Automation upstream and down

Larry O'Brien of ARC Advisory Group talks oil and gas automation trends

Sometimes a cliché is the best way to describe something, and “drinking from a fire hose” would have been an apt description of what it was like listening to Larry O’Brien’s presentation at ABB’s Energy and Automation Forum in Calgary last week.

The ARC Advisory Group’s resident expert on process automation in the oil and gas industry spoke on Wednesday, September 10, delivering a rapid-fire assessment of industry trends. Here is just a sample based on what I was able to get down before the next slide came up.

  • Oil prices – going up despite increased production from North America; EIA projects price per barrel to reach more than $140 by 2035
  • Automation in upstream vs. downstream – the downstream segment is “saturated” but upstream is investing to catch up
  • MAC approach – having “one throat to choke” in a main automation contractor is convenient, and it can result in 30 percent savings over a traditional project model
  • IT/OT convergence – yep, it’s happening in O&G too
  • Predictive maintenance – the O&G sector is ripe for improvement; a recent internal Shell audit showed 63 percent of maintenance checks resulted in no action
  • Industry growth – in double digits for the foreseeable future, driven largely by a retiring technical workforce

OK, so some of these trends are not exactly unique to oil and gas, but they are no less important. In fact, O’Brien returned repeatedly to the issue of the aging workforce, both as a challenge for the industry and a growth driver for automation.

The challenge is clear enough: with control room operators in Fort McMurray reportedly bringing down $250,000 a year, there is a labor shortage. The opportunity, then, centers on using automation not simply to reduce headcount but to make workers more productive.

One area where advances in automation will really have an impact is in operator effectiveness, particularly in terms of alarm management, KPIs and other elements of the user interface.

“We have alarm overload,” O’Brien explained.

He also noted several examples of how the upstream and downstream segments differ and how best practices in one are beginning to infiltrate the other.

The downstream business is characterized by facilities that, once built, remain in operation for decades. That has implications for labor (a tendency toward “compartmentalization” and adherence to traditional methods) as well as automation systems. Upstream facilities, by contrast, are “new every time,” which means the owner has the chance to start fresh with the latest thinking and equipment.

In short, while a drilling operation might only live to see one or two automation upgrades, a downstream business like a refinery will have to live with whatever the company installs… well, pretty much “forever” until the system is replaced outright.

That puts a premium on future-proofing for the downstream side. Eliminating customized components, increasing integration, lowering lifecycle costs—all of these are on the rise in downstream oil and gas, and according to O’Brien it’s thanks in part to the upstream cousins sharing their experience.

Meanwhile, real-time closed-loop control common in the downstream segment is being applied to drilling, for example to reduce the number of humans required at remote facilities. Oil majors are also combining their up- and downstream engineering departments, he said.

Closing with yet another reference to retiring workers, O’Brien warned that we have yet to see the full impact of the demographic shift currently underway, but we’ll see it soon. It’s a good time to be in the automation business.

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About the author

Bob Fesmire

Bob Fesmire is a Content Manager at ABB, based in Cary, North Carolina. He has written more than 150 articles and white papers on a variety of topics including energy efficiency, industrial automation and big data. In addition to his work at ABB, Bob is also the co-author of Energy Explained, a non-technical introduction to all aspects of the energy industry.
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