HOW INFORMATION TECHNOLOGY CAN IMPACT THE OIL AND GAS INDUSTRY
By: Clement Ndiok
ABSTRACT
Oil and gas production sites require significant IT infrastructure to keep operations running smoothly and safely. Fortunately, there are many options available when it comes to IT equipment, software, and services for the oil and gas industry. The Oil and Gas industry has been thriving in recent years, with the rapid increase in technological advancement on a global scale helping to drive innovation in the oil and gas industry as well as increasing efficiency levels. Oil and Gas industry in Nigeria is used as a case study: this journal contains details of the impact of information technology in upstream, midstream and downstream operations in the Oil and Gas industry.
INTRODUCTION
Nigeria’s oil and gas industry accounts for over 90% of the country’s export earnings and provides employment to over 1 million Nigerians. In order to continue growing, Nigeria’s oil and gas industry will need to attract additional investment in the future. The steady advancement of information technology could provide opportunities to improve the efficiency of existing companies [1], while also attracting new entrants into this crucial part of Nigeria’s economy. As Nigeria’s oil and gas industry continues to be one of the largest in the world, information technology can play an important role in helping this industry stay competitive in the global economy. Nigeria’s oil and gas industry, one of the most productive in Africa, will benefit greatly from information technology (IT) solutions as that nation continues to develop and become more industrialized.
In order to ensure its continued success, Nigeria needs to invest more in information technology and IT support services that will make sure that operations run smoothly and efficiently no matter what challenges may come its way over time. Information technology helps to enhance downstream operations (refining crude oil, distributing of oil products and transportation), midstream operations(storage) and upstream operations (exploration and crude oil production) [2].
OIL AND GAS INDUSTRY IN NIGERIA: A HISTORY
The history of Nigeria’s oil and gas industry dates back to the discovery of oil in the Niger Delta in 1956, by Shell Oil Company in the village of Oloibiri [3]. Since then, Nigeria has been recognized as one of the world’s leading petroleum producers, with over 1 billion barrels extracted each year in 2015 alone. Some major private and public oil companies in Nigeria include: Agip oil, chevron petroleum, Mobil oil, Total (now total energies). Nigeria major producer of oil and gas in sub-Sahara Africa and all in some part of the world, and the importance of this commodity has been highly manifested in the nation’s economy. from the early 70’s, the petroleum industry has become the dominant sector in the economy. Following quickly after agriculture (the dominant sector before the discovery of oil and gas) it has directed the pace of economic, political, social and cultural progress in the nation. Nigeria holds 37,070,000,000 barrels of proven oil reserves as of 2016, ranking 10th in the world and accounting for about 2.2% of the world’s total oil reserves of 1,650,585,140,000 barrels. Nigeria has proven reserves equivalent to 237.3 times its annual consumption. This means that, without Net Exports, there would be about 237 years of oil left (at current consumption levels and excluding unproven reserves) [13].
Information technology has made it possible to remotely monitor oil fields, develop real time report and access live data through various systems. Several components of oil fields including pumps, pipelines, oil rigs can viably connect with one another while having an IP address. Information technology services provided by Big IT companies to the petroleum industry in Nigeria are mostly to the department of geosciences. Here, using technology it makes it possible to observe changes in oil fields using 3D seismic technology. Data from offshore and onshore activities could easily be transmitted real time to experts.
OIL AND GAS SUPPLY CHAIN
The oil and gas global supply-chain includes activities such as domestic and international transportation, ordering and inventory visibility and control, materials handling, import/export facilitation and information technology [6].
Every Supply Chain in large industries involves configuration, management and continuous improvement of sequential set of operations that includes multiple parties. The goal in Supply Chain Management (SCM) is to deliver maximum service to the customer at the lowest cost possible.
The Oil and Gas Supply Chain can be analyzed through three different industry sectors:
- Upstream
- Midstream
- Downstream
UPSTREAM OPERATIONS
Upstream oil and gas operations, which refers to anything that takes place prior to the refining process (including exploration, drilling, and production), has been transformed by information technology in recent years. Thanks to faster communication speeds, advanced tracking methods, and ever-more powerful software tools, it’s now possible to improve both the efficiency and safety of upstream operations on an ongoing basis in real time helping companies save money on operational costs while still being able to produce the oil and gas they need at the same high level of quality customers have come to expect [7]. With information technology, a significant amount of data concerning oil fields could be collected, with manipulation of those data in models which support decision making with respect to optimal oil recovery methods.
