The next frontier for digital technologies in oil and gas

Over the past several years, the global oil and gas industry has had to navigate very choppy waters; after a prolonged run of high and growing rig counts, mega-capital-expenditure projects, and plentiful capital to support investment, oil prices slid precipitously in 2014 and 2015. Within a matter of months, oil companies that had invested heavily based on rosy forecasts were slowing or even halting operations.

A recent price rebound has increased optimism slightly, and efforts are under way to contain costs by reducing head count, postponing projects, and cutting spending. Still, in the face of uncertain long-term forecasts, it is time to explore more drastic strategies to boost efficiency.

In response to recent technological advancements, oil executives should consider digital technologies with the potential to transform operations and create additional profits from existing capacity. Our research finds that the effective use of digital technologies in the oil and gas sector could reduce capital expenditures by up to 20 percent; it could cut operating costs in upstream by 3 to 5 percent and by about half that in downstream.

Oil and gas companies were pioneers of the first digital age in the 1980s and 1990s. Long before phrases such as big data, advanced analytics, and the Internet of Things became popular, oil executives were making use of 3-D seismic, linear program modeling of refineries, and advanced process control for operations. The use of such technologies unleashed new hydrocarbon resources and delivered operational efficiencies across the value chain.

Thanks to the latest technological advancements, we are now poised for a second digital age that could further reduce costs, unleash unparalleled productivity, and boost performance significantly—if executives can harness the right technologies to support their business strategy. Making better use of existing technology can deliver serious returns: up to $1 billion in cost savings or production increases.1Executives that make their organizations more digital will be well positioned to pursue new growth opportunities.

The oil and gas industry is tailor-made for this transformation: operations typically span multiple regions, with heavy capital investments and extended supply chains. The visibility and clarity delivered by digital technologies and advanced analytics can give executives unprecedented, granular views into operations, increase agility, and support better strategic decision making. Digital enablers, from process digitization to robotics and automation, can also help realize this potential by supporting processes in dynamic ways.

Many oil and gas companies are beginning to harness these enablers to drive better performance. To calculate the potential impact of digital technologies, McKinsey conducted research on more than 100 use cases at oil and gas companies and identified three categories for the application of digital technologies:

A billion-dollar digital opportunity for oil companiesRead the article
  1. Operations of the future. While advanced analytics are being used to transform functions such as procurement and to support better decision making, the latest technologies, such as drones and equipment sensors, are also revolutionizing monitoring and maintenance. The potential impact of using advanced analytics for predictive maintenance is a decrease in maintenance costs of up to 13 percent. At one company, where maintenance costs accounted for 25 percent of operating expenses, this enabled preemptive equipment maintenance—in effect, vital equipment could be repaired before it broke down. This effort reduced costs by up to 27 percent while increasing reliability and uptime. Advanced analytics for energy and yield also has the potential to increase energy efficiency by as much as 10 percent.
  2. Reservoir limits. By integrating digital applications, companies have been able to increase their reservoir limits significantly, resulting in a decrease of up to 20 percent in upstream and downstream capital expenditures, in addition to ancillary benefits. Some companies have begun using 4-D seismic imaging to add a time-lapse dimension to traditional 3-D imaging, enabling them to measure and predict fluid changes in reservoirs. This enhanced view of reservoirs typically increases the recovery rate by as much as 40 percent, boosting upstream revenue by up to 5 percent.
  3. Digital-enabled marketing and distribution. Retailers in other industries have implemented digital technologies to gain a better understanding of consumer habits and preferences, optimize pricing models, and manage supply chains more efficiently. Oil companies are applying these same methods, with impressive results, potentially increasing revenue by up to 1.2 percent. By using geospatial analytics, for example, executives are increasing the efficiency of their supply and distribution networks through location planning and route optimization. Collectively, efforts in this category have lowered costs by up to 10 percent and increased revenue by 3 percent.

With the current oil and gas market, companies need to reinvent themselves to improve productivity. While capital expenditures or acquisitions might give executives pause, investing in digital technologies is a no-regrets move that could increase production from existing operations. Since these technologies are readily available and have proved their value in the form of reduced operating costs, increased efficiency, and revenue generation, oil companies should move quickly to embrace digital. It could be the difference between leading the next wave of industry innovation and being left behind.


