVT data
Well testing and pressure buildup
Reservoir Modeling

Enhanced oil recovery programs

Site management (Right of Way)

Wired drill pipe
LWD/MWD
Rotating equipment
EHS compliance
Hazardous material disposal
Field development

Inventory management
Procurement
Project management

Dispose & Abandon

Production

20 years

Well Design
Economic analyses
Facility planning and mgmt.

Production allocation & surveillance

Production planning and mgmt.
Well and field services
Energy mgmt.
Operational excellence
Integrity & reliability

06 Months

Environmental certifications

Asset disposal planning

Plug and Abandon activities
Remedial work & site restoration
Project execution and monitoring
Logistics (People, Stores &
Spares)

Logistics and contract mgmt.

Hydrocarbon logistics and storage
Venture financial mgmt.

Generally, the digital Oilfield encompasses both the tools and the processes surrounding data and information management across the entire lifecycle of upstream
activities
2015 SAP SE or an SAP affiliate company. All rights reserved.

Solutions from SAP for integrated digital oilfield operations

What do SAP solutions help customers do?
Hydrocarbon production management
Validate data, perform production allocations, create forecasts,
and capture deferment events

Hydrocarbon revenue management

Streamline financial, revenue, and venture processes to explore,
develop, and product hydrocarbons

Field logistics
Promote an integrated framework for production
allocation, planning, and maintenance, and support
modeling of linear assets

Reduce the time and effort needed for ordering, scheduling, and
delivering field activities and services

Typical results*

80%

Of decision makers think access to the right

information at the right time is critical to their
business

*Source: SAP Performance Benchmarking.

2015 SAP SE or an SAP affiliate company. All rights reserved.

+76%

Operating margin with historical and forwardlooking views into financial and operational
performance

Well pad operations

Operational plant maintenance on mobile devices
Business Needs & Use-Case
Empower field workers to perform Well Pad Operations processes and access necessary
context information using mobile devices
Enable core functionality from SAP Plant Maintenance on (offline) mobile devices
Besides performing planned maintenance activities, field workers also perform routine
checks using checklists
Immediate incident reports including integrated picture taking capabilities
Offline-availability of (technical) documents and BOM information

Business Value
Improve maintenance efficiency and productivity of field workers by providing and capturing
plant data, when and where required lower administrative efforts
Increased data accuracy and near real-time information in backend systems
(no hunt for information)
Avoid legal actions and reduce risk of environment, health and safety incidents
Increase operational efficiency by utilizing new technological possibilities

2015 SAP SE or an SAP affiliate company. All rights reserved.

Well opportunity management

Well services activity management
Business Needs & Use-Case
Improve WSAM proposal processing time
Leverage SAP platform capabilities for integration of business processes

Decommissioning of disparate legacy system

Business Value
Effective planning and execution of well services to maintain oil and gas
production levels
Optimize usage of critical resources e.g. Hoist

Support effective decision making process by providing consolidated

information
Scalable and Adaptable Solution based on SAP Application Portfolio
Improve scheduling process by automating business processes to reduce
manual data entry, delays and errors

2015 SAP SE or an SAP affiliate company. All rights reserved.

Real-time prediction of drilling failures

Business Needs & Use-Case

Stuck drill problem costs the oil industry hundreds millions $

every year
Even when all precautions are taken, stuck pipe may occur
Problems come quickly if corrective action is not taken as soon
as the sticking situation is noticed
Process is not analytical with prediction based on the drilling
crews experience and skill

Objectives

Reduce Oil exploration and drilling costs

Respond rapidly to changing drilling conditions

Implement an analytical control system that alerts crew to stuck drill

events.

Enable real time prediction to failure with low latency

Improve automation/execution speed & efficiency of drilling operations

and reduce drilling cost

Solution Approach
Use SAP Predictive Analysis on HANA to :

Detect and predict upcoming events and potential

failure in real-time to enable corrective action
Use data from multiple sources including the drill
string, earth model, historic data etc
Aggregated to build models, pattern recognition, and
simulation

2015 SAP SE or an SAP affiliate company. All rights reserved.

Avoid lost revenue due to down time of drill

What
Change
Consequences
Impact

A day in production operations

The IDOO Story

A field produces primarily Oil , with some water production. The oil field makes extensive use of ESP (electric
submersible pump) due to the low pressure Oil being produced. There are more than 1000 Application
producing wells on
&this
field.
Platform

In a certain year Oil production seems normal.

In the next year, the Production Manager

also reveals that failure rates for ESP have
Network
(Oils-Sealed) failures & manual
adjustments
(Water cut, BHP, Vibration, Temperature)

A new maintenance program is designed to replace the worst performing bearing pack more frequently

Real Time Operation Monitoring and Reporting, Operations Management based on Predictive Analysis

Effect of well outage on Production Plan is simulated, assessed and a new Production Plan is created

Maintenance Plan is executed This also intimates Procurement and MOC activities

Maintenance Executed and completed

An incident is reported and managed whilst maintenance was being performed

Application,

notices that monthly Oil production is falling below plan. Investigation

increased. Deeper investigation reveals a root cause as Bearing Pack
to pump operational parameters for Optimum operating conditions
for optimal operational

Network
& Platform

All costs associated to the program are captured and allocated to JV partners

Company Execs are able to see / measure the positive Impacts of the program in due course

2015 SAP SE or an SAP affiliate company. All rights reserved.

Application

Run Simple with SAP

Run Simple
with

Intricate Business Models

Pace of Change
Complexity in Business & IT

Accelerated
Innovation

Service and Support

Simplified
Business & IT

Sustainable
Engagement

New Business
Models

Streamlined Processes
& Decision Making

Focus on Outcome &

Value Realization

Innovation Roadmap

Real-time business via

SAP HANA

E2E Engagement

Co-innovation on
SAP HANA Cloud

Choice of deployment
(OnPremise, Hybrid, Cloud)

Landscape Optimization

Speed of Innovation

Long-term
Relationship
One Accountable
Lead

Simple to do Business with SAP

One Recommendation
(Solution Center)

2015 SAP SE or an SAP affiliate company. All rights reserved.

Simplified, global Portfolio,

Contracting & Pricing

SAP MaxAttention
as the foundation

Pioneering Business Models

Faster Time-to-Value
Reduced TCI & TCO
Enabled Growth

SAP platforms and solutions reflect unmatched industry expertise

85%

>50% Of
the worlds oil
movements are
managed with
SAP solutions*
Overall, 6,000+
customers run SAP
software worldwide

800+ oil and gas customers worldwide

Industry-driven, robust advisory

councils help ensure alignment
Deep industry-specific capabilities with
clear industry road map
40 years of delivering value to oil and
gas

*Source: SAP Performance Benchmarking

2015 SAP SE or an SAP affiliate company. All rights reserved.

Largest oil and gas companies

in Forbes 2000 rankings
ExxonMobil
Royal Dutch Shell
PetroChina
Chevron
Gazprom
British Petroleum
Petrobras
Total
Sinopec
ENI
SONANGOL

Statoil
Rosneft
Lukoil
ConocoPhillips
CNOOC
Ecopetrol
Schlumberger
Reliance Industries
Phillips66
YPF
NNPC

Thank You
Stephan Klein
Global Vice President
Energy and Natural Resources Ind.

T +49 351 4811 4800

E stephan.klein@sap.com

Arif Abdullah
Global Director
Energy and Natural Resources Ind.

T +49 622 7768 304

E arif.abdullah@sap.com

ENERGY LIVES HERE!

The IDOO Story

2015 SAP SE or an SAP affiliate company. All rights reserved.