This blog first appeared on ARC Advisory Group's Industrial IoT/Industrie 4.0 Viewpoints.

Over 1,000 customers from around the world attended the recent 18th GE Oil & Gas Annual Meeting in Florence, Italy.  A multitude of presentations and demonstrations of the latest oil & gas technologies for processes, such as upstream, pipelines, LNG, and refining were made, but most were blended with digital transformation and IIoT. The annual meeting was kicked off by GE Oil & Gas CEO Lorenzo Simonelli, explaining how his company is charting a new course in productivity, resilience, disruption and innovation, telling his partners how “together, we fuel the future” in this new era of human partnerships and co-creation. Next, Fatih Birol, Executive Director of the International Energy Agency, discussed how Low carbon fuels and technologies, mostly renewables, will supply nearly half of the increase in energy demand to 2040. He also discussed how a wave of LNG is spurring a second natural gas revolution, and how we still need new upstream investments to avoid a period of greater market volatility and help smooth the energy transition to renewables. But these opportunities can only be leveraged by embracing digital transformation and IIoT across the entire energy system. Then, Arnaud Breuillac, President of Exploration & Production of Total, discussed an environment shaped by disruptions and how to improve operational performance while reducing Opex and Capex by positioning upstream on low cost integrated assets and leveraging digital transformation and IIoT as the service for increased performance.

Reduced Spending Accelerates Need for Digital Transformation and IIoT

GE CEO Jeff Immelt and BP CEO Bob Dudley then held a “fireside chat” where the topic was how in an environment where cost cuts have approached 75 percent, the oil & gas industry needs significant digital transformation and IIoT to be able to increase productivity and profitability in this new era of reduced spending. Bob Dudley encouraged the industry to increase collaboration and partnerships, not to see change as a threat, don’t overreact to short term market cycles, and in a limited Capex and Opex spending environment, the importance of digital transformation and IIoT becomes even greater. Following up on the theme of “the future is not what it used to be” regarding energy transition and renewables, Luca Cosentino, Energy Solutions Executive Vice President of ENI, discussed how to use renewables to close the energy demand loop, and how the oil & gas industry must develop the skills and leverage digital technologies to make the transformation. To further follow-up on this new era of reduced spending, Martin Houston, Executive Vice Chairman of Tellurian Investments, discussed how to achieve the lowest costs for greenfield LNG by understanding the market you are serving, building only what you need, fitting the design for purpose, and thinking in an evolution, not revolution mode, along with leveraging the latest digital technologies and IIoT as part of design to purpose.

Navigating the New Normal with Digital Transformation and IIoT

Various companies discussed how they will navigate this new normal. Claus Hemmingsen, Group Vice Chief Executive Officer of Maersk, discussed using integrated services, capitalizing on new sensors, and training its workforce how to leverage digital transformation and IIoT as its way to achieve success today and in the future. Joseph Geagea, Executive Vice President Technology, Projects and Services for Chevron, explained their three-pillar response to navigating the new normal, which are technology, cost efficiency, and a high performance culture,  which involves digital transformation and IIoT as key to their three pillars response.  Martin Craighead, Chairman and Chief Executive Officer of Baker Hughes, the company that is expected to merge with GE Oil & Gas, emphasized radical efficiencies, technology and innovation as the company’s secret to eliminate inefficiency gaps and greatly increase the company’s return on invested capital performance.  This will be done through a combination of virtualization and automation as part of the movement towards digital transformation and IIoT.  Nelson Silva, Chief Strategy and Performance Officer of Petrobras, Petróleo Brasileiro S.A., described how the company going to focus more on deep-water, with safety as a top priority and partnerships to achieve its financial turnaround by increasing its return on average capital employed and reducing its net debt.  This involves rebooting its business model, significant cost and Capex reductions, while still focusing on cutting edge technological developments, such as digital transformation and IIoT to achieve its turnaround.

Data is the New Oil, Which Drives Ecosystems

Manoj Chouthai, Chief Information Officer of Reliance Industries Ltd., discussed that for his company, enabling the digital future is a top priority, as “data is the new oil, and intelligent data is the new petrol”. Big data and analytics is unlocking the next level of manufacturing productivity for the company, which takes pride in being an early adopter of the latest technologies, such as digital transformation and IIoT, and leveraging the best partner ecosystem possible. The importance of the ecosystem was reinforced with a “fireside chat” with Bernd Leukert, SAP Board Member and Senior Executive, Technology; and Bill Ruh, Chief Digital Officer of GE.  GE Digital and SAP are partnering to strengthen the integration between Predix and SAP’s HANA Cloud Platform. The companies intend to collaborate in asset management, including SAP’s Asset Intelligence Network, and explore and design use cases to enable the ‘Things to Outcomes” vision in the oil & gas industry, whose customers will be the first users. SAP and GE are both members of the Industrial Internet Consortium (IIC).

Predix Role in Digital Transformation and IIoT

Colin Parris, Vice President, Software Research of General Electric’s Global Research Center, led the discussion on exploring what’s possible with Predix, GE’s operating system for IIoT and cloud-based platform for edge-to-cloud connectivity and manufacturing analytics, along with its role in helping its users with digital transformation and IIoT. Predix is used to help in the creating of the Digital Twin, which is a collection of physics-based methods and digital technologies that can be used to model the present state of Oil & Gas assets. This digital creation of these assets has been used to drive positive business outcomes across Oil & Gas.  Asset Performance Management (APM) is also a key element of digital transformation, and one of the drivers of GE’s purchase of Meridium, which shifts asset management from reactive, to predictive, to proactive.  ARC also followed up on APM and presented on how APM Overcomes Industry Challenges focusing on how APM improves performance, reduces unscheduled downtime, lowers asset lifecycle costs, and provides a platform for innovation.

In Summary, Oil & Gas Companies Must Pursue Digital Transformation and IIoT Strategies to Survive Long-Term

Even in a time where many Capex budgets has been adjusted to the scale of todays and forecasted prices for a barrel of oil, digital transformation and IIoT projects remain on the table because of their often quick ROI’s and positive bottom line impact. This interest in digital transformation and IIoT was demonstrated by the number of C-level executives that traveled to Florence, Italy to attend the GE Oil & Gas annual meeting. Digital transformation and IIoT are becoming increasingly embedded into numerous applications, such as APM and condition monitoring, and these senior executives want to learn more about these technologies and how they can be deploying in their respective organizations and deliver quick ROI and increases to bottom line results. This exposure of GE’s Predix to the C-level executives bodes well for it to become an increasingly embedded part of these digital transformation and IIoT applications for many of the world’s major Oil & Gas companies.

This exposure of GE’s Predix to the C-level executives bodes well for it to become an increasingly embedded part of these digital transformation and IIoT applications for many of the world’s major Oil & Gas companies.

About the author

Craig Resnick

ARC Advisory Group

Craig Resnick covers the PLC, PAC, HMI, OIT and Industrial PC markets as well as the Packaging, Plastics and Rubber Industries for ARC.  He is the primary analyst for many of ARC’s Automation Supplier and Financial Service clients.  Craig’s focus areas also include Production Management, OEE, HMI Software, Automation Platforms, and Embedded Systems.  Craig has 30 years’ experience in sales, marketing, product development, and project management in the industrial market, gained with major suppliers of PLCs, process control systems, power transmission equipment, and field devices.  Craig is a graduate of Northeastern University with an MBA and BS in Electrical Engineering.

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