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Digital Transformation in the Oil & Gas Industry: “Drill, Data, Drill!”

“Drill, baby, drill” makes for an easy mantra when it comes to energy exploration, but the oil and gas (O&G) industry moved past simply drilling long ago with the introduction of digital information processing. For example, integrated production modeling was introduced in the 1970s. With the recent turmoil in the energy industry, the stakes are even higher for O&G companies to work smarter and more efficiently. Forward-looking businesses are making the transition to true digital transformation, which requires the adoption of the Internet of Everything (IoE)—the networked connection of people, process, data, and things—throughout the entire O&G value chain. According to a recent Cisco study, of these four IoE elements, essential “data” is the component most in demand—and the element that needs the most improvement.

Survey respondents identified “data” as the area of IoE they need to improve most to drive insight and value.

Survey respondents identified “data” as the area of IoE they need to improve most to drive insight and value.

However, in many cases it’s not data that’s lacking; O&G firms are awash in data generated by sensors and machines spread throughout their far-flung operations. The struggle comes in capturing real-time operating data closest to the point it’s created, analyzing it in real-time and applying the results to improve functional and business capabilities. To capitalize on the wide range of data IoE generates, O&G firms must overcome three key challenges:

  • Automating the collection of data
  • Integrating data from multiple—and often far-flung—sources
  • Analyzing data to effectively identify actionable insights

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Cisco Live 2015 has a Secure Ops Solution Demonstration Area

Many of you know about the Cisco Secure Ops Solution that was announced in 2014, and that it has already been adopted by Shell to secure the company’s critical infrastructure, but may not have seen a demonstration or talked with a Cisco subject matter expert about it.

Cisco Live, San Diego, CA, USA

Cisco Live, San Diego, CA, USA

Well, here’s your chance. We have arranged for a booth in the industrial vertical area at the World of Solutions at Cisco Live in San Diego to show just that. We’re pleased to be accompanied by one of Cisco’s security partners to show new features and functionality that takes Secure Ops even deeper into the cybersecurity protection and surveillance arenas.

The Cybersecurity space is getting more and more alarming every day. As my colleague Peter Granger notes, we have gone from the quaint world of Sherlock Holmes…

Sherlock Holmes: I didn’t really ask, Dr. Franklyn, but what exactly do you do here?

Dr. Franklyn: Oh, Mr. Holmes, I’d love to tell you. But then of course, I’d have to kill you.

Sherlock Holmes: That would be tremendously ambitious of you.

…past the pseudo-high-tech world of James bond and closer to a more modern world reminiscent of Kiefer Sutherland’s character Jack Bauer in the TV series ’24’. Today’s Cyber attacks are not just disgruntled employees or simple mischief makers (although that’s bad enough), but can be carried out by powerful crime syndicates and hostile governments.

Now more and more attacks are becoming visible and reported (e.g. Stuxnet like ‘Havex’ malware strikes European SCADA Systems – June 2014) and whether they are a terrorist attack such as the data destruction attacks on Saudi Aramco and on Qatar’s RasGas gas company in 2012 or unintentional (the vast majority of reported cyber incidents are ‘accidental in nature’ as reported by the Repository of Industrial security incidents, 2011), billions of dollars are lost every year because of them. Night Dragon, Shamoon, Flame, and Duqu have joined Stuxnet in the past few years and more will come.

A study by Fox-IT reported that 60 percent of oil and gas companies do not have a cybersecurity incident response plan. In addition, only 11 percent are fully confident that they can address a cybersecurity breach appropriately. Twenty-three percent admitted that they are not actively monitoring their network for potential intrusions.

How can Cisco help your energy organization? You can find out more by visiting our cisco.com website, and check out the Security for Industrial Networks Overview/White Paper (don’t worry, it’s less than 3 pages!).

Security continuum #1And, of course, you can also visit us Cisco Live: there you’ll see how the Cisco Secure Ops Solution is relevant to many industries and is helping tackle our customers’ security challenges. A combination of technology, software and services expertise, Secure Ops Solution can help you increase your security response levels significantly – before, during and after an attack, across the entire attack continuum.

Don’t forget our other presence there around the Collaborative Operations Solution, which my colleague Suresh Venkat talks about here: What does a Cisco Live Demonstration have to do with droughts, floods and fossil fuels?

