"RECENT DEVELOPMENT IN THE DIGITAL

OILFIELD TECHNOLOGY: A CASE STUDY

BASED UNDERSTANDING"
A synopsis of the capstone report submitted in partial fulfillment of requirements
for Masters of Business Administration, Oil & Gas Management
November 2016

Under the Guidance of

Mr. Vibhav Prasad Mathur

Assistant Professor (SG)

Department of Decision Sciences, UPES

Submitted by,
Jyotiprakash Banik
Roll. No.: R020215038
SAP ID: 500043405
MBA Oil & Gas Management
2015-2017

College of Management & Economics Studies, UPES

Dehradun
Introduction

Digital Oilfield is the online management of Oil & Gas Companys assets throughout their entire life-cycle.
This new technology which is fast changing the conventional ways of oil and gas business (Upstream &
Downstream) is called digital oil field. The digital oil field is a suite of interactive and complementary
technologies that let companies gather and analyze data throughout the job site on real time basis. It includes
intelligent wells, which have fiber-optic sensors buried in the drilling apparatus, controlled manually by
operators on the surface or automatically through closed-loop information systems. These sensors transmit a
constant stream of data about the well and its environment, enabling operators to respond to shifting
circumstances in real time. For instance, they can adjust fluid pressure or valve settings as the drilling
surface becomes more or less permeable. Digital oil fields also have advance alarming systems, which
predict performance levels and warn of potential equipment failure, these data are sent via the internet to a
control room for real time monitoring & support to field operations.

Typically the fundamental objective is to improve operational effectiveness and maximize or optimize
production for the life of the assets. This is achieved by taking the right decisions at the right time, using a
holistic, asset-wide perspective and recognizing that the different process cycles or loops range from seconds
to months or even years. typical integrated operations include:

Reducing downtime by early detection of underperforming wells

Increasing well production by matching well potential
Reducing operational costs by decreasing failure rate
Automating processes to predict or troubleshoot production problems
Increasing asset team productivity using standardized workflows and tools
Delivering actionable information in the form of key performance indicators (KPIs)
Implementing visualization environment to promote cross-discipline collaboration
 Recent Technologies

The oil and gas industry has always been highly innovative. In the face of repeated predictions that it would
run out of oil and gas to produce (peak oil), it has repeatedly proven the ability to develop the technologies
necessary to discover new resources and to economically produce ever more difficult-to-extract
hydrocarbons. Some of the new solutions that the oil industry has came up with are:
Drilling Technology
Customized high performance drill bits
Extended length horizontal drilling
Increasingly automated drilling rigs
Completion Technology
Multistage Plug & Perf and sliding
Sleeve Fracturing completion technique
Dissolved frac balls
Advanced electrical submersible pumps
Hydrocarbon Processes
Insitu Reservoir Management
Solvent Co-injection to increase oil-sands productions
Efficient water-flooding in conventional oilfield
Exploratory Processes
Real-time micro-seismic monitoring
3D seismic imaging and reservoir monitoring

All these processes leads to better field productivity, fleet management, GIS, land management, data index
mapping, predictive maintenance, remote asset monitoring, inspection and operation and asset optimization.

Some Examples of DOF Implementation

BP has installed sensors and fiber optic networks across its North Sea, Gulf of Mexico and
other assets to collect and interpret immense amounts of data in over three dozen advanced
collaborative environments around the world. Among the benefits, it estimates it has added
3,000 bbls/d to the Schiehallion Field in the North Sea, 10,000 bbls/d higher production at the
Thunder Horse Field in the Gulf of Mexico and bolstered recovery at its Prudhoe Bay Field in
Alaska from 4060 per cent.

Shell's implementation of Smart Fields has increased the total amount of oil recovered from a
field by 10 per cent and gas by five per cent, as well as boost the rate of production. The
technology allows sensors with fiber optic cables to relay digital information on temperature,
pressure and other field conditions to control centers where engineers continuously monitor
production and make quick decisions on how to best extract oil and gas, such as activating
underground valves electronically to better manage the oil flow. In its first field to have Smart
Fields technology, Champion West in the South China Sea, Shell says the technology allowed
it to produce oil from scattered sub-sea reservoirs that for 30 years had been considered too
costly to develop.

BP announced an agreement in mid-2015 to license GEs Intelligent Platforms Software to

connect all its oil wells to the Internet in order to optimize production globally. BP, which has
6,000 producing wells worldwide, plans to capture, store, contextualize and visualize data in
real time in order to drive efficiency and performance. It estimates its Digital Oilfield
technology will increase its global production by 100,000 bbls/d by 2017 and support the
addition of one billion barrels of reserves.

