​Digitalizing engineering could go a long way to help reduce oilsands major project costs

Image: Vista Projects

When it comes to adopting fully digital technology, the oil and gas sector is something of a laggard, according to some industry observers.

But the promise of these systems is increasingly recognized as key to the success of Canada’s industry as it navigates a future dimmed by low prices and lower-cost suppliers.

“If there is hope for a reinvigoration of the Canadian oilpatch, short of higher prices, the Digital Oilfield, in its many guises, is the single most promising solution,” concludes the new Digital Oilfield Outlook Report from JWN Research and partners Siemens, Storm Telematics and GDM Pipelines.

“It holds the promise to bring down costs and shrink the industry’s environmental footprint, conceivably in game-changing ways. But as with any potentially disruptive technological change, it is difficult to predict which applications will come to the fore and have the greatest impact in the years to come.”

Engineering and procurement (EP) firm Vista Projects believes its digital engineering environment is one of these technologies. The company recently completed what it describes as the oilsands industry’s largest and most comprehensive implementation of a digital engineering environment for a new oilsands project’s front-end engineering and design (FEED).

Vista says the result was a collaborative effort with its client that led to FEED coming in 16 per cent under budget and detailed engineering now anticipated to realize even larger savings compared to the initial forecast.

Additionally, Vista predicts a major reduction in the project’s total installed cost.

Streamlining workflow

In many industries, the road to eliminating paper has been a moving target. When computers were first introduced, the promise was invariably that they would do so. Yet few machines have lived up to the promise, and some users say computers have increased, not stemmed, the flow of paper in most offices.

In theory, digitalization is meant to improve efficiency for engineering firms, giving them a cost advantage that can be passed on to clients, including the oilsands operators who build some of the biggest industrial facilities in Alberta.

While the oilpatch has come a long way in recent years, other North American industries are well along the digitalization curve, according to Patrick Reilly, project manager for Vista, which has several oilsands facilities under its belt in recent years.

In a recent interview, Reilly cited the North American aerospace industry as one that is notably further along in digitalization, as is the manufacturing sector.

The oilpatch is playing a game of catch up, something that’s more apparent at the level of the engineering firm.

“I would term [full digitalization as] the modernization of engineering in the oil and gas sector,” Reilly said, noting other industries, including those named, have already worked through the modernization cycle and are seeing the benefits.

“The time is ripe to make the same type of changes in our industry,” he added.

In fairness to Vista’s competitors—the engineering firms that serve western

Canada’s oilpatch—most, if not all, have embraced digitalization to varying degrees, as the ongoing use of software like AutoCAD and many other applications suggest.

Yet, the adoption of computers and software does not necessarily make for full digitalization, Reilly pointed out. A firm that uses a range of programs like AutoCAD can still be fundamentally paper based at the end of the day.

“Although you’ve designed with AutoCAD…it’s going to end up being printed out on paper, approved and marked up in paper-based processes,” he said. “You end up with a huge volume of documents.…That is not truly digitalized.”

Indeed, Reilly noted that, following completion of a major project like an oilsands facility, an engineering firm will typically archive thousands of drawings and documents that represent the project’s evolution from early design to construction and finally, commissioning.

Within those drawings and documents exists a realm of data that, in many ways, is sealed and inaccessible to the very people who will need it down the road. That includes the client who owns and operates the facility or plant. “There’s a bunch of data locked up in these drawings [and] it’s not really accessible from a modern data perspective,” said Reilly.

On the other hand, full digitalization creates a layered but comprehensive online database that is accessible both to the EP firm that does the front-end engineering and design, and to the corporate client that bankrolls the project and is responsible for its maintenance and service going forward.

In effect, a fully digitalized EP firm is one that largely integrates the different engineering processes—civil, mechanical, electrical, piping and process—that together create the project, making for a mostly seamless environment.

According to Reilly, integrating the various work streams in a common database

has several advantages. One is that design changes that would otherwise be costly may be done at a lower cost to the client, and with less hassle for the engineers.

On the other hand, in a conventional engineering environment that is not fully digital, similar changes would drive up overall project costs, something a fully digital system would minimize.

Using integrated engineering software, when a change is made to one part of the design, it is automatically replicated or flagged in other layers of the database. Another benefit is that the project database may be searched quickly and easily. For example, an engineer searching for a particular valve can search the database by inputting technical specifications in a broad or narrow way.

The search results often indicate where the valve is located, the number of similar valves and other data. The search would facilitate not only the design process, but later in the project life cycle, the service and maintenance of the facility, since the client would be able to access the database for years to come.

There is also a visual component of the software that allows users to zero in on a part of the design, say a pressure vessel, and create an image that may be turned, rotated, inverted or enlarged at will. When it comes to choosing integrated engineering database software, two of the major software makers are Intergraph and AVEVA, each of which have offered packages to engineering firms for roughly 10 years. Despite that, Reilly said there has been very little widespread adoption of the tools in western Canada.

For Vista, a current facility being designed for a major Canadian oilsands player represents “the first project we’ve done…that used [the integrated software] on a significant scale,” according to Reilly.

The result was a 16 per cent savings through FEED, something he believes is no coincidence. “We came under budget… and our best explanation for that was that these processes were [superior] to the conventional ones,” he added.

Among the benefits of using integrated engineering software is the ability it gives an EP firm to work collaboratively with clients. A more collaborative process means engineers and clients are likely to find themselves on the same page more often when it comes to project design because both can access a common database with the same digital drawings and documents, reducing the scope for misunderstanding.

In a conventional engineering environment, requests for design changes are often the result of a gap between the client’s expectations and what was actually designed. As well, Reilly said using the software to integrate the various engineering processes often makes for a shorter project timeline, another way to cut project costs.

“We can compress the schedule via an early handover of the project,” he added. “Conventionally, on large capital projects, a big effort goes into translating what the engineers have produced to what the guys in commissioning, construction and operation ultimately need.”

When it comes to project timelines, delays usually mean higher costs. If the schedule on a major project is extended six months, it could add $100 million to the final cost. That’s due less to added hard costs than the increased cost of keeping the entire project team running, all of the equipment available and other services, Reilly said.

As in other professions, not all engineers took readily to the idea of digitizing the drawings and documents they had worked with for so many years.

Yet, resistance to the new software was overcome mainly by two factors. One was the positive results that engineers themselves experienced in seeing project timelines shortened, for example.

The other factor was the current industry downturn, which has meant stiffer competition for EP firms in winning contracts in the broader oil and gas sector, and in the oilsands arena. The tougher market created a climate more conducive to change.

“I think market conditions allowed us to make these types of changes, because we could go to [engineers] in our own organization and say, ‘We need to get significantly better.’ We can’t just work a little harder…. In a hot market, it’s tougher to convince people that that change is necessary, but in a down market, it’s possible,” Reilly said.

For project proponents, there is still a choice to be made, even after the decision to go with integrated engineering software is made. While using the software for greenfield projects is a “no-brainer,” brownfield projects need to be examined a little more closely, he said.

“You have to look at how much work you are planning to do on the [existing] plant,” he added. “If there are no planned changes, it might be hard to make the case to apply this approach, but in cases where there are plans to do debottlenecks or other changes, it usually makes sense.”

Summing up the key benefits of integrated engineering software, Reilly said reducing front-end engineering and design costs by 16 per cent was a big one, as was getting more collaboration between engineers and clients, and seeing shortened project schedules.

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