“Well organization” isn’t biz-speak for a hospital. Rather, in the opinion of consultants McKinsey & Company, it’s precisely how to consider an operating company.
Why the well organization? In the company’s recent report, “A new operating model for well organizations,” authors Brun and Zharkeshov make persuasive points. To begin with, they note that well construction and intervention account for typically 40%—and often as much as 70%—of an operator’s capital spending. For this and other reasons, that area is recognized as the most critical, complex operation to “get right” in the entire oil and gas value chain. Furthermore, drilling and well activities are highly complex, in an environment with significant health and safety risks, and often involving an intricate web of interfaces in which 10 or more suppliers are working together to deliver a single well.
The authors believe the key to unlocking full digital transformation will involve soft and hard automation technologies, as well as require more nimble work practices. “We have seen that for a business like the typical well organization, completion of tasks that used to require months might soon be possible in mere days or weeks.
“If this sounds unnerving, it’s because it is… But along with challenges of implementing digital change, there are also enormous opportunities for substantial cost reductions, better safety, and sustained productivity improvement.”
End-to-end, digitally enabled onshore drilling, well-delivery setup. A highly interesting—and entertaining—part of the report is a colorful isometric illustration of what could be called the Wellsite of the Future, and what they call “an end-to-end, digitally enabled onshore drilling and well-delivery setup.” Collectively, the callouts outline how such a wellsite might function:
- Autonomous robots strengthen safety.
- Teams use virtual- and augmented-reality goggles to inspect equipment/wells, and communicate hands-free.
- Basin-wide optimized water-hauling runs, from a digital control tower.
- A digital “Amazon-like” supply chain drops off Conex boxes ahead of drilling, and delivers OCTG pipe just-in-time from mill to well.
- Drones read gas levels and look for irregularities.
- Digital gas-oil separation, pipeline flow, and quality management maximize value from each molecule.
- Digital drilling workflows are driven by iPads and augmented reality.
- Digital wells have real-time monitoring for predictive maintenance, safety warnings, and compliance.
- Digital subsurface helps prioritize well planning.
- Digitized downhole tools and sensors enable:
- Real-time data capture
- Advanced analytics to drive increased estimated ultimate recovery
- A “learning engine” for manufacturing oil
- Digital ESP or sucker-rod pump to improve initial production and reduce decline rates
- Digitized functional support includes:
- Robotic-process-automation-enabled finance to manage royalty and all daily profit calculations
- Digital workforce management to ensure right people at right places
- Digital procurement, focused on fulfillment of standard materials.
Possible, but is it probable? Here’s consulting firm Deloitte’s less-than-sanguine observation: “Despite a deluge of digital advancements, upstream oil and gas companies have been slow to seize the opportunity. The prize of going digital is clear, but for most companies, getting there is not easy. A coherent road map could help make sense of the digital muddle and drive more value.”
The company asks: What is holding them back from realizing this opportunity? They answer: More than the technicalities, it is often the digital muddle that’s deterring companies from achieving digital maturity. Companies can benefit from a strategic road map that helps them assess the digital standing of every operation and identify digital leaps for achieving specific business objectives. More importantly, it could push them to embrace a long-term goal of transforming their core assets and, finally, adopting new operating models.
They finger the “digital deluge” as a prime suspect. This aptly named problem—rapid changes in the digital world, complex interdependencies between technologies, and many names for the same technology—often makes it difficult for the industry to enable digital transformation. For instance, out of more than 200 technologies listed on (the even more aptly named) Gartner’s Hype Cycle from 2000 to 2016, over 50 technologies appeared for just a single year, while many took years longer to register mainstream success.
Here’s where the road map comes in. The company’s Digital Operations Transformation model is…a digital journey of 10 milestones, where the leap from one stage to another marks the achievement of specific objectives, and it puts cybersecurity and an organization’s digital traits at the core. Although the journey technically completes at stage 10 for a specific asset or operation, it should be broadened into a never-ending loop. This would include a wider set of assets or business segments, the entire organization and, ultimately, the ecosystem of a company, including supply chain and stakeholders.
The company declares that “it’s time for action.” No doubt, but what kind of action? Something along the lines of rapid prototyping? Maybe, but as an upstream executive with a supermajor remarked, “Consumers and IT-based firms know the early bird gets the worm, but oil and gas players would rather be the second mouse that gets the cheese. This is because it’s more costly to be the first to adopt new oil and gas innovations.”
- Executive viewpoint (November 2023)
- Digital transformation: Accelerating productivity, sustainability in oil and gas (November 2023)
- Technological innovation delivers transformative product suite to upstream sector (November 2023)
- Taking the next step in offshore digitalization (November 2023)
- Optimizing BHA and fluid selection with a machine learning-based drilling system recommender (October 2023)
- An advanced model for hydrodynamic analysis and development planning of reservoirs: A case study in southwestern Iran (October 2023)
- Applying ultra-deep LWD resistivity technology successfully in a SAGD operation (May 2019)
- Adoption of wireless intelligent completions advances (May 2019)
- Majors double down as takeaway crunch eases (April 2019)
- What’s new in well logging and formation evaluation (April 2019)
- Qualification of a 20,000-psi subsea BOP: A collaborative approach (February 2019)
- ConocoPhillips’ Greg Leveille sees rapid trajectory of technical advancement continuing (February 2019)