The digital oilfield has long held the promise of introducing disruptive new cost cutting efficiencies, greater levels of production and entirely new business models with the potential to transform the energy industry in the same way digitalization has transformed many other sectors of the economy.
The oilpatch has been slow to embrace the digital oilfield, which has been touted for over a decade as a potential saviour for an industry facing headwinds on several fronts, from low commodity prices and the great crew change to increasing competition from renewable energy. Digital technologies hold the promise to solve many of the challenges, if they can penetrate into an industry perceived to be resistant to change.
With this year’s inaugural Energy Excellence Awards, adoption of digital technology into the oilpatch is more evident, with a selection of finalists that leverages a wide range of digital technologies, from artificial intelligence (AI) and the industrial Internet of Things (IoT) to virtual reality and blockchain.
Long reach of digital
Osprey Informatics Ltd. is dipping into the digital oilfield well to leverage the latest advances in intelligent visual monitoring technology to give companies the ability to limit remote site visits, while reducing operational costs and mitigating safety and environmental risks. Its Osprey Reach made it a finalist in the Energy Excellence Awards Digital Oilfield category.
Osprey Reach is transforming the essentially “dumb” surveillance systems of the past, that required a set of human eyes to make effective, to “smart” systems able to distinguish out-of-the-ordinary events, from intruders or physical dangers to leaks and equipment breakdown, around the clock.
“When you are doing things with video there is just too much data for any one person to really understand, and take action or gain insight from, so we use the computer vision technology to look for specific activities or specific objects within an image or a video and then we allow individual users to basically set up their own alerts, and they can be alerted based on what the computer vision detects,” said Jeremy Bernard, chief innovation officer and head of business development at Osprey.
When there is an alert — visual or from another sensor — operators can view live images and video to validate the alarm, have better awareness of the environment, repair needs and any risks before deploying crews.
Increasingly sophisticated machine learning can “train” the system to detect and distinguish increasingly specific objects and events — for example, discriminating between a person or vehicle and an animal, or a change in cadence of a pump to provide an early warning of pending breakdown or indicating maintenance is required.
“It's an important technology because it really filters out the noise and gives people more concise information. What’s made it effective is, there have been advances in artificial intelligence and in cloud computing and computing power to run the algorithms, and it’s all come together — a combination of people and technology to make it really powerful today,” Bernard said.
The fully managed service operates edge devices, including cameras, modems, processors and local storage, at scale while reducing routine site visits by approximately 50 per cent. The average cost for an in-person well site inspection is reduced from an industry average $20 to $57 to as little as $2 per day, the company estimates.
Visual evidence is also valuable for efficiently auditing third party contractors for health and safety compliance, incidents and invoice accuracy. One company used Osprey Reach to create a report showing contract workers arriving and departing, with time-stamped images, resulting in a 30 per cent invoice reduction based on inaccurate billing. The “pictures don’t lie” concept also shortens the time to resolution dramatically.
Osprey Reach could also assist companies in their efforts to contain methane emissions at a time when a mandated path to a 45 per cent reduction of emissions to 2025 is soon to come into effect. The industry is grappling with a gap in knowledge as to how much methane is leaking, from where, as well as seeking cost-effective ways of monitoring and remediating emissions.
Thermal imaging can detect large methane leaks such as from storage tanks. Osprey has launched two new projects looking to take that capacity to new levels in order to detect much lower-volume and infrequent fugitive emissions. One uses computer vision to automate and increase the accuracy of detecting and quantifying methane leaks and the other is investigating capturing and integrating audio data to provide 24/7 sight and sound monitoring and analytics as part of the company’s managed service offering.
The technology got a boost in December when Osprey closed a $3.75 million investment round led by Shell Ventures LLC and Evok Innovations, with participation from InterGen Capital and current shareholders. “Enabled by augmented intelligence and machine learning, our industry is undergoing rapid change. We see Osprey’s technology as a core component of this digital transformation, with proven operational benefits and promising methane detection potential,” Michael Crothers, Shell Canada president and country chair, said of the investment.
