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Driving Operational Excellence Through Digital Transformation in Oil & Gas

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Marcel Cappetti

Guest Blog by Marcel Cappetti, Managing Director, Oil and Gas, Global Enterprise Theater

I’ve just returned from CERAWeek in Houston—an international event that could be described as “Davos for the energy industry.” It’s a gathering of the power elite, including industry, finance, technology, and government leaders from around the globe. For me, it was the perfect sensing post for all the angst and opportunity that pervades the industry today.

It was my privilege to participate in a panel on “Leveraging Operational Excellence to Drive Margin Expansion”—a key concern of oil and gas (O&G) executives following the crash in oil prices. Too often in previous downturns, companies have relied heavily on deep cost cuts—including massive layoffs and cancelled projects—to keep margins afloat. But this time seems different. There is general agreement in the industry that we will not be returning to $100-a-barrel oil prices any time soon. So it’s time for more than a course correction. It’s time for digital transformation. Digital transformation will drive operational excellence and, yes, margin expansion.

Marcel at CERAWeek

During my talk last week, I shared highlights from a new Cisco study discussing the new reality in O&G and the opportunity for digital transformation through the Internet of Everything (IoE)—the networked connection of people, process, data, and things. Key findings include:

  • “Operational efficiency of existing projects” and “maintenance of assets and infrastructure” will be the top two areas of increased investment over the next 24 months.
  • O&G leaders clearly understand data’s potential—they named “data analytics for faster, better decision-making” as the No. 1 driver for IoE investment.
  • Business transformation—including breaking down organizational silos and converging IT and OT people, processes, and technologies—is essential for digital transformation. According to Cisco’s study, 59 percent of respondents do not believe their IT and OT organizations are aligned.
  • Companies that transform will have a significant bottom-line impact. Analysis by Cisco Consulting Services shows that by implementing a range of IoE-empowered solutions, oil and gas companies can capture their share of $600 billion of Value at Stake between 2016 and 2025. For a $50 billion firm, this translates into an 11 percent bottom-line (EBIT) improvement.

Cisco can help O&G companies in their journey to digital transformation through the investments we have made in key technologies—such as analytics, data, sensors, wireless, and mesh—and through solutions developed with key partners. For example:

  • Remote Operations—Developed with GE, our Connected Oilfield solutions increase personnel safety and improve asset integrity with predictive maintenance; real-time analytics at the edge and virtual expert support enable faster and better decisions.
  • Pipeline Automation—In partnership with Schneider Electric, Cisco’s Connected Pipeline solution uses analytics at the edge to improve security and environmental protection with predictive detection of pipeline intrusion, leakage, and deformation.
  • Wireless Operations—Developed in partnership with Honeywell and Emerson, this Connected Processing Plant solution improves personnel safety and process efficiency with wireless real-time tracking, video analytics, and automated incident response.
  • Secure Operations—Industrial cybersecurity solutions improve security and risk management to combat new and evolving cyber security threats, specifically in the process control domain. A good example is a project for Royal Dutch Shell that provides remote proactive monitoring and SLA-driven management of security, applications, and infrastructure. We are working with industrial control system delivery partners such as Yokogawa Electric and Rockwell Automation to support this solution, which Shell plans to deploy at all upstream, downstream, and lubricant sites.

When the price of oil stood at more than $100 per barrel, the need for oil and gas companies to improve operational efficiencies was primarily driven by the competitive marketplace—and many firms took no action at all. Read More »

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Cisco and Bit Stew Set Out to Transform the Industrial Internet of Things (IIoT) – One Customer at a Time

Kevin Collins

Kevin Collins, CEO and co-founder, Bit Stew

We’ve introduced several of the key figures within Bit Stew and shared with you the ways they are working to bring the IIoT to fruition, particularly within the energy sector.

I had a chat with Kevin Collins, CEO of Bit Stew to discuss the next opportunities for the company:

“It’s an exciting day at Bit Stew, with the announcement of additional funding from Cisco Investments and GE Ventures. With this support, we will continue to bring our experience in managing massive data sets and optimizing edge and fog computing to automate industrial operations in utilities and other industries as well.”

Kevin told me that the new funding will help fuel Bit Stew’s ongoing technology innovation and customer adoption: “This investment will open doors to new market opportunities for Bit Stew, and positions the company as a global leader in Software Defined Operations for IIoT. Bit Stew has quickly become the hot company to watch”.

GRID-EDGE-20Bit Stew was recently recognized to Greentech Media’s prestigious Grid Edge 20 list, as one of the top 20 innovators architecting the future of the electric power industry, along with Tesla, Duke Energy and SolarCity. “Making the Grid Edge 20 provides validation of our strong market traction, and is a tribute to what we’ve achieved since Bit Stew was incorporated in 2009. It also serves as a reminder of the responsibility we have to our utility customers, partners, and the industry as we work towards transforming the power sector to one that is more efficient, reliable and agile.”

Purpose-built for the Industrial Internet
The MIx Core platform is the culmination of years of industry-hardened machine learning derived from trillions of data points analyzed throughout the utility and oil and gas industries. Purpose-built for the Industrial Internet, MIx Core processes and analyzes greater volumes of data than most of the largest social networks in the world every day.