The different sectors within the upstream segment include:
- Offshore drilling
- Oil sands mining
- Supply and service
- Manufacturing
- Seismic surveys
- Geological surveys
- Reclamation
Exploration, (Drilling) and Production (E&P)
The exploration phase first starts with activities of the operator to obtain a lease and permission to explore, from the owner of onshore or offshore acreage that might contain oil or gas.
This also includes activities of collecting geological, geophysical and geochemical material as well as different descriptions and maps of old mineral localities. Geologists and geophysicists play a major role in this phase, because they use different methods and techniques, such as seismic surveys, satellite images, magnetometers, air guns, explosives and seismometers, in order to assess the presence of hydrocarbons or minerals.
When the potential site is confirmed, the drilling of an exploratory well begins, process that is also known as drilling wild cat. These activities need to check the physical presence of reserves, so it can decide if additional exploratory wells should be drilled in close location. This way the scientists can confirm and evaluate the entire potential of the reservoir.
Production phase includes extraction of the hydrocarbons, separating the mixture of liquid hydrocarbons, gas, water, and solids, and removing of constituents that cannot be sold. The sites used for production can often handle crude oil from more than one well.
After production, an additional phase appears called abandonment, which happens when a well lacks the potential to produce economic quantities of oil or gas, or when a production well is no longer economically viable.
Upstream Sector Companies List and Categorization
There are four major groups of companies that can be identified in the upstream sector of the oil and gas supply chain:
- Majors, also known as Major or Integrated Oil companies, such as ExxonMobil, BP, Chevron and Shell. These companies can also have integrated activities down the supply chain as well.
- NOC’s (National Oil companies) who are owned and managed by governments,
- Independents – these companies exist in each segment; the independence comes from not being integrated into other segments.
- Oilfield services companies – These companies offer services, equipment and different technical skills related with exploring, drilling, testing, and producing oil and gas.
Midstream Oil and Gas Sector
Information technology could help the midstream segment ease its operations from remotely monitoring storage of crude oil and refined products to marine shipping and transportation. Midstream segment in the oil and gas supply chain, includes operations that connect the upstream and downstream participants and companies [8]. Four major groups of services are characteristic for the midstream segment are:
- Processing
- Storing
- Transporting
- Marketing
The more detailed services that fall within the midstream sector can be seen in this list:
- Diversified Midstream Pipeline and Storage
- Crude Oil and Refined Products Pipeline and Storage of Excess
- Marine Shipping and Transportation
- Natural Gas Gathering and Processing
- Natural Gas Pipeline and Storage
- Oil Field Services
Information technology could help the midstream segment ease its operations from remotely monitoring storage of crude oil and refined products to marine shipping and transportation. Other important things to know is that midstream asset investments are dependent on the health of the upstream; and oil and gas prices affect the demand from the downstream participants.
DOWNSTREAM OIL AND GAS SECTOR
The downstream sector is the last one in the oil and gas supply chain, and encapsulates the operations that take place after the production phase right to the point of sale to the end consumers. Here are included the processes of refining crude oil and distributing its byproducts (gasoline, NGL’s, diesel, jet fuel, heating oil etc.) up to the retail level and selling to end consumers. Here, information technology equally plays an important role in marketing, sale projections,
Downstream Sector Characteristics
The main business characteristics about the downstream sector is that it is margin business, which has high complexity, companies should always have the global perspective in mind and it includes working with marketing and delivery of final products to retailers and end users.[8]
When discussing about the downstream being a margin business, it defines the margin as the difference between the price of the products from the crude oil and the cost of the crude oil that is delivered to a refinery.
The complexity of this chain segments is due to the inclusion of different range of activities such as refining, petrochemicals, distribution, wholesale and retail marketing.
Key downstream sectors include:
- Oil Refining,
- Supply and Trading,
- Product Marketing – Wholesale and Retail
international companies use of information technology in Nigeria
Information technology use and research by international companies in Nigeria has played a significant role in the sustenance of many private and public Oil and Gas companies in Nigeria. Related technologies can help these companies in upstream, midstream and downstream operations companies. Companies like Agip oil, Shell, Chevron, Total energies, shell petroleum leverage on the use of technology from assisting to discover new oil reservoirs to using technology to extract oil in already existing oil fields. Subsequently, these international oil and gas firms should dedicate resources to finding valuable insight with focus on using technology in development in the oil and gas industry to ensure valuable information technology solutions. Information technology are used in the following regards [11]:
- Marketing:
Brand awareness, electronic payment systems, retention of customers.
