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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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Focus Magazine Explores the Future of Energy

If you could look into the future and get information about when your car might break down, or your water heater leak, you would probably find it very helpful. The information would allow you to take care of any potential problems before they actually develop. Many industries are now taking advantage of this kind of predictive knowledge, made possible by sensor technology, which allows for remote monitoring of assets. Read More »

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Seeing is believing – Graphics Conference first day brings together industry players with Cisco

No longer just the domain of gamesters and young-at-heart, the graphics industry is now providing stunning performance to all sorts of industries such as manufacturing, finance, healthcare and design. Perhaps none more so though than the Oil and Gas Industry, as companies explore in harder-to-get-at places and dangers to workers are greater than ever. The GPU Technology  Conference in San Jose this week showed how far we’ve come in accelerating energy discoveries with less time spent travelling to far off dangerous environments.

So what’s it all about? Well, for starters four partners – Cisco, NetApp, NVIDIA and Citrix have got together to change the way users of high performance graphics applications can be used in remote and local environments. Normally geophysicists and geoscientists using, say, Schlumberger or Halliburton seismic analysis software use powerful (but expensive) workstations or have to work close to large central datacenters to get the kind of performance they need to get their applications running fast enough and their graphics visualizations looking smooth and not jittery.

That’s where the four partners come in. Putting it simply Cisco and NetApp provide a best-in-class virtualized data center with ‘Flexpod’, then NVIDIA provide high-performance  GPUs (Graphics Processor Units) that slot into the Flexpod (remember it’s based on Cisco UCS so have heaps of flexibility), and then remote users can access their graphics applications on inexpensive devices (even tablets!) using VDI (Virtual desktop infrastructure) software from Citrix. This is on show in various places in the Exhibit hall, including Cisco’s booth # 219.

What does it all mean? Well, for starters, really fast loading of the datasets – no waiting around in the break room for ages! Also – remote access to the analysis of the data – so the data never leaves the datacenter so better security. Add to that the possibility that scientists can now work together using Cisco and other collaboration tools, and productivity just got a shot-in-the-arm. The demo stowed the applications running remotely – performance was indistinguishable from running locally on expensive and cumbersome workstations or on local datacenters!

Folks at the booth were impressed. “Wow – that’s graphics visualization and analysis on steroids'” said one visitor. “We could really use that where I work” said another (yes, we’ll be following that one up!).

Other highlights today were Cisco presenting the benefits of UCS to a sizable audience, and Dassault Systems, an accomplished Cisco UCS user, talking about how they use NVIDIA GRID and CISCO UCS for Graphics Virtualization. Laurent Seror, Founder and CEO, Outscale, presents. Tomorrow we’ll hear from the Ford Motor Company with a presentation entitled ‘So you want to Deploy High Resolution Graphics Desktop Virtualization’. Chip Charnley, Technical Expert, Client Technologies, Ford Motor Company will review both the process of doing, and the results of the Proof of Concept for implementing XenApp and XenDesktop that was conducted jointly by Ford Motor Company, Citrix and Cisco. Read More »

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The Information Driven Enterprise in a Connected World

Join me at the ARC Industry Forum Europe 2015 –  March 4-5, Amsterdam, The Netherlands – where this year the theme is ‘The Information Driven Enterprise in a Connected World’.

“New and emerging technologies such as the Internet of Things, predictive analytics, wireless, additive manufacturing, modular and mobile production, cloud computing, mobility, and 3D visualization are beginning to disrupt and radically change the way industrial enterprises do business.  Departing from the characteristic industry prudent innovation, leading companies now recognize that they must embrace new information, automation, production, and supply chain technologies to maintain a competitive edge.” (Arc Forum Executive Team)

The Forum is aimed at CEOs, COOs, and Presidents, CIOs and CTOs, and I shall be hosting a couple of sessions on the agenda:

The first day I’ll be driving a session on Collaboration and Organization, and the second day a plenary workshop on Industry 4.0, Industrial IoT, Dig Data, Analytics and the cloud:

ARC Forum 2015 Ams

Join me if you can. If you have a good case study from your company I’d be happy to buy you one of our great beers brewed in the Netherlands so that I can listen!

Registration Methods
Please use one of the following methods to register for the Forum:

Call +49-(0)2104-28698 (ext. 87 or 89), fax +49-(0)2104-542013, or e-mail ablech@arcweb.com or  rkilies@arcweb.com.

Register On-line

Read More »

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2015 Strategic Directions: Smart Utility Report

Founded in 1915, Black & Veatch is a leading global engineering, consulting and construction company, specializing in Energy, Water, Telecommunications, Federal, and Management Consulting. Black & Veatch’s annual Strategic Directions Report identifies top of mind issues based on a compilation of data and analysis from an industry-wide survey. The complete report is available from the Black & Veatch website.

“The annual Strategic Directions report series captures Black & Veatch’s global engineering and thought leadership expertise across key elements of the critical human infrastructure market.… This report represents the evolution of Black & Veatch’s inaugural Strategic Directions: Utility Automation & Integration report, with an expanded focus on automation and integration and utilities’ efforts to harness data to make operations and service delivery more efficient.

Black & Veatch 2015

The major sections of the report address:

  • Utility Telecommunications
  • Utility Automation
  • Data Analytics
  • Smart Communities
  • Perspectives

The report notes that utilities and communities, with the proliferation of smart devices, automation and the use of analytics are transforming development and delivery of key infrastructure services to become more responsive, efficient and resilient.

Especially relevant to Cisco’s engagement with the utility industry and communities around the world is Black & Veatch’s observation that as legacy equipment is replaced or upgraded, IP-based technology is creating new opportunities. Connected devices on utility telecommunications infrastructure is now widely recognized as “…an essential element of the Internet of Things (IoT).

Advanced metering Infrastructure (AMI) has often been thought of as synonymous with “Smart Grid”, but the expectations of real-time pricing or even time-of-use (TOU) rates and demand side management are far from the top of the list of top areas enabled by increased data management and analytics. The top three listed in the report are:

Asset Management (67%)

Capital Investment (45%)

Customer Service/Engagement (27%)

More than 63% of electric utilities report plans to replace, upgrade or build communications infrastructure in the next 5 years, with IP leading the way as the network protocol standard including SCADA systems.

“Some utilities are completely embracing a converged mentality and running everything over a shared infrastructure, while others are moving more cautiously by keeping protective relaying and other mission-critical applications separate from the converged network.

The report notes that some utilities are more focused on the cost of maintaining and replacing outdated equipment and are unconvinced that smart grid technologies and automation are critical, but concludes, “Staying on the sidelines carries risk.”

Budget concerns dominate the obstacles to new technology implementation, and convincing stakeholders is key to addressing cost and perception issues.

The report concludes that the adaptive planning enabled by IP communications and advanced analytics allow leaders to effectively address core management functions of Strategic Options Assessment, Asset management and Operational Planning.

“For organizations that provide essential services, this represents the greatest transformation in utility operations in decades. For the smart city, it will facilitate the transformation to becoming a better place to live and a more friendly and desirable place to do business for generations to come.”

Black & Veatch and Cisco partner to create architectures for electricity, natural gas, solar and wind customers that provide secure and optimized network integration for smart grid environments. If you’d like to know more about our work together, contact me by commenting on this blog.

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