Economic Prosperity in the Digital Age

SAN JOSE – Around the world, people are demanding change. Recent electoral outcomes – perhaps most notably, the Brexit vote in the United Kingdom and the presidential election in the United States – have highlighted rising economic uncertainty. In this environment, it is imperative that leaders articulate and deliver on a clear vision for inclusive economic growth, one that accounts not only for tax and trade policy – the focus of many of today’s debates – but also for digitization.

Representing $19 trillion in potential economic value over the next decade, digitization has the power to enable countries to kick-start GDP growth, job creation, and innovation. We’re already seeing the profound impact that digitization can have on countries that embrace it as a core driver of their economic strategies.

In India, for example, Prime Minister Narendra Modi is implementing a strategy that is transforming India into a technology powerhouse and setting the stage for a digital future. In France, the government has invested in an extensive national digital plan that is expected to create 1.1 million jobs over the next 3-5 years and contribute $101 billion to GDP over the next decade.

While other countries are embracing robust digital strategies, the US is falling behind. Despite having led the Internet race in the 1990s, the US is now the only major developed economy without a clear digitization plan. The consequences are already starting to show: according to the 2016 Bloomberg Innovation Index, the US is now the world’s eighth most innovative country, having fallen two spots since 2015.

The message is clear: when it comes to digitization, nobody is entitled to anything, and there is no time to waste. Even in Silicon Valley, we must constantly reinvent ourselves to stay competitive. The US economy must do the same, or risk losing its innovative edge. Only with a clear and effective digitization plan can the US ensure that it retains its status as a global economic leader in the Digital Age, while fulfilling its citizens’ demands for more economic opportunities.

I believe that connectivity has the power to transform economies and generate new opportunities. That is why America’s new digital agenda must rectify the fact that, despite living in one of the world’s wealthiest countries, one-third of the US population still lacks broadband access at home.

Existing Smart City initiatives promoting connectivity in Chicago and Washington, DC, are encouraging. But, to close the digital divide, a more comprehensive national digital strategy is needed, one that emphasizes digital infrastructure investment, rather than just physical infrastructure investment, as in the past. Only with broad access can technology continue to fulfill its potential as one of the great economic equalizers.

An effective US digitization plan must also support start-ups. Young companies represent the future of job creation – they are the primary source of new jobs in the US – and technological disruption. Yet start-ups are on the decline in the US. According to research by the Brookings Institution, the start-up rate (the number of new companies, as a percentage of all firms) has fallen by nearly half since 1978.

To boost innovation and job creation, we need to reverse this trend, injecting more fuel into the US economy’s start-up engine. This will require businesses and government to work together to create an environment that encourages entrepreneurs to bring their visions to life. A combination of legislation, such as tax benefits for early-stage companies, and corporate/venture capital investments that provide financial backing and mentorship opportunities to start-ups, will be vital to sustain this ecosystem.

More broadly, US leaders must create an environment that encourages all kinds of business growth and investment. Trump’s call to update US tax rules in 2017 could produce benefits on this front, assuming that the new rules promote domestic investment by encouraging companies to bring back their overseas earnings and by lowering the corporate tax rate, currently one of the highest among OECD countries. These steps could bring more than $1 trillion into the US economy, creating jobs and economic opportunities in the process.

Yet another critical element of an effective digitization plan is education and training. Businesses need to invest in the existing workforce, which largely lacks the skills necessary to compete in the Digital Age. At the same time, we must transform our education system, so that younger generations acquire the skills they need to secure the high-paying digital jobs of the future. To this end, we must move beyond emphasizing science, technology, engineering, and mathematics – the so-called STEM subjects – to think about how to apply technology and digitization to all fields.

Digitization could create $5.1 trillion in economic value for the US by 2025, while significantly lowering unemployment. But the US cannot realize this potential unless its leaders work effectively across party lines and with all industries to drive forward a digital agenda.

Technology is changing everything: the way we do business, the rules of capitalism, and entire economic ecosystems – all at tremendous speed. The US must change with it, acting now to do what it takes to reclaim its innovative edge and thrive in the Digital Age.

