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The Opportunity for Digital Disruption in Downstream

06th September 2019

Ann Sun, Vice President of Market Development at Atomiton looks at the opportunities for digital disruption in the downstream oil & gas sector

Ann Sun, Vice President of Market Development at Atomiton looks at the opportunities for digital disruption in the downstream oil & gas sector

Ann Sun, Vice President, Market Development; Atomiton
Ann Sun, Vice President, Market Development; Atomiton

Why is now the right time for downstream companies to drive digital innovation?

There are several industry factors and limits that create the right opportunity for downstream companies to take on digital innovation initiatives. The existing workforce is maturing, with a lot of knowledge stored in people’s heads, and there is a need to attract the next generation workforce who are digitally competent and looking to drive innovation. Legacy technology has maxed out efficiency, where only smaller incremental changes can be made, and there’s new technology and solutions using sophisticated software that can be applied to the complexity of refinery and downstream terminal operations or logistics.

Downstream is an ideal sector where digital innovation can transform industrial operations, which have operated much the same over many years, typically in plan and react mode. There’s a fundamental need to leap to the next level of operational efficiency and productivity in these existing plants and terminals, in order to drive growth and reduce costs.

In downstream, there’s already a lot of existing data available, but there’s a massive gap between amount of data generated and the speed to create value in operations. With industrial IoT, and the different data sources available, it is now possible to take former silos of data and integrate it all together to create real-time models, operational insights, predictions and optimizations, through analysis using software algorithms based on artificial intelligence. This ability to take extremely diverse operational data and drive it forward with operations – to get to predictive operations, is very important to achieve that leapfrog to the next level of operational and business transformation.

 

What are the current barriers to widespread adoption of digital solutions?

One barrier we see is lack of problem definition. We often see proof of concepts (POCs) conducted, but the issue is that they are focused solely on the technology itself, which doesn’t drive operational changes or business impact. Without defining the operational challenge you are trying to solve, you may collect too much data and don’t know what to do with it. Or, you think you need a huge team of PhD data analysts and that you have to hire all these new people. If you don’t start with the operational issue, it’s easy to get bogged down in the means before you get to the end.

Ultimately, the issue is not around the technology, but one of the biggest barriers is around information. Many organizations are trying to transform, and the challenge is organizations and people may not know or understand enough around digitalization in order to move forward – e.g. what data systems or sensors, how they deal with data, software algorithms, project scope, etc. No single person or department has all the knowledge, so it takes time to gain this core knowledge and move to action. People have varied levels of knowledge and they don’t always know how to bridge information and digitalization, often because of a lack of common understanding across the organization.

At Atomiton, our focus to address this complexity is to educate and inform Energy/Oil & Gas companies in areas like edge computing, the practical use cases for industrial IoT applications in O&G, and applying artificial intelligence software, to help move the market and our customers forward. In fact, we’re holding a lunch and workshop, Applying AI to Innovate Digital Plants and Terminals on 2 October, 2019, following the Future Downstream conference, for digital innovation leaders.

 

What impact or changes should downstream companies expect in their digital transformation efforts?

We look at transformation from a few different views.

Information transformation.
With all the data that resides on the edge of downstream operations, companies can gain a competitive advantage based on how fast they integrate, process and analyze this data, turning it into real-time operational intelligence. For our customers, predictive operations can significantly impact their operations from an operational efficiency and cost perspective, as well as managing risk (HSE) – e.g. reducing energy/steam usage in plants/terminals by 25%, where energy/steam may be 30-40% of operational cost in a refinery; reducing environmental impact; managing performance of key equipment; increasing throughput in terminals and saving several man hours/day in previously manual tasks such as scheduling.

Commercial transformation.
The operational intelligence from digital innovation also impacts the entire business, in areas such as supply chain decisions, when interconnected. Availability of more granular information, gained in real-time, directly from the infrastructure and products themselves, enable faster supply chain adaptation and decisions. There are also companies who look at the opportunity to enhance their own business models to better service their customers.

Workforce transformation.
Digital technologies will increasingly be a part of the front lines of operations, challenging the workforce to step up their digital skills while enabling new ways to operate. Workers have the opportunity to grow and learn new skills. And it creates opportunities to attract the next generation of workers who are looking to drive innovation and create meaningful business impact.

 

What are some tips for smoothing the path of digital innovation initiatives?

Organizational alignment around digital innovation is critical to company success. We’ve seen that success comes more quickly when you have the combination of executive support and the people who use the solutions are enthusiastic about how it makes their work easier or better. This is why we see better outcomes where there is collaboration across multiple groups, each bringing expertise, with a focus on solving operational issues. When you have the teams working together – an innovation champion – perhaps the Technology or Innovation Office, along with Operations – the users, and IT (if IT was not the innovation champion).

Each of the people from these groups have different areas of expertise that contribute to the success in innovation initiatives, whether it is bringing the operational experience, looking at strategic impact opportunities, assessing the technology, or evaluating architectural integration. In many companies, IT has traditionally been a gatekeeper, but their involvement in the beginning is important because they have the background & knowledge to bring – e.g. analytical software, AI, etc., that operational teams may not have. And it’s important to bring IT and OT together for shared understanding of their respective environments, to drive successful implementation. Working together, this small, agile team can identify and select the operational issue, assess the technology and solutions, and scope an appropriate pilot project, leveraging other resources as needed. They can act locally but think globally about how this digital innovation might scale and be adopted in other plants or terminals.

The other aspect of organizational alignment is education of the workforce. Sharing the vision and strategy from a top down perspective and creating the operational execution view from a bottom up perspective helps everyone across the organization understand the impact and issues that digital innovations bring to the company.