Bit Stew’s MIx Core takes full advantage of Cisco’s IOx technology, by embedding its core technology inside Cisco fog devices, providing data analysis at the edge of the network and in cloud-based systems – all in real-time. Running MIx Core in the “fog” brings a significant new advantage for organizations that are dealing with massive amounts of data running on complex networks in the IIoT

“Bit Stew’s collaboration with Cisco and the synergy between our Mix products and Cisco’s IOx platform has allowed us to utilize fog computing to completely revolutionize the way the energy sector operates,” Kevin said. “By using the edge of the network in the computing and analysis process, together we can create instant intelligence that is shared simultaneously in the operations center and in the field. This contextual analysis of industrial operations enables decision-making with a confidence that wasn’t necessarily available before. This expanded awareness results in increased up-time, faster issue resolution and optimized dispatch of resources,” adds Kevin.

Clearly Bit Stew is going places. And not just with utilities anymore. Find out more here: Read More »

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Securing Your Industrial Networks by Aligning IT and OT

In the first six months of 2013, 53 percent of cybersecurity incidents were in the energy sector, according to the Department of Homeland Security. As cyber-attacks are becoming increasingly prevalent in industries that support our critical infrastructure, it’s crucial that business leaders adopt security process designed to address these new threats. Are you ready?

While I was at CERAWeek last month, former US Secretary of Energy, Daniel B. Poneman, and Under Secretary, NPPD, US Department of Homeland Security, Suzanne Spaulding had a  message to attendees. Their message was clear:

Cyber Security is a “C-Suite” topic of Enterprise Risk Management.

Their recommendations are strong: Security needs to be baked it in from the beginning! Physical and Cyber Security and Secure Coding of Software!

• Implement Layered Protection; we cannot depend on just a perimeter defense
• Apply Cyber Security Framework: 1. Assess, 2. Protect, 3. Detect, 4. Respond, 5. Recover
• Attend to the nexus of Physical and Cyber Security
• Test your response, including business recovery and continuity

Digital strategy and business strategy are becoming one and the same. Forward-looking energy firms see opportunity in today’s turbulent market and seek to pull ahead by changing their operating models through the Internet of Everything (IoE). Transformative digital technologies have to potential to deliver many advantages to O&G firms, including increased business agility and risk awareness, lower cost of operations, and reduced downtime. But before the industry can embrace these new strategies, an effective, end-to-end cybersecurity approach—including alignment between IT and OT—is needed.

Security a Catalyst for Transformation
Digital transformation means that a range of new and diverse devices are connecting to industrial oil and gas networks, generating greater amounts of data. When managed effectively, this data delivers the right information to the right place, at the right time, helping create a competitive advantage. However, as the IoE proliferates, the accompanying explosion of devices and applications will lend itself to increased areas of attack that criminals will seek exploit.

Oil and gas companies must replace traditional approaches like physical segmentation and security by obscurity. They need an integrated approach where information flows in real time to enable immediate action. Cybersecurity doesn’t need to be an inhibitor. It should be the catalyst for new ways of working. It can help oil and gas companies work more safely and better protect the environment by obtaining remote visibility and control over operations, including processes in refineries. It can make processes more efficient, increase production and reduce overall costs.

Addressing the Entire Threat Continuum
Cyber-attacks occur on a continuum of before, during, and after. The same digital hyper-connectivity that oil and gas managers use to collect data and control machines and processes, can also allow cyber attackers to get into system networks and steal or alter classified information, disrupt processes and cause damage to equipment. Threats to a company’s information systems and assets could come from anywhere. State and non-state actors from around the globe are constantly working to penetrate the networks of energy providers and other critical infrastructures in the U.S.

Energy firms must address this entire continuum with a visibility-driven, threat -focused, and platform-based framework:

  • Visibility-driven means having an accurate, real-time view of the network fabric, endpoints, mobile devices, applications, virtual environments, the cloud, and their interrelationships. High visibility allows you to make sense of billions of devices, applications, and their associated information, while helping you see an attack coming, control the environment, and mitigate threats.
  • Threat-focused means focusing on detecting, understanding, and stopping threats. Policies and controls reduce the surface area of attack, but threats still get through. Focusing on threats can help you identify threats and indicators of compromise based on a well-honed understanding of normal and abnormal behavior. This requires continuous analysis and real-time cybersecurity intelligence across all technologies. With contextual awareness, you can identify false-positives and assess the impact of a threat.
  • Platform-based means we have an integrated system of agile and open platforms that cover the network, devices and the cloud. It is a true platform of scalable, easy-to-deploy services and applications. You gain powerful end-to-end visibility with centralized management for unified policy and consistent controls

Securely Converge IT and OT
As oil and gas companies embrace the IoE, they bring together the use of information technology (IT) and operational technology (OT). Security needs to be as pervasive and applied in a unified way across the extended network. Physical and cybersecurity solutions must work intelligently together to reduce unauthorized system access – in order to protect networks, devices, applications, users and data. For example, in many oil and gas companies today, upstream and downstream domains use different solutions for common tasks such as asset performance management. In addition, OT is often managed autonomously from IT, even for critical functions such as reliability and cybersecurity.