John Chambers is Executive Chairman of Cisco.


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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.

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PhDsoft’s revenue continues to increase in a $1 trillion potential market

“PhDsoft will grow in the current oil crisis because companies are searching for ways to reduce costs without raising risks, and that’s what we do”, predicted in the beginning of the year the CEO and founder of the company, Duperron Marangon. In fact, we know now, PhDsoft’s revenues are going to end 2016 in a 30% increase. Beyond the oil crises, though, there is a potential $1 trillion market to guarantee the company success at least until 2022.

Gartner has just published the report Top Strategic Predictions for 2017 and Beyond: Surviving the Storm Winds of Digital Disruption. “Digital business innovation creates disruptive effects that have a wide-ranging impact on people and technology. However, secondary ripple effects will often prove to be more disruptive than the original disruption. Digital strategists must actively identify secondary effects when planning change”, says the Summary.

One of the Strategic Planning Assumptions of the document is that “by 2022, IoT (Internet of Things) will save consumers and businesses $1 trillion a year in maintenance, services and consumables. The key findings were that: Assets under maintenance globally exceed $240 trillion, with maintenance costs of $27 trillion; Moving to predictive maintenance (with PhDC4D, for example) can often save 10% to 20% over preventive maintenance; IoT, properly deployed, can unlock this $1 trillion savings opportunity (excluding new technology investments).

Near-term flags are: Emerging use cases demonstrating the use of IoT to drive predictive maintenance; Proliferation of digital twin models to optimize predictive maintenance efforts by 2020; Reporting of improved efficiency based on IoT implementations by 2018; Software models of physical assets provided by suppliers by 2020.

The study recommends to: Identify costs associated with scheduled maintenance and consumable expenses; Target a 10% reduction of these costs, based on a shift to a predictive regime; Build a roadmap to implement IoT projects against the portfolio, targeting the fastest returns, initially focusing on larger, more complex and expensive assets — where downtime and waste are expensive — and instrument to deliver “low-hanging fruit” cost savings, starting with POC projects that have short payback periods in order to build momentum for these projects; Continue to prioritize additional IoT instrumentation for additional cost savings until you approach the point of diminishing returns.

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An Expert Interview About Information Technology in the Oil Industry

Concluded in last June 1st, the Energy Perspectives 2016 – Long Term Macro and Market Outlook, from Statoil, begins with the following statement: “Global energy markets are in transition”. In fact, the 2008 crisis is not over yet and new technologies are promising to revolutionize the energy business, which also means lots of opportunities. This is the drive for Duperron Marangon, CEO and founder of PhDsoft: “We will grow in the current oil crisis because companies are searching for ways to reduce costs without raising risks, and that’s what we do”.

Expert in technology management and asset integrity maintenance, Marangon has been in the oil industry for the last three decades and see too many uncertainties regarding the future: “Everybody likes to talk about clean energies. I’m not different. The instant image associated to that is of a better planet. But nobody knows if this is going to be economically sustainable. Statoil Outlook, for instance, asks if cost reductions in extraction could affect the competitiveness of different fuels. There is no answer, as they analyze on the following excerpt”.

The Productivity Puzzle

Total Factor Productivity (TFP), primarily driven by labour productivity, has for several Western countries fallen since the IT boom of 1994-2004. This is unfortunate as its stimulus to economic activity has been slow and productivity gains are a necessity for a robust wage development. It seems legitimate to ask why this weakening has come about. Some of the recent new information products, such as social media, are innovative and improve people’s living standards, but do not seem to increase efficiency in the same way that the advent of PCs or the growth of the Internet did. Since the end of the financial crisis, companies have had easy access to labour and hence expanded the labour force instead of investing in technology to boost output. Furthermore, job creation has to a large extent been within low-skilled jobs in the service industry, where productivity improvement is typically low. It is also possible that companies have become more reluctant to invest in labour productivity due to stricter and more complex government regulations introduced in recent years. These regulatory efforts boost growth over the longer term, but slow the current momentum within industry and trade. Finally one might question if productivity gains are fully measured and captured in the “new economy” of e-commerce and so-called “sharing”, and in the service industry in general.

