We are in the midst of a revolution. Digital technology is transforming every aspect of human lives, levelling the playing field and causing shifts in the balance of global power. Germany has sought to hijack and capitalise on this movement to the benefit of its manufacturing sector by labelling it ‘Industrie 4.0’ (Industry 4.0) and positioning itself as the world leader. While creating a focus for research and development (R&D) activities in larger Germany companies, its allimportant ‘Mittelstand’ or small and medium enterprises (SME) sector has been a bit slower to adopt the emerging technologies, and it is debatable whether Germany really is the global leader.
Suffice it to say that companies in all sectors and of all scales that most successfully embrace digitalisation are those that are likely to emerge as being leaders in competitiveness and profitability (the survivors). The oil and gas sector is no exception. Critical success factors in five years’ time could be quite different from those of today.
Industry 4.0 can be described as the integration of physical and cyber systems. It brings together several different technologies, each of which enhances operational and business effectiveness, but when put into a single, seamless system are revolutionary.
Why is it called Industry 4.0? Well, because it is seen by many as the fourth major industrial revolution.
INDUSTRY 1.0 (1760s) – Factory system with steam power – industrialisation and mechanical production
INDUSTRY 2.0 (1900s) – Mass production system with electricity – Taylorism and Fordism
INDUSTRY 3.0 (1970s) – Automated manufacturing with electronics – robotics and automation
INDUSTRY 4.0 (2010s) – Cyber-physical systems – total integration and autonomous manufacturing systems.
While the original focus of Industry 4.0 has been manufacturing, the oil and gas sector is also expected to be radically transformed. Uncertainty about future demand and low prices means that the industry is looking for cost savings, and Industry 4.0 can deliver. It is estimated that close to $1 trillion will be spent per year between 2016 and 2020 on Industry 4.0 (Infosys, 2018). Technology, in the form of shale oil and gas, has shaken up the sector in the past 10 years and Industry 4.0 will define it for the next 10. Technologies deployed in the Industry 4.0 system include:
• Big Data & Analytics
• Cloud Computing
• Cybersecurity
• Artificial Intelligence
• Internet of Things and Smart Sensors
• Advanced Robotics (e.g., human/robots co-working)
• Additive Manufacturing
• Human-Machine Interface (often through mobile or head-up displays)
• Virtual Reality and Augmented Reality
• Simulation
Implementing any of these technologies will take you a step closer to Industry 4.0, but it is really the synthesis of a number of them, together with reconstituted vertical value chains (the life of a product extraction to end user) and your horizontal value chains (how you work with internal and external partners in doing business), that makes Industry 4.0. This might imply changing business models entirely.
An example from the manufacturing realm is Rolls Royce Aerospace, which shifted from selling jet engines to providing propulsion as a service to its airline customers through its ‘TotalCare’ offering. At any time, its ‘Airlines Aircraft Availability Centre’ is connected to and monitoring all Rolls Royce products, which it owns, deployed in aircraft around the world. Its ‘IntelligentEngine’ concept means that engines are constantly connected and aware. They can optimise fuel economy for weather and air traffic conditions in real time and if a fault occurs, before the aircraft even lands, maintenance services are mobilised at the destination. What about spare parts? In the future, they will be 3D- printed in high strength material as needed on-site. No spare parts logistics network will be necessary. The airline avoids maintenance downtime and Rolls Royce has an uninterrupted revenue stream from its product.
Conversion of vast quantities of data obtained from smart sensors on Internet of Things (IoT) connected equipment into something meaningful for business decision-making is one of the most challenging aspects of the journey to Industry 4.0. Big data and artificial intelligence-based data analytics are critical here.
Ultimate Industry 4.0 systems will be self-aware and self-healing. Automated diagnostics already exist and, in the not-so-distant future, equipment will become ‘self-healing’; automated maintenance and repair, possibly involving advanced robotics, will execute a repair without any human involvement. A leaking pipeline? It will be detected by sensors, diagnosed by autonomous monitoring drones and repaired by bots in minutes.
In the oil and gas sector, Industry 4.0 has relevance in the upstream, midstream and downstream. Upstream, improved analytics and 3D visualisation from seismic surveys will provide a more precise geological mapping; then autonomous drills will work at optimum drilling parameters, modulating sand water and chemicals to optimise drilling efficiency and well productivity. A fourth dimension can be added as the well goes into production, providing visualisation of the changes in oil and gas reserves over time. This is an example of the integration of the digital and physical domains — data on physical production is fed back into the digital model to simulate the impact on the well geology. Midstream, storage and transportation systems will be affected (BDO, 2018). This will include the use of smart, connected sensors to track and monitor shipments or detect pipeline leaks. Downstream, refineries and process plants will have smart sensors, feeding data to cloud-based analytics software, enhancing control of systems-optimised plant efficiency. Direct connection to customer management systems will ensure production and distribution closely matches demand. There will be fewer surprises since the analytics will not only be improving efficiency, but notifying the operators when and where maintenance is required.
Industry 4.0 can be implemented operationally through incremental improvements or strategically through significant capital upgrades. Both bring benefits but the incremental approach is lower-risk and less capital-intensive. This is not, however, a mere technology implementation — it must be led by somebody who understands entire organisation — really C-level executives (Infosys, 2018).
In Trinidad and Tobago, we are presented with an opportunity and a threat. If we embrace the technologyrich future of the industry and aggressively pursue emerging technologies, we can overcome some of the challenges of aging plant infrastructure and swing towards prolonged life through smart maintenance approaches. We can improve gas supply management and reduce costs at the plant level. If we hesitate, then our infrastructure, processes and products will become increasingly uncompetitive, we will face gas supply management challenges and we will struggle to compete in our energy sector commodities on the world stage. The global industry is moving on with the digitalising world. Will we bite the bullet, run ahead and win the prize?