The oil and gas industry is embracing digital transformation. As a traditional pillar of the energy sector, the oil and gas industry has always had an important part to play in the energy field. However, these are challenging times.
On one hand, the industry is subject to increasingly complex mining conditions and, with that, higher mining costs. On the other, it is faced with tumbling global oil prices that bring new challenges to all players in the field. In such circumstances, how can Artificial Intelligence (AI), big data, cloud, and 5G technologies be used to increase efficiency while reducing costs? This is now the key concern of all oil companies.
In sum, it is beyond doubt that the implementation of digital transformation has become a key factor determining the success of oil companies.
The Digital Transformation of Oil Companies Is in Full Swing
According to the China Oil and Gas Industry Development Analysis and Outlook 2019-2020 Blue Book, China imported 505.72 million tonnes of crude oil in 2019, an increase of 9.5% year on year, representing an import dependence of 70.8%. The year’s natural gas imports reached 96.56 million tonnes, with a year-on-year growth rate of 6.9% and an import dependency of 43%. Both import dependencies increased year on year.
It was in this context that, at the beginning of 2019, China’s three oil giants — China National Petroleum Corporation (CNPC), China Petroleum & Chemical Corporation (Sinopec), and China National Offshore Oil Corporation (CNOOC) — launched a seven-year ‘reserve and production increase’ plan to strengthen oil and gas exploration and development, and improve reserves and production.
However, with the global decline in conventional oil production, oil and gas exploration and extraction are gradually moving toward deep water, pre-salt, and unconventional reservoirs, significantly increasing the difficulties of extraction — and the costs.
At the same time, seismic exploration and oilfield development require increasingly high precision and powerful computing capabilities, to cope with new challenges. It is the application of digital technologies, then, that makes these complex tasks far easier.
According to the International Energy Agency (IEA), the large-scale application of digital technologies can reduce oil and gas production costs by 10–20%, as well as boost global recoverable reserves by 5%. Yet, the full value of digital technologies will be most evident in the extraction of unconventional reservoirs, such as the shale oil and ultra-deepwater oil and gas.
Unsurprisingly, global oil companies now regard digital transformation as a key strategic development direction. This is driving the industry to achieve disruptive technological innovation, fundamentally reshaping the industry landscape.
It has been reported that global oil companies, including Chevron, Shell, Schlumberger, and CNPC, have all initiated data centre integration and cloud platform construction, to implement centralized management of software and hardware resources, establish exploration and development cloud platforms, and explore new hybrid cloud construction modes. These measures help to reduce the informatization construction and Operations and Maintenance (O&M) costs of oil companies, enhance their core competitiveness, and accelerate their digital transformation.
Two years ago, BP, a multinational oil and gas company headquartered in London, UK, acquired Ubiworx, an Irish Internet of Things (IoT) company, to build more interconnected, intelligent, efficient, and sustainable energy systems. The acquisition strengthened BP’s existing renewable energy development and energy storage capabilities, now complemented by Ubiworx’s advanced Machine Learning (ML) and AI technologies.
Elsewhere, a year ago, ExxonMobil established a partnership with Microsoft, to improve upstream production activities through Microsoft’s ‘data lake’ platform. Further, the company laid out its plans to invest approximately one billion US dollars each year in ML research. ExxonMobil has also deployed an AI-powered program to manage its global refineries and chemical plants. Capable of monitoring the data of millions of sensors, the program helps the company obtain crucial data and information, such as oil flow data.
Chinese oil companies are also cooperating with Information Technology (IT) companies to explore the road to digital transformation, including large state-owned enterprises like CNPC and Sinopec. Both have cooperated with the likes of Huawei and Microsoft to explore digital transformation in the oil and gas industry.
As Yang Hua, when serving as the Chairman of the Board of CNOOC, noted in a letter to all of the company’s managers: “The oil and gas industry must go digital to adapt to the data era; otherwise, there will be no future.”
Huawei is a Next Generation Oilfield Service Giant
Evolving from a vendor that simply provided switches, routers, and network devices, to becoming a full partner dedicated to providing digital transformation solutions, Huawei now works with partners and customers alike to jointly promote the application of 5G, AI, and big data in the oil and gas industry. It continues to explore new technologies and fresh applications — this is where solutions to the current challenges lie. Indeed, Huawei is combining its strengths with players in the oil and gas industry to bring more value to the sector as a whole.