Literature Review
S No. Author's Name Jounal/ Version Topic Influence

New Drill bit

technology: Smith Bits 6
1 World Oil October 2011 issue
Designing the tool inches
to suit the well

Kuwait Intelligent Key

Oilfield Technology: Digital Oilfield Performance
2 Schlumberger
March 2014 (KwIDF) project Indicators
as example (KPIs)

Expectations
for horizontal
Horizontal Drilling - Future in
drilling in
Technology review developing Kansas'
3 W. Lynn Watney future; Case
and Current Petroleum
study on Unger
application resources
Field, Marion
county
A review on
Horizontal Well
4 EIA Drilling Sideways technology &
domestic
application
Engineering
and Business
Management
Logic; Realtime
Real time field
5 Petroleum Experts The Digital Oilfield field
management
management
through
standard
workflow
Production and
operational
Andrew Stenhubl Unleashing
surveillance;
Glenn Klimchuk Booz & Company: Productivity: The
6 operating
Christopher Click Summer 2008 Digital Oilfield
model; dynamic
Paula Morawski Advantage
Real-Time
reporting model
Well
completion;
Intelligent
Completion;
Liner Hangers;
H010822 Complete with the
7 Halliburton Sand Control
12/13@2013 Leader
completion;
Service Tools;
Wellbore
Cleaning
technology
 011113 issue Dissolved Frac
8 TEAM Oil Tools T-Frac System
@ 2012 Balls

Innovation in
approach and
downhole
Saudi Aramco
equipment;
9 Saudi Aramco Winter 2014 Journal of
Optimum well
Technology
planning;
Electromagnetic
Imaging

3-D reflection
Seismic data
seismic imaging of
processing of
doi:10.5194/se-4- the Hontomn
10 Solid Earth the northern
481-2013 structure in the
Iberian
Basque
Peninsula
Cantabrian Basin

An Overview of Seismic
Report No. 448
11 IAGC Marine Seismic monitoring and
April 2011
Operation imaging

Digital Oilfield
Market by
Services
(Automation &
Instrumentation:
DCS, SCADA,
PLC, Smart Well
& CPM, IT
Services: Understanding
Marketsandmarke
12 November 2015 Outsourcing, of the digital oil
t
Equipment & market
Software), by
Processes
(Reservoir,
Production &
Drilling
Optimizations) &
by Region

13 Oil & Gas Big The global

DOF market
Data digital oil field
technology
market involves
the use of the
latest IT tech,
instrumentation,
and automation
concepts to
 enhance the
production and
exploration of
crude already in
utility within
the oil sector.

Digital Oil he report

provides a
Field segmented
analysis of the
Technology
global digital
Market - oil field
technology
Global market, based
on the
Industry categories of
Analysis, process,
Transparency
14 services and
Market
Size, Share, technologies,
and geography.
Trends, Each segment is
deeply analyzed
Analysis, to ensure a 360-
Growth and degree
assessment of
Forecast, 2013 the global
digital oil field
- 2019 technology
market.

igital Oilfield The industrys

inclination and
Solutions Market:
attempts to
Global Industry optimize
February upstream assets
Future Market Analysis and
15 2017 is one of the
Insights
key drivers for
Opportunity the global
Assessment 2015- digital oilfield
solutions
2025 market.

Digital Oilfield (DOF) is building collaboration between various processes in the oil & gas sector. This
enables better monitoring, surveillance and control over the processes in oil exploration and production.
Global DOF market is expected to reach USD 30.78 Billion by 2020 growing at a CAGR of 4.31% from
2015 to 2020. Market estimation for the digital oilfield market is done with 2013 as historical year, 2014 as
the base year, 2015 as estimate and forecast till 2020. The report covers market segmented by various
processes, services, and regions. In the process segment, production optimization is expected to lead the
market during the forecast period driven by the demand from oilfield operators aiming low cost crude
production.

DOF solutions have been majorly implemented for various processes such as production optimization,
drilling optimization, and reservoir optimization. Investments in the individual processes are subjected to the
prevailing oil prices. Presently, crude oil prices are below USD 50/barrel reducing the global drilling
activities by more than 20% from 2014. This decline has led the operators to target production optimization
segment for efficient and economic crude recovery. Moreover, the overall CAPEX for oilfield development
has significantly declined driving the operators towards mature oil fields. Oil prices are expected to stabilize
at USD 60-70/barrel by 2018 reviving higher growth rates post the year.

Europe is expected to be the largest market for digital oilfield solutions during the forecast period. However,
the market is expected to have a low CAGR because most of regions production comes from offshore
oilfields. After the oil prices declined below USD 60/ barrel in early 2015, the region witnessed 55% decline
in rig count compared to the rig count for 2007. The market has some of the leading operators such as BP
(U.K.), Statoil ASA (Norway) and Royal Dutch Shell (The Netherlands).