The world might have to get used to somewhat lower future productivity growth compared to recent decades, with a consequent slightly negative impact on the economic outlook. However, there will be supportive factors for productivity that could push it upwards. Reaping the full effects of the IT boom might come with a delay, as was the case with many earlier inventions, which were so comprehensive that it took years for their full impact to emerge. This – combined with the more recent drop in the cost of 3D printers and sensors, big data management, ongoing automation, and more – has the potential to transform the economy and increase productivity. Today, the world is increasingly connected and progress can spread rapidly. As labour markets in the Western world continue to tighten, putting pressure on wages, companies will have a stronger incentive to invest in training and technology, which will add support to productivity growth. Governments’ policy support, reform, and increased ability to invest in infrastructure will also be decisive for productivity in the decades to come.

“In other words, companies will not be able to keep going without raising investments in technology anymore. This is the only way to improve productivity, reducing re-work, preventing accidents and unplanned shutdowns, and so reducing overall costs. PhDC4D, our main software, has lots of cases, since it promotes more than digitalization of the whole maintenance process, but standardization. It makes everything more simple, effectively reducing costs without raising risks. As a matter of fact, it raises safety. As Statoil notices, all industries are expected to face digital disruptions in the 2020s, and will need to transition to new digital models to optimize their business”, explains Marangon pointing to another excerpt from the research.

Digitalization can improve efficiency and reduce costs, as illustrated by the progress made in the airline industry since the end of the 1990s. Sensors on planes have helped airlines realize fuel efficiency targets, maintenance and route optimization, while digitalization of sales and reservations has reduced errors and led to the “pricing and overbooking business” – where companies use big data to optimize plane occupancy. New ideas are developed as airlines understand their own data better, leading to a continuous learning journey of adapting and testing the operating model.

Brazil Oil & Gas Technology Radar

More focused in new technology and innovation, Lloyd’s Register surveyed Brazil-based oil and gas leaders, from 240 companies, between September 5 and October 3 2016, to produce Brazil Oil & Gas Technology Radar. It asked what the biggest barriers to innovation are today in Brazil, what challenges exist to the deployment of new technologies, and explored the impact of specific policies on the sector, such as the mandatory 1% levy on oil and gas production that is being redirected to local R&D. The survey also asked participants to rank a number of potentially game-changing technologies in terms of their short and longer-term impact on the sector.

Of the 26 technologies listed, respondents believed all would have some impact in the future. Distinctions were made between those that would have a high or medium impact in the short term (before 2020), medium (2020-2025) or long term (2025 or later) time horizon. Until 2020 were all incremental improvements on existing technologies: subsea robotics and other deepwater equipment advances, sensor technology such as wireless monitoring, and high-pressure high-temperature drilling.

“We’ve been investing in developments for the Internet of Things (IoT) for the last years, and our technology is ready to help the oil industry to get through the current challenges”, says the CEO of PhDsoft.


How Corrosion Management is Making the World (and Insurance Business) Better

“Basic Coverage for Equipment Used in the Production, Drilling and Exploration of Oil and/or Natural Gas in Marine Operations (offshore) and Land (onshore) – Special Conditions (…) Clause 2 – Risks not Covered and downs Indemnified/ 2.1. In addition to the provisions in clause 5 of the General Conditions, are excluded from coverage claims for indemnification for losses, damages, expenses, or other costs resulting directly or indirectly from the following events: (…) j) natural wear for the use (including abrasion, friction, deterioration or encrustation by boiling machinery, plant or equipment as a result of use or daily operation), gradual deterioration, including any effects or weathering, oxidation, rust, flaking, scale, cavitation and corrosion of mechanical, thermal or chemical origin“.

The excerpt of the policy “Oil Risk Insurance”, from Tokio Marine Insurance Company (in a free translation from Portuguese), makes clear a practice of the insurance industry: not to pay for insurance arising from corrosion events. And the “Special Conditions” for pipelines and offshore platforms also list corrosion as a “risk not covered and downs indemnified”. “All risks of incalculable probability over which the insurer has no estimate capacity are not covered by insurance policies”, explained recently the executive of a reinsurance company to PhDsoft CEO, Duperron Marangon.