“Working with partners, Huawei planned and built a computing AI platform for an industry customer, to implement AI training and big data analytics. This has, in turn, led to an increase in both oil and gas reserves as well as production. Indeed, solutions have been implemented in various scenarios, including artificial-lift fault diagnosis, well-logging and reservoir identification, and seismic first arrival wave identification, extracting significant value from unutilized — formerly ‘useless’ — data,” said David Sun, Vice President of Huawei’s Enterprise Business Group, at the Huawei Global Oil & Gas Virtual Summit 2020 held on July 15.
Seismic data collection has long been a heavy, time-consuming, and labor-intensive task. However, with 5G, this burden can be lifted. Partnering with a customer, Huawei put 5G network features to work — including high bandwidth, wide connectivity, and low latency — to help achieve high-speed backhaul of seismic data, reduce the manual cabling workload, and significantly improve the efficiency of seismic data collection.
Elsewhere, Huawei has successfully delivered a High-Performance Computing (HPC) cloud data centre for CNPC’s Daqing Oilfield, helping to solve computing performance and data storage problems, greatly reducing the customer’s initial investment and improving work efficiency. In particular, this has increased computing power eight-fold. Similarly, Huawei’s solution has improved pre-stack seismic data processing capability by five times, from handling 400 km2 to handling 2000 km2 each time.
“In this cloud environment, we have also introduced AI and big data analytics capabilities to Daqing’s current workflow. This has allowed 10 PB of historical exploration data to be reused, extracting additional value from it to allow better, faster decisions to be made, adding significant overall value to the oilfield’s operations. This effort has allowed Daqing to take a big step in its digital transformation journey,” said Wang Hao, Chief Technology Officer (CTO) of the Oil & Gas Development Department for Huawei’s Enterprise Business Group.
Huawei Is Committed to Becoming a Trusted Partner in Oil and Gas Digital Transformation
In addition to upstream exploration, Huawei’s Information and Communications Technology (ICT) extends into oil and gas production and O&M processes. AI, big data, and industrial IoT technologies are all used to predict potential faults in oil and gas field production.
“Now, with the increasing prevalence of industrial IoT, AI, and ML, we have not only established a multi-parameter quantitative diagnosis model, but also a prediction model, considering multiple data such as well production performance, reservoir properties, well trajectory, pumping rate, and related electric parameters. With this ability to predict potential issues, customers can take appropriate action ahead of time, to solve potential points of failure in advance: well production performance remains uninterrupted and the additional costs involved in any shut-in are avoided,” Wang Hao said.
Elsewhere, Huawei 5G networks are already being used in oilfields and stations to support robot inspection, drone inspection, and Augmented Reality (AR) and Virtual Reality (VR) applications.
Huawei has built the largest industrial 5G field lab in the largest refinery in Europe. Deploying 5G network features — including enhanced bandwidth, millisecond-level low latency, and mass connectivity — Huawei has made processes that once seemed only possible in the distant future, a reality today.
“Along with developing cutting-edge ICT technologies, Huawei is building a vision at the corporate level and is committed to bringing digital to every person, home, and organization for a fully connected, intelligent world. This vision is no different in the oil and gas sector. Indeed, Huawei is striving to become one of the leading partners for digital transformation in the energy field. We have already demonstrated the use of new ICT in diverse scenarios in the oil and gas industry, helping our customers to achieve a more profitable upstream, safer midstream operations, and a more valuable downstream,” Wang Hao pointed out.
To ensure rapid advancement in the development of ICT, Research and Development (R&D) is a key focus for Huawei. Half of the company’s global workforce — more than 90,000 people — work in R&D, including over 3000 AI experts. With 14 R&D institutes located around the world, along with 36 joint innovation centres, Huawei is working ever more closely with industry customers in challenging times. Indeed, Huawei already works with 19 of the top 30 oil and gas companies, in 45 countries and regions across the globe, helping them achieve digital transformation success.
David Sun noted that, over the past decade, Huawei has partnered with customers in the oil and gas industry and together witnessed oil prices peak at 120 dollars per barrel, as well as fall to a low of 30 dollars. Along the way, Huawei’s role has changed — and upgraded — with the support and help of oil and gas companies. As he concluded at the Huawei Oil & Gas Virtual Summit 2020: “According to IDC’s latest survey, Chinese industrial users see Huawei as the digital transformation leader, ranking number one. In the future, we hope to share Huawei’s digital transformation capabilities and experiences in China’s oil and gas industry with global customers, to help achieve even greater business success.”