We look forward to seeing you in the Process Manufacturing Secure Industrial Networks booth at the World of Solutions next week.

As always – comments are always appreciated and we respond to questions!

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What does a Cisco Live Demonstration have to do with droughts, floods and fossil fuels?

In days where smartphone and staying connected have become living necessities, we forget that there are natural resources that are equally important.  In times where television, microwave, refrigeration, network connectivity have all become baseline requirement for living, we assume there will be endless supply of natural resources.

Visit us at Cisco Live 2015

Visit us at Cisco Live 2015

We are observing unprecedented droughts running throughout the world while some places are facing floods never seen before.  We are waking up to the awareness that we need to take care of earth and leave it better for our children and the upcoming generations.  Ask a kid growing up in India, my dad used to mention that fuel might not last another 40 years.  Forty years hence we have seen a lot of changes and there is no clear alternative to fossil fuel and our dependence is only increasing.

Fossil fuel is a powerful economic resource that countries are frantically looking for new resources in unexplored areas of the world.  It undoubtedly creates economic strength, jobs and ability to make difference in citizen’s lives.  The consumption of fuel is steadily increasing with increasing population.  Third world countries are bringing in a lot of additional vehicles on the road and in the process also try to move its economy upward.

As the need, dependency of fuel increases with the threat of depleting natural resources, it becomes imperative to improve efficiencies wherever and whenever possible.  It should start from exploring all the way to the end users consuming the natural resource.  To this effect, productivity and reduced down time directly means competitive edge and increased profitability which is fundamental concern across the board to enterprises.

Cisco Collaborative Operations Solution Screen Shot

Cisco Collaborative Operations Solution Screen Shot

To enable improved productivity in a process centric environment one looks for tools to enable this.  Collaborative Operations Solution from Cisco is one such tool that helps with increased productivity.  All one needs to do is see the demo and they can immediately see the value such tools can bring to their process and enable faster decision and reduce flat times.

Come see a demonstration at Cisco Live in the World of Solutions in the Process Industries section. You’ll see the Collaborative Operations Solution in action, and see how partners such as Librestream add value to the solution. In the case of Librestream you’ll see how Mobile collaboration becomes a reality, and how Librestream and Cisco are working together to provide our customers with real business value and positive business outcomes.

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Summary: #DigitalTransformation Fueling the Need for Workforce Transformation

In case you missed it, here a summary of Karen Walker’s latest blog on the IoE Blog site that reaches out to all those in the Oil and Gas Industry:

“…we recently published a new report that shows a global oil and gas (O&G) industry awash with disruption, and primed for digital transformation. Low oil prices have upended the sector, spurring an urgent rethinking of strategy by oil and gas executives—and accelerating the adoption of IoE.”

kwalkerKaren Walker, Senior Vice President of Marketing at Cisco and interim CMO, highlights some of the key findings from the report:

“To become agile enough to compete in the IoE Era, the oil and gas workforce must possess a mix of technical skills, industry knowledge, and business acumen. With talent shortages due to massive numbers of professionals retiring over the next few years—and a lack of necessary digital skills among those who remain— O&G firms need to make bold moves to transform their workforce strategy:

  • Extend the reach of existing expertise –Video-based collaboration can help bridge the expected talent gap by making the most of professional expertise that is spread too thin, as well as providing ongoing training throughout the organization.
  • Attract digitally-savvy talent – As up to 50 percent of oil and gas workers prepare for retirement in the next five to 10 years, who will be the next generation of workers that replaces them? An earlier Cisco report showed the next wave of digital transformation will be all about capturing timely, actionable insights from the deluge of data being generated by the Internet of Things (IoT), a key enabler of IoE.
  • Bridge the silos – In addition to analytics expertise, O&G companies will need employees who can see and work across the boundaries between IT and operational technology (OT).
  • Create a culture of innovation – O&G companies don’t compete just with each other for top talent, they compete with the likes of Google and Facebook. The best and brightest data scientists and software engineers want to be on the leading edge of innovation, not mired in “the way we’ve always done it”.”

Read the full blog to find out further insights here:

#DigitalTransformation Fueling the Need for Workforce Transformation

…and, as always, let us know what you think!

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Driving Operational Excellence Through Digital Transformation in Oil & Gas

mcappett2

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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