Oil price volatility is expected to be the major restraint for the DOF market. Declining oil prices have
impacted the profits of the oil & gas companies. From drilling operators to oilfield service companies, the
slump has reduced profits of every player in the industry, thereby restricting them from investing in the
R&D activities and new optimized solutions. The oil prices are expected to hit USD 60-70/barrel by the end
of 2018. This will improve profit margins of the players and the industry is likely to witness surge in the
demand for process optimizing solutions.

Literature Gap

The last important study done in this field with concern to India was in 2016 and that to had
explained only the current market of digital oilfield.
This project would be able to explain the solution adoption profit / benefits; projection of future
vendors / tech firm and how the above causes can be implemented in India.
Also an analysis of how the new emerging solutions can be new alternative.
The impact this would have on oil and gas regarding the the future investments prediction by
different vendors / Tech firms.

Objectives

The DOF technology adoption and the underlying processes

Mapping of technology solutions: Case by case basis
 How we can implement these in Indian context; development of framework

Business Problems

Every oilfield has limited amount of hydrocarbons that can be produced economically. However producing
that limited amount also requires constant asset vigilance and superior decision making that can identify and
address potential threats to production and recovery throughout asset lifecycle. Adoption of Digital Oil
Fields (DOF) in upstream industry has been a widely practiced business improvement initiative focused on
optimizing production and recovery through improved collaboration, streamlined workflows, right tools and
better information management. Successful DOF programs have resulted in improved organization
capability leading to better decision making and business outcome. Based on our involvement in several
industry DOF projects, a key success factor is the ability to identify right capabilities to pursue in DOF
implementation. Many DOF programs have been started with poorly defined, misaligned or ambitious
scope, resulting in lost opportunities or unclear benefits. A robust opportunity framing methodology is a
must for organizations embarking on their DOF journey to generate maximum value out of it.

Decision Making Challenges in Oilfields and Role of DOF

Traditionally upstream organizations have been structured in departmental/discipline silos (operations,

subsurface, petroleum engineering, etc.) with limited and ad-hoc interactions between them. Shift towards
asset based organization model hasnt completely removed these silos as cultural, process and information
barriers still exist. This has affected both quality and speed of decision making as each departmental silo has
looked at different parts of the production system from their perspective and not from integrated production
system perspective.

Technology practitioners need their desires answered as well. In most operations, the
technology puzzle is too difficult. To start, like most long lived assets, each field, acquired and
produced over time and geographies, have their own standards and methods for naming and
delivering data. There are many incompatible and inconsistent systems, from site-level
production and asset systems to broad enterprise systems, such as ERP and sourcing
systems. On-boarding new facilities or functionality is difficult, time consuming and costly.
There is often weak process and systems interoperability. There is no consistent data
foundation, ownership, or structure. The main barriers include:

Numerous different applications deployed across the enterprise at both the business and production levels to
manage and record operations performance.

Each application instance has its own unique reference and data model, creating a lag time before
data is available for comprehensive analysis.
 Process tag information and its context to equipment is not conveyed in real time, thus placing a
heavy reliance on engineering interpretation. Processes are embedded within applications, equipment
and employees.
Cross location and cross work process transactions and events are not captured in the context of
equipment configurations or production relevant events.
Operational views are incomplete; overall analysis is sub-optimal and localized. Integrating
additional facilities or introducing new functionality is difficult, time consuming and costly.
Process events, alerts cannot be distributed and handled across the enterprise to initiate business
processes or personnel collaboration or attention.

Traditionally, these barriers proved to be too much to overcome, or, at least, too expensive or expansive to
tackle. This has put engineering and IT groups at unwitting, frustrating loggerheads, where the two can
never come together to move effectively towards the vision.

How much does it costs and other terms and conditions

Application of technologies involves a high CAPEX or initial investments. Beside this there are other
restraints such as:

Budget constraints
Organizational barriers
Cyber Security concerns
Difficulty in consolidating data
Poor data quality
Lack of integrated solutions
Storage of necessary talent
Superior alternative

Research Methodology

1. I will list out the different cases of DOF implementation and the big scenarios.
Identifying the patterns of implementation and benefits.
Source of information: Secondary data
Research method for collecting data: Business reports, documents and
case studies.
Performing document analysis
 2. Doing vendor specific DOF solutions with rig processes. Process mapping with
technology features clustering.
3. Development of framework for Indian context out of learning from objective 1 and 2.

Secondary Research

Company reports and publications

Regional government and factual databases
Authentic new articles, web-throws and other related releases for market assessment
Internal and external restrictive databases, key market pointers and relevant press
releases for market gauge and figures
The secondary research was carried out by searching journals and articles on the
relevant analysis to be done on.
Industry journals and publications

Chapter Outline

1.0 Introduction
2.0 Literature Review
3.0 Literature Review Gap
4.0 Business Problem
5.0 Objectives
6.0 Research Methodology
7.0 Analysis
8.0 Conclusion
9.0 Reference