In fact, nowadays,

corrosion is a predictable phenomenon

In Brazil, where PhDsoft won its first clients, the insurance company Porto Seguro requires hiring a tracker that allows the location of a car in case of robbery or theft to vehicles of value from R$ 200,000 (link in Portuguese). “It’s the same logic that we are seeking to bring to the oil industry. Despite of deep water exploration in Brazil, no accidents that can harm the environment as much as the one with the BP offshore platform, in the Gulf of Mexico, has happened and this is partially due to our software PhDC4D®. We explain it as a comprehensive system resulting from the synergistic integration of a 4D-space-time visualization with a predictive corrosion algorithm, a regulatory code compliance engine and automation of engineering activities and best practices. This consolidates a safer and cost effective maintenance process”, states Marangon.

In fact, nowadays, corrosion is a predictable phenomenon. There are only few corrosion processes that any intelligent solution would have difficulty to deal with. Pitting – a form of extremely localized corrosion that leads to the creation of small holes in the metal – is one. Since PhDC4D allows companies to monitor corrosion conditions and its evolution, insurance policies could start to cover corrosion caused accidents. That is technological disruption uniting two very traditional sectors in a win-win relationship for everybody.


Where CMMS are Headed in the Next Five Years

Nanotech sensors connected to the internet are dispersed in the painting of hulls and pipes, measuring thickness and corrosion rates in real-time and practically eliminating risks of offshore operations. It’s cool, but it will take a little longer. So far, it’s only science fiction.

But if the painting nano gadget is still a dream, the use of sensors connected to the internet integrated by a software like PhDC4D is headed in the next five years. Until the beginning of the next decade, thickness or and corrosion rates will be measured all the time. Since we are talking about very large structures, human measuring will still be needed, but in a more intelligent way, focused in areas previously selected with the help of sensors.

In fact, any device with an on and off switch to the Internet (and/or to each other) will be connected, in what is called the Internet of Things (IoT). The IoT is a giant network of connected “things”, which also includes people. The relationship will be between people-people, people-things, and things-things. Intel says that by 2020 there will be over 200 billion connected devices. In 2015, there were 15 billion.

Anything that can be connected, will be connected

This includes everything from cellphones, coffee makers, washing machines, headphones, lamps, wearable devices and almost anything else you can think of.  This also applies to components of machines, for example a jet engine of an airplane or the drill of an oil rig. It is not different with Computerized Management Maintenance Systems (CMMS).

If you want to know more, have a look at this Guide to the Internet of Things produced by Intel.


PhDC4D Will be Available in App Form

PhDC4D is going through its final adjusts to be launched in App form, for Windows Mobile, Android and IOS. The App will allow user to do everything he does in the site, managing inspections and defects in hulls, pipes and other structures. Although PhDsoft expects it to be much more used to register anomalies than to manage inspections.

Besides having all equipment status in the pocket, the user of PhDC4D App will be able to synchronize the anomalies registered as soon as he is back to the office, making data available to every member of the team. And thus, PhDsoft technology keeps evolving to the integration into three systems:

  • Computers – more technical, with its 3D models.
  • Internet – more managerial, where are registered all defects.
  • App – managerial and technical.

Intrinsically safe equipment

Since the App is going to be used in structures like offshore platforms, one alert we must make is that only intrinsically safe tablets or phones are allowed. Any other kind of equipment is forbidden because of the risk of explosions.

In intrinsically safe equipment, produced by companies like Aegex Technologies and Sonim Tehcnologies, the electrical energy available in any spark which can occur in the hazardous area will be non-incentive. This avoids the risk of explosions.

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From a hull maintenance software to an innovation platform

The use of hull life-cycle maintenance software since 1995 on 26 major Brazilian oil company tankers has reduced inaccuracies in the evaluation of ship renewal costs during dry-docking. Due to its success, the software has been redeveloped and extended for the whole floating fleet, including FPSOs and jackups, replacing regular drawings by the 3D models. While jackups’ needs are very similar to ships since they can dry-dock, FPSOs have a totally different approach with attention to corrosion being the primary focus. Past 20 years, PhDC4D has become an innovation platform that can include almost any kind of new features tailor made to companies’ needs.