Cisco has the broadest set of solutions covering the broadest set of attack vectors, leveraging both global and local intelligence. Cisco’s Secure Ops Solution is helping oil and gas companies secure industrial control networks by combining on-premises technology, processes, and managed services. For example, Royal Dutch Shell (Shell) was challenged with increasing its security maturity level. By implementing the Secure Ops Solution, Shell was able to improve its cyber security and risk management, lowering costs of delivery while significantly reducing its costs of securing the process control systems that keep billions of pounds of toxic material under control. Cisco Secure Ops Solution provides remote proactive monitoring and Service-Level-Agreement (SLA) driven management of security, applications and infrastructure, making it easier to:

• Manage cyber-security risk.
• Support compliance.
• Secure the perimeter between enterprise and operational networks.
• Implement and maintain layered security controls

How can Cisco help your energy organization? Read More »

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Oil and the Smart Pipe – Article on The Network, Cisco, by Scott Gurvey

Scott Gurvey (the famous New York bureau chief and senior correspondent of the PBS broadcast Nightly Business Report for more than 20 years) has written a thought-provoking piece on “The Network” (Cisco’s Technology News Site).

Safety is the key in the Oil and Gas industry. Whether it’s people, infrastructure, or the environment, the industry is grappling with sometimes controversial issues.

Scott talks about the Keystone XL Oil Pipeline, new technology and the relative safety of different oil transport methods. He quotes James Stafford, the editor of Oilprice.com, as saying that even though moving oil through pipelines is generally considered safer than the alternatives of rail or truck transport, the number of pipeline accidents reported each year remains “unacceptable”

That’s where the new technologies of the Internet of Things comes in. The Operational Technologies (OT) requirements have been different to the IT needs in the past. In my view that’s because of several reasons. The different technologies used for each area gave rise to concern that folks have had about security between networks is one.

Read the latest Thought Leadership for Oil and Gas

Read the latest Thought Leadership for Oil and Gas

Another is that there was also a lack of visibility, and it was difficult for parts of an organization to collaborate with another to sense problems in real time and deliver the right resources to solve them. That’s changing as IT and OT converge. Probably not fast enough for most people’s liking, but that’s owing to the cultural changes needed.

Back to Scott’s article. I’m not going to steal his thunder on ‘Pigs’ (well, Smart Pigs, but still not the kind in your hot dog!), drones (the peaceful kind), or the Analytics challenge the industry faces today. You’ll have to read his article for that.

But I do want to give a plug for the recent thought leadership in the oil industry that Cisco recently conducted (A New Reality for Oil & Gas: Complex Market Dynamics Create Urgent Need for Digital Transformation), which I was proud to contribute to. In it the analytics issue comes to the forefront and IT/OT convergence and Collaboration are seen as essential catalysts for change, with an overarching emphasis on ensuring end-to-end cybersecurity. Read it to see the details. Some might surprise you.

As always, you can learn more about Cisco in Oil and gas here: www.cisco.com/go/oilandgas, and read the latest Secure Industrial Networks with Cisco White Paper (don’t worry, it’s only 3 pages!), by clicking on this link: Secure Industrial Networks with Cisco.

And I almost forgot – if you’re interested in Cisco’s relevance to oil pipelines and that part of the industry, here’s something to whet your appetite: Cisco Connected Pipelines At-a-Glance.

Happy reading! And remember, stay safe out there!

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Summary: A New Reality for Oil & Gas

An excellent post from Mike Riegel talks about how things have changed between the Tech industry and the Oil and Gas Industry over the past 20 years. The conversations he once had with his father-in-law who was at Mobil Oil have changed dramatically since the nineties. Oil companies are now  ‘Digitizing':

  • The Digital Age has come to the Oil industry, and despite the current downturn, the most visionary companies  will have the opportunity to transform their business models for future growth.
  • The recently released report: “A New Reality for Oil & Gas – Complex Market Dynamics Create Urgent Need for Digital Transformation” makes it clear that the move to a Digital Business and the adoption of Internet of Everything is the way forward for the industry and for the global economy.
  • IT and OT (Operational Technologies, sometimes called Automation Control Systems/ACS or Industrial Control Systems/ICS) need to become more aligned out of their silos.
  • Biggest issue the industry faces is the ‘data-deluge’ – there’s a need to do deal with sensor and other data both in real-time at the source (usually the edge of the network) and that stored away in huge historians. Analysis of historical and real-time data is an imperative.
  • The US is well positioned to be the ‘swing-producer’ in the market as a result of their agile adoption of IoE, and the successful companies will take advantage of the market dynamics to invest, whilst others will cut costs, investments and retrench, falling behind. This week at CERAWeek we’ll hear from Marcel Cappetti about that (Wednesday at 11:20 AM).

Check out the full post from the IoE Blog channel here:

20 Years Hence – What Do Oil, Dating, Digital, and Analytics Have In Common?

Mike will no doubt get feed back from his father-in-law this weekend and hopefully we’ll get a report back!

As always, let us know what you think!

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