Digital Solutions Across the Energy Value Chain

Cloud computing is changing the traditional oil and gas E&P business and transforming geoscience workflows.
This article appeared in Vol. 16, No. 4 - 2019


Digital Solutions across the Energy Value Chain

Arno van den Haak is Head World Wide Business Development, Oil & Gas for Amazon Web Services. © AWS. “I have never seen a situation in the oil and gas industry that the use of cloud computing could not improve,” says Arno van den Haak, Head World Wide Business Development, Oil & Gas for Amazon Web Services, a company that has been working in this field since 2006, long before most people had heard of the concept. Amazon Web Services (AWS) is its own company within and is the world’s most comprehensive and broadly adopted cloud platform. “Having built the enterprise infrastructure system to regulate the huge number of transactions which undertakes every minute, the company realized it had a unique skill set to offer to other industries which deal with large datasets, such as health, finance, manufacturing, public services – and, indeed, oil and gas,” Arno explains.

AWS has grown fast in those 13 years, and there is now no industry segment, from public sector and retail to academia and non-profit organizations, in which it is not involved. In fact, most of us use AWS in our everyday lives without realizing it; for example, whenever we watch Netflix, or use banking or ride sharing apps, we are utilizing products which are run through the company’s cloud-based services.

Minimal Loveable Product (MPL)

AWS approaches business challenges through a ‘working backwards’ process which helps customers innovate. “The pattern in the O&G industry has been for people or companies to develop solutions independently and then approach customers and try to make these solutions ‘force-fit’ each individual implementation,” Arno says. “At AWS, we spend time understanding what the significant business challenges are and how we can solve the client’s needs, before ‘working backwards’ to discover what the solution could look like, and then picking the right technology to do it.

“The benefits of this process are that we can work on a very clear problem where the solution can have an immediate business impact. An important aspect of this process is developing what we call the MLP (Minimal Lovable Product!); working backwards allows you to quickly experiment and explore a number of solutions until you know you have the right one. With the cloud you can innovate easily, cost effectively and quickly, getting feedback through it to iterate around a solution to ensure you have the right one for that particular issue. Then you focus on the chosen ‘MLP’ and build out from there. 

“The working backwards process permeates everything we do in AWS. It drives our innovation and data centers to help us come up with new solutions, improve our operational performance and reduce costs to our clients.”

Oil and Gas Industry Examples of Cloud Computing

To see the advantages of cloud computing in oil and gas, let’s look at a couple of industry examples.

The first involves E&P major Shell. The company had realized that its explorationists were spending 70% of their working day just looking for the data they needed before they could start working on it: a waste of both their time and their experience. The solution was a cloud-based ‘data lake’ where all data, structured and unstructured, were accumulated along with the relevant metadata. This enabled the geologists and engineers to access data across different functions, allowing them to incorporate additional information that they did not traditionally use, which they found led to new insights and solutions. “The beauty of this was that not only had this organized data lake helped exploration, but Shell now had a platform that allowed it to run all kinds of machine learning as the data lake has become the foundational piece,” Arno explains.

“Shell has seen a threefold improvement in the effectiveness of its machine learning through using the AWS platform,” he continues. “It realized that this was a solution that changed the way the company looked at the industry in a truly transformative way, so Shell decided to open it up to a consortium of companies in the industry, creating the Open Subsurface Data Universe (OSDU) that is being administered through the Open Group.

“This is what we see time and time again,” he adds. “When people start using the cloud and begin to experiment, they notice the benefits and synergies and identify more and more ways to use it.”

Arno cites another example of the use of a data lake to solve a very specific problem for an operator working in the Permian Basin who was running thousands of beam pumps and needed to reduce the mean time between failures. “In just about four weeks we were able to create a data lake that incorporated both historical and ongoing production data. Based on this, we were able to build machine learning models that allowed the company to predict, with a two-week notification period, when the equipment was likely to fail – with 98% accuracy.

“This shows how you can harvest all that old data that you have been sitting on for years, and turn it into meaningful information that can drive successful business outcomes. We describe this process as going from hindsight to insight to foresight. You not only understand what has happened, but you have the insight to understand why it has happened and the actionable knowledge to prevent it from happening again.”