Today, PhDC4D is already in use for painting and pipes of the FPSOs process plant of a major Japan company. It is also in test for the Internet of Things, both to ROVs and measuring sensors of tube thickness. Soon it will include cranes and pipelines as much as secondary equipment as an FPSO stair. “The software allowed a sophisticated data acquisition process to be applied, capturing and applying large quantities of key information thus enabling risk-based inspection to take place”, explains PhDsoft CEO, Duperron Marangon.

Results achieved

The technology incorporated into the software has been shown to reduce by 50% the cost required to renew steel on a VLCC. By extrapolating old gauging data to achieve a better mapping of the corroded areas, we were able to raise the accuracy of the forecast steel renewal figure. The client was therefore able to predict the budget required ahead of time more accurately.

We subsequently had two cases in which we helped to avoid a tanker’s repairs to continue regular operation. Due to the large amount of steel renewal that would be necessary the hulls were converted to FPSOs instead. Use of the software also allowed a ship owner to anticipate a request for classification societies to use FEM criteria to produce reassessments. This reduced by half the amount of steel renewal required.

PhDC4D allowed users to realize the poor quality of some thickness gauging reports and take actions to improve accuracy. Besides the primary applications for the software such as identifying areas of greater risk or those with higher corrosion rates, the models were also used to aid knowledge management for all structure-related issues. This replaced the existing management systems for this information. The models became the database for risk-based inspection procedures adopted by Petrobras.

The sharing of information through the software between ship and rig owners with classification societies’ consulting branches and gauging companies has been made possible through a common interface. Petrobras has hired the consulting branches of major classification societies to develop and update the many different models to assure the safety of offshore rigs including stability, hydrodynamics, FEM and degradation. For stability they developed their own software to keep a common interface for all rigs. The same approach has been used for degradation information by using the single interface provided by PHDC4D with the various classification societies involved.

There have been no major structural incidents with Transpetro tankers during the last two decades, when they have used this technology. In part this is due to a broader set of good practices being implemented such as better control of structure integrity status through the use of PhDC4D.

Technology standardization

A number of other organizations developed products with similar goals. Similar approaches have been used applying the same principle as the classification rules. These had to be standardized according to IACS common structural rules. On December 14th 2005, the Common Structural Rules for Tankers & Bulk Carriers were unanimously adopted by the IACS Council for implementation on 1 April 2006. The Council was satisfied that the new rules have been based on sound technical grounds, and achieve the goals of more robust and safer ships. IACS started then to implement the CSR maintenance program (IACS Procedural Requirement No32) via the IACS CSR Knowledge Centre (KC). All the agreed Q&As and CIs (common interpretations) are published on the IACS web site without delay in order to assist its member societies and industry in implementing the CSR in a uniform and consistent manner.

It took some time for the rules to be standardized and we believe there should not be the same delay for hull maintenance software. The sooner standards are established, the sooner the industry can benefit from a common interface. Establishing a common database format, but still requiring a user to have deal with multiple different interfaces according to the classes of their fleet, is not desirable. Ideally broader development cooperation should be realized to facilitate faster development and interface standardization.

PhDC4D as an innovation platform is mature for large-scale application. Building models and inputting data is a long-term process. Addressing differences between emerging technologies represents the next big challenge. PhDsoft has experienced these issues while the software was under development with models having to be adapted to reflect changing technology. The software development process, therefore, has to be sufficiently flexible to address evolving technology and successive model changes.

Please, contact us for more information: +1 (713) 340-9958 or phdsoft@phdsoft.com.


The Evolution of Corrosion Management

“If the present growth trends in world population, industrialization, pollution, food production, and resource depletion continue unchanged, the limits to growth on this planet will be reached sometime within the next one hundred years. The most probable result will be a rather sudden and uncontrollable decline in both population and industrial capacity”, concluded in 1972 the report The Limits to Growth, published by the Club of Rome.

