Smart Assets Through Digital Capabilities

Smart Assets Through Digital Capabilities

Jayantha P. Liyanage, Thore Langeland
DOI: 10.4018/978-1-60566-026-4.ch553
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The history of oil and gas (O&G) production on the Norwegian Continental Shelf (NCS) dates back to the early 70s and began with the discovery and subsequent development of the great Ekofisk asset in 1969. Ever since, North Sea has been an attractive region, and Norway in particular has been a major supplier of O&G to the world energy market. The remaining production prospect on the Shelf is also said to be substantial and the more recent estimates indicate that it is equivalent to twice the already produced amount. However, a major part of the Norwegian O&G production portfolio will approach maturity by 2007/2008. Both declining production and marginal discoveries have given a clear indication that the Norwegian O&G industry will undergo a series of significant challenges during the next few years. These critical issues, in conjunction with volatile business environment, have brought a major turning point demanding immediate steps to enhance operational efficiency and to reduce operating risk in offshore exploration and production (E&P) activities on NCS.
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Norwegian Oil Industry Association (OLF) constantly raised its concerns since the mid 90s about this emerging situation owing to its substantial commercial impact. By 2000-2002, major challenges for E&P activities on NCS became more visible and obvious. These included:

  • declining investments and activity level on NCS and its immediate impact on the production profile and sustained growth;

  • the need to enhance recovery efficiency to keep supply levels and to add more value;

  • rising lifting costs and its direct impact on the cost of operatorship; and

  • the volatile oil price and its direct implications on profit performance of offshore E&P activities.

Subsequently it appeared that the Norwegian O&G industry requires, a dedicated plan to re-engineer conventional practices in order to reduce commercial risk and to enhance value creation (see discussions by Lindgren & Bandhold, 2003). Thus, the O&G production scenario on the NCS stepped into its so-called 3rd efficiency leap with the effect from 2003 (see Norwegian Oil Industry Association, 2003). This macro-scale national program is expected to induce a step change particularly related to smart use of advance information and communication technologies (ICT) and new data management techniques, and is completely dedicated to adapt to a fully integrated operational setting to smartly manage offshore-onshore activities by the year 2010. Issues related to this new development scenario were envisioned in the government white paper; Storting white paper 38:2003–2004: On the petroleum activities in 2003.


Smart Assets Through Integrated E-Operations

In more general terms, smart assets and integrated e-operations largely dedicate the Norwegian O&G industry toward:

  • joint exploitation of advanced technologies, digital ICT capabilities, and real-time operational and technical data to optimize decisions, and

  • tighter integration of work processes, decision loops with effective and efficient division of work to optimize activities.

This aims at enhancing connectivity and interactivity between offshore O&G assets and their onshore support systems (for further highlights see Barabasi, 2003). Advancement in information sciences and technologies, and long-term commercial benefits of their successful usage, have contributed much to the ongoing change process. Partner industries, particularly those related to electronic and communication technologies in general, play pivotal roles to establish the necessary stable and reliable digital environment around offshore assets and activities (see further discussions by During, Oakey et al., 2002). The key enabling technologies that are already under implementation include:

Key Terms in this Chapter

Extended Digital Enterprise: The organizational form resulted by the growth of conventional organizations into a virtual organizational setting where a number of organizations can simultaneously interact with each other, breaking the boundaries of traditional organizations, through digital infrastructure and digital capability for a common purpose.

Integrated Work Processes: Work processes integrated across technical disciplines using large-scale information systems to streamline decisions and activities.

One-to-Many Connectivity: The ability to connect from one active node to many active nodes in the digital infrastructure on top of the existing network infrastructures allowing consolidation of such conventional ICT networks into one-single common data-hub establishing 24/7 online real-time operational network.

Intelligent Data: Data that are automatically acquired through advanced application technologies (smart sensors, intelligent transducers, electronic gadgets, equipment with advanced functionalities, etc.), systematically processed, and are presented in a meaningful form for active sharing, further assessments, and following interpretations.

Digital Capability: Abilities and strengths acquired through active integration of advanced application technologies (e.g., smart sensors, intelligent transducers, electronic gadgets, equipment with advanced functionalities, etc.) and digital infrastructure to optimize decisions and work processes through 24/7 online real-time connectivity.

Smart Assets: Those production assets that actively exploit digital capabilities and digital infrastructure smartly and strategically in conjunction with the extended data-knowledge-experience sharing enterprise setting, creating a highly interactive hybrid techno-organizational environment.

Digital Infrastructure: Joint fiber-optic and wireless- based advanced information and communication technology platform with embedded multi-functional application services that facilitate 24/7 online real-time connectivity between nodes in the operational network to allow remote management of production assets.

E2E Monitoring: End-to-end monitoring of status of the operational network performed by the administrator of the digital infrastructure.

Integrated Operations: The operational setting where both production assets and a technical support environment are tightly integrated across technical disciplines and organizations creating an active collaborative environment around production assets based on enhanced digital capabilities.

Hybrid Techno-Organization: Highly technology dependent and team-based interactive organizational form that functions through a high-level synergy between human and technology.

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