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GE’s on How Digitization Helps Reduce Costs in Oil and Gas

“Unplanned downtime continues to plague the oil and gas industry. The offshore sector, in particular, has been saddled with unnecessarily high costs and exposed to unnecessary risks as a result. This was made clear in a study by Kimberlite, an international oil and gas market research and analytics company, in Summer 2016. And the problem is only going to get worse as budget cuts, aging assets, and the loss of industry experience take their toll. There is a solution. Digitization enables offshore operators to reduce unplanned downtime while simultaneously reducing risks”.

The statement is part of a paper GE Oil & Gas has recently published and reached the following conclusions:

  • Offshore oil and gas organizations experience on average $49 million annually in financial impacts due to unplanned downtime. For the worst performers the negative financial impact can be upwards of $88 million.
  • Fewer than 24% of operators describe their maintenance approach as a predictive one based on data and analytics. Over three-quarters either take a reactive or time-based approach.
  • Operators using a predictive, data-based approach experience 36% less unplanned downtime than those with a reactive approach. This can result in, on average, $17 million dropping to the bottom line annually.

Digitalization and efficiency

In a world of low oil prices, organizations must move from “chasing barrels to chasing efficiency”. Unplanned downtime is not cheap, but the market’s most frequently used approaches to maintenance – which should ideally help reduce unplanned downtime – are not as effective in reducing it as more modern approaches.

Fewer than 24% of operators described, in the Kimberlite study, their maintenance approach as a predictive one based on data and analytics. The rest either took a reactive or time-based approach. As the digital worlds of organizations grow, privacy, control and security will continue to be top concerns. Evolving digitization has made sensitive data vulnerable, but it has ultimately triggered a wave of innovation as companies work to stay ahead of threats and be able to isolate and minimize their impact when they occur.

Another common concern when taking on digital initiatives is system integration. Oil and gas organizations are becoming increasingly connected across their organizations in terms of not just applications, but data as well, so there is a need to ensure that new application and technologies for better asset management can fit well into the broader organization.

Summing up, GE recommends:

  • Oil and gas executives responsible for offshore operations should work with their technology teams to create a digital strategy to reduce unplanned downtime that will be based on a foundation of data and analytics. Oftentimes there is a lack of comprehensive and specific strategies for digital opportunities with asset repair and maintenance. Strategies should be developed at a high enough level to ensure that digitization does not happen in pockets, and it is able to scale.
  • Challenge your OEMs to provide digitally-enabled equipment and machines that will provide the data necessary for reducing downtime, and they can assist with building a more comprehensive digital strategy for your asset management efforts. Ask your OEMs questions about their digital strategies, and truly understand their approaches and plans.
  • Evaluate asset performance management (APM) tools and technology to manage machine data and support more timely, data-based decision processes.
  • Consider cloud-based solutions and outsourced services. It is important to consider your organization’s core competencies and how much digitization aligns with them. Cloud-based and outsourced services can offer additional expertise and scalability to support data-driven approaches as they continue to grow and evolve.

Now is the time to embrace new digitization opportunities that will improve margins and profitability. PhDsoft is helping oil and gas companies see returns from digitization. Contact us to accelerate your path to mitigating risk resulting from unplanned downtime and to driving enhanced operational efficiency.