This global think tank was the first to use computer simulation analyzing exponential economic and population growth versus finite resource supplies. The original version presented a model based on five variables: world population, industrialization, pollution, food production and resources depletion. These variables are considered to grow exponentially, while the ability of technology to increase resources availability is only linear. So the 1970’s would know the environmental movement.

Since corrosion has a direct impact in pollution, it was about the same time that the first evaluation of the cost of corrosion was conducted. The Hoar Report revealed that 3% to 4% of the GDP of industrialized countries is lost annually to corrosion. All similar evaluations performed later by different organizations basically came to the same conclusion. But the Hoar Report already emphasized that 25% of the annual cost of corrosion could be saved just by applying existing knowledge on corrosion control.

R&D efforts

The World Corrosion Organization published a whitepaper in 2009 (Dissemination, Research, and Development in Materials Deterioration and Corrosion Control) that concludes:

“To satisfy the basic needs of the 6.3 billion people on this globe, including proper nutrition, clean water, good health, safe housing, dependable energy, effective communication, and mobility, many technological changes with global dimensions must be accomplished. While this concept is widely appreciated as such, there is often only a limited awareness of how critical it is to solve corrosion problems and what the real implications are to society”.

The intention of the study was to demonstrate with several examples that future technological challenges can only be met by “immense R&D efforts worldwide in the fields of materials, surface protection, corrosion control, and condition-based monitoring”.

“It appears that in literally all cases, key problems related to materials degradation and corrosion must be solved. This involves materials stability under new environmental conditions or functional adjustment of environments and materials surface properties by appropriate surface modification methods. This work must include efficient management of corrosion mitigation and service integrity. Condition-based monitoring will be one of the key factors to ensure service integrity. However, this can only be accomplished with innovative sensor devices that have yet to be developed. Global standards should be established to foster condition-based monitoring as a standard procedure”, stated the document.

Maintenance and corrosion management systems

Duperron Marangon office at the beginning of the 1990sDespite the Digital Revolution and its growing popularity from the 1970’s, it was only in the beginning of the 1990’s that computers starter to be used to maintenance and corrosion management. Until that time, all the information of critical facilities, like ships or offshore platforms, was kept in papers that used to be spread in lots of piles when any repair must have been done.

“Then we were forced to follow blindly the price of shipyards without any control”, remember Duperron Marangon, naval engineer and consultant for Brazilian mining company Vale at that time, for the maintenance of its ships (the picture shows his office at the beginning of the 1990’s). It was a huge and non-intelligent work, so, he decided to develop a finite element calculator associated to digital spreadsheets that showed up to be much more efficient.

Ships are the largest steel structures produced by man. They go through a continuous process of maintaining their structures and equipment and, every five years, on average, need to stop in shipyards for structural repairs. Due to the aging fleet and the increasing environmental concerns, it has become essential to exercise better control over the maintenance of ships. Thus, they were natural candidates for carrying out validation tests of a maintenance management software.


Today, a software like this is known as Computerized Maintenance Management System (CMMS). It is supposed to streamline the maintenance management of great responsibility structures, where failure may cause major damage, pollution and deaths, such as ships, oil platforms, bridges, aircrafts, industrial parks, minimizing the risk of accidents. The most advanced ones reproduces the 3D structures to simulate degradation over time, which results in a 4D perspective.

A software capable of performing intelligent maintenance management needs to have a graphical interface, because structures do not have identification numbers, as do the equipments, with each piece being recognized by a unique code. Even if each part of a structure is numbered in the construction project, the repair will occur in order to produce new regions, which can be inserted into the original or extend for many of them. The lack of this part number also prevents the use of the internet for the execution of quotations, since the shape of the repair and the region where it is located has a direct influence on the cost of implementation. The location, especially in large structures, has implications for the number of scaffoldings needed to perform the work.

The capability of knowledge management should be emphasized as well, because gathering information in a single database allows faster access, data security and consequent increased productivity. If you are interested in integrating the results with your ERP or other existing system, it must is also be possible. Otherwise, you will remain at Stone Age and information will just be dispersed in a very large number of plans, sketches and paper reports. Humanity is still not sure about the limits to growth in a planetary scale, but at least for corrosion management, as the music says, “the future has arrived”.