- Refining:
Equipment optimizations, Security solutions.
- Exploration:
Monitoring remotely, management in real time of reservoirs.
- Production:
Sensors, predictive maintenance, robotics.
- Transport:
Real time surveillance, advance navigation systems.
4.0 EXPLORATION USING TECHNOLOGY
Oil and gas companies have been looking to digital solutions to streamline operations, transforming their digital infrastructures to increase efficiency in exploration [3].
Digital transformation can help oil and gas companies explore and manage remote areas, with data-enhanced technologies such as remote monitoring and predictive maintenance enabling offshore operations to be conducted and moderated in areas humans would be unable to reach.
Companies can use digital visualization to access real-time data and information about operations and react to changes as they happen, as well as take pre-emptive measures to resolve problems before they happen.
This information can be used to help discover potential areas for exploration, uncovering new resources through increasing the accessibility and utility of existing data.
Methane detection systems
Methane accounts for approximately one fifth of manmade global emissions, oil and gas companies are now taking steps to reduce methane emissions in their operations.
This can be accomplished through integrating methane management into digital infrastructures, with technologies being developed to detect emissions and leaks more efficiently. These enhanced infrastructures also allow oil and gas companies to repair any methane leaks more quickly
The platform consists of two connected formats: a ground-based solar-powered wireless sensor network and a drone-based system for over-air monitoring. These systems are capable of streaming live data from their sensors to a cloud-based software dashboard for accurate and efficient monitoring of methane emissions.
LUMEN also uses machine learning and algorithms similar to those used in search engines to provide methane concentration data in real-time, with rates and locations of any leaks. This allows operators to make quicker and more reliable decisions.
4.2 Scada
Supervisory Control and Data Acquisition. SCADA is a computer-based system for gathering and analyzing real-time data to monitor and control equipment that deals with critical and time-sensitive materials or events. SCADA systems were first used in the 1960s and are now an integral component in virtually all industrial plant and production facilities [9].
SCADA Systems are widely used in the following:
- Oil and Gas
- Pipeline monitoring and control
- Remote equipment and asset monitoring and control of production, pumping, and storage locations
- Offshore platforms and onshore wells
- Refineries, Petro-chemical stations
- Plant/factory automation
- Water and Wastewater
- Water treatment centers and distribution
- Wastewater collection and treatment facilities
- Utilities
- Electrical power distribution from gas-fired, coal, nuclear
- Electrical power transmission and distribution
- Agriculture / Irrigation
- Manufacturing
- Food and Beverage
- Pharmaceutical
- Telecommunications
- Transportation
- And many others
An example of a SCADA application
A typical SCADA system can be setup to monitor a critical leak on a pipeline, and then once a leak is detected; it can carry out a chain of commands using machines to either alert a signal of the leak and/or immediately close the valve to minimize or eliminate hazardous conditions, revenue or production loss. Each SCADA system can be custom tailored to exactly fit a particular application; it can be relatively simple – small office building (low budget) to incredibly complex – nuclear plant (high budget).
Seismic imaging
Seismic imaging is an important part of the oil and gas exploration process, allowing companies to discover potential wells and collect data to construct maps of the sea floor.[10]
However, the process, which generally uses airguns to send seismic waves through the sea, has been criticized for potentially disrupting marine wildlife such as whales and dolphins.
Seismic technology has itself become more advanced, with companies working to make the process safer and more efficient. A submarine-like machine which uses low frequency waves to see deeper below salt layers and identify untapped resources of oil and gas.
Artificial intelligence
Oil and gas companies have started using artificial intelligence (AI) alongside existing digital infrastructures to increase efficiency and productivity of exploration operations.[10]
Belmont Technology developed a cloud-based geoscience platform, nicknamed “Sandy”, using AI. This platform provides BP with unique “knowledge-graphs”, created by interpreting geology, geophysics, historic and reservoir project information from BP.
The AI intuitively links that information together, identifying new connections and workflows and creating a robust image of BP’s subsurface assets. The oil company can then consult the data in the knowledge-graph, with the AI using neural networks to perform simulations and interpret results.
CONCLUSION
The latest advances in digitization provide a significant opportunity to change the management and operations of the oil and gas facilities in a fundamental way. The oil and gas industry is too significant to the economy and is a vital energy source to homes, vehicles, machines etc. to remain sustainable, coupled with the high demand for redundant safety systems, latest technology should be deployed to boost upstream, midstream and downstream operations.