Connected Oil and Gas Value Chain: From E&P to Petrol Pump

The oil and gas industry has a long and complicated value chain stretching from upstream, midstream and downstream to retail and trading, and a large element of the work involved is done by organizations outside the large oil companies. Many believe that this is where digital transformation can offer considerable value. In fact, a recent report by McKinseys suggested that the value of AI alone in supply chain management for O&G is in the region of $400 bn, while a World Economic Forum study suggests the value of digital transformation to the industry to be as much as $1.5 trillion.

Arno agrees that one of the most important things cloud computing can offer the oil and gas industry is that it can connect right across this value train, from E&P to the petrol pump. “The O&G industry traditionally takes a rather ‘silo’ approach to the use and storage of data,” he explains, “but what we are seeing is that with the tools and services available through the onset of the cloud we are able to bridge those silos; this is true digital transformation, allowing us to change the workflows dramatically to increase productivity.”

As Arno explains, the example described above in the Permian Basin demonstrates how using cloud data in one part of the operation can spread the advantage through the value chain, as the operator in question can now go back to vendors and suppliers and share the value of an optimized supply chain, driving value for everyone.

High Performance Computing in O&G

The AWS ‘Snowballl’ captures raw seismic data and allows for some field processing before quickly ingesting the data in the AWS cloud. This eliminates the need for tape, thus transforming the seismic acquisition workflow. “One of the areas where we are seeing how the cloud is transforming the industry is in high performance computing,” Arno says. “We have an example from Germany, where an oil and gas company had been taking about 100 days to run 100 simulations, but by using the nearly unlimited compute power of the cloud, this was brought dramatically down to just four days.

“Another example of how high-performance computing is really changing the way we look at development is the ability to use this huge compute capacity to create different optimization algorithms,” he continues. “Working with a number of academic organizations in the UK, for example, recently we were able to double the NPV of an existing development plan using these new algorithms, taking into account 30 equally-probable geological models. What’s more, the total cost of the cloud computing needed to make this dramatic improvement was less than the cost of a single day of an external consultant’s time. This demonstrates the fact that on-demand cloud-based IT resources with a ‘pay as you go’ model via the internet are available at a reasonable cost to everyone, from large E&P companies to small independents, service companies and consultants.

“Whether you are a billion dollar company or a start-up, you have the ability to use the same resources, on demand; this is really leveling the playing field across the industry. In fact, we have found that when start-ups begin by using the cloud, they see the benefits and stay with the cloud as they grow, providing them with agility and flexibility at the lowest cost.”

Cloud Computing in the Oil and Gas Industry: The New Normal

The benefits of cloud computing and digital solutions within the O&G industry are constantly growing, Arno believes. “People are seeing the benefits coming to them not just through lower costs, but also from the agility and elasticity of the cloud, and the ability to innovate and leverage the on-demand services.

“More importantly,” he adds, “the use of machine learning can be seen to support geoscientists in their day to day work. Using machine learning for interpretation around salt bodies or to automate horizon and fault picking, for example, reduces the time spent on these sometimes tedious tasks, allowing the geoscientists to spend more time innovating and being creative. I think this is transformational for the industry; we are not seeing these tools replace our geoscientists and reservoir engineers, just giving them more time and making them more efficient and augmenting their skills.

“This is a growing trend,” Arno says. “Two or three years ago the questions were about ‘if’ and ‘why?’; now it is simply ‘how fast can we move to the cloud?’ The speed at which companies are shifting to building applications in the cloud and using machine learning is accelerating fast and the network of users and partners is constantly growing.

“In oil and gas, as in other industries, using the cloud has become the new normal.”

Further Reading on Using Cloud Technology in Oil and Gas

On-demand Global Seismic Data
A Minute to Read: Searcher Seismic have recently launched Saismic™, a cloud-based service that provides global seismic data on-demand with native support for deep learning and advanced analytics.
This article appeared in Vol. 16, No. 3 - 2019

Using Cloud Technologies in Geosciences
Rhian Burrell, Charles Jones, Joseph Nicholson and James Selvage; Osokey
How can cloud technologies help me as a geoscientist? Here we offer a demystifying guide and provide the answers to some of your questions.
This article appeared in Vol. 16, No. 2 - 2019

Digital Transformation to Boost Oil and Gas Production
Patrick Meroney, Katalyst Data Management
In the upstream oil and gas industry, digital transformation is changing how companies do business. According to Booz Allen Hamilton (December 2018), digital transformation of E&P proprietary data could save the industry as much as $1 billion each year while boosting hydrocarbon production by up to 8%.
This article appeared in Vol. 16, No. 3 - 2019


Related Articles