The funding is also bolstering the Calgary-based company’s expansion into the U.S., where it has recently opened a sales office, in Houston. In March, Osprey entered into a strategic partnership with Infrastructure Networks, Inc. (INET) to roll out its technology to the U.S. energy sector. INET will sell, supply and service Osprey’s intelligent visual monitoring solutions, delivered over INET’s wireless platform, while Osprey will leverage INET’s LTE coverage of key energy producing areas for its growing U.S. client base.
Simplifying transactions on the chain
Finalist GuildOne Inc. has been making waves through the industry as a pioneer in applying blockchain — the distributed ledger technology that initially made cybercurrencies possible — to the oilpatch. The Calgary-based company accomplished the world’s first proof-of-concept energy royalty transaction on blockchain, using Royalty Ledger, the company's royalty application on its Energy Block Exchange (EBX), in February 2018.
EBX is a blockchain business network platform for applications that the company said will drastically reduce general and administrative costs, mitigate costly data and contract disputes, and allow for near-instant transactions in the energy sector. GuildOne estimates Royalty Ledger will reduce costs associated with royalty discovery and payment by up to 85 per cent.
Because it uses an immutable and transparent ledger, blockchain removes the need to trust the parties between business transactions — trust is built into the platform. “What Bitcoin proved was that you can transact with strangers and people that you didn't trust and you could derive trust from the system,” said James Graham, GuildOne president and chief executive officer.
Royalty Ledger, for example, uses a mutually agreed-upon contract as the basis of its ongoing payment calculations. After both sides agree on contractual terms, the software’s business logic — based on current and historical legal conventions and precedents — automatically triggers the transaction on fulfillment of the applicable terms of the contract.
Blockchain is the logical culmination of a process that started with the alignment of data first to solve data discrepancies and disputes between company departments (data silos), then between vendors (platforms) and finally between companies (contracted counterparties and partners).
“All of those data disconnects start to turn into some real business impacts,” Graham said. For example, one study found 30 per cent of oil and gas contracts were not fully executed, he said. “We found that when companies are left to their own to store [data related to contracts] on their own side of the contract divide, they fall out of sync very quickly with their partners.
“With smart contracts and ledgers, we can actually put those facts that are shared on the contract — the interpretations of the contracts and a common interpretation of the calculation of how we execute the transaction — all in the middle between the counterparties in a shared space. The benefit that is emerging there is the concept of frictionless transactions. We have proven that you can take a 90-day dispute-laden process and reduce it to 90 seconds if you do the work to really share the facts, and smart contracting distributed ledgers allow us to do that.”
Traditionally very protective of their data, oil and gas companies were initially reluctant to consider any kind of sharing of that data, Graham said. That began to change with the downturn of 2014. “With the great slowdown, [the industry] needed new models to address profitability and sustainability of these systems, so that forced executives look at new ways [to collaborate].”
The end result was what Graham calls “the ultimate team sport that I have seen in my career. In terms of collaboration, I've never seen a larger teamwork requirement for a system, or a disruptive technology, than we see for blockchain… Blockchain is about getting it right for your counterparties as much as for yourself.”
Technology partners include Amazon Web Services and recognized enterprise blockchain software firm R3. Among other things, bringing them on helped in terms of security, scalability and reliability — bringing immediate credibility to the technology application.
VizworX Inc. has stepped aggressively into the augmented reality (AR) domain with a product created specifically for engineering design reviews that enables users to walk through any kind of AR model in full one-to-one scale.
Its stand-alone product, Panoptica, was created to address the significant amount of overspend required to rework projects in the construction phase, which accounts for up to 30 per cent of overall project costs. Errors in the original design that were not caught during the initial design review are the main reason for rework.
Unlike traditional tools that display 3D models on a 2D screen, and lack the context needed to fully comprehend scale differences, Panoptica accurately conveys the true sense of size and space in relation to real-world surroundings. During engineering design review meetings, teams are able to walk up to, around, duck underneath and engage with the 3D models using natural human interactions as if the models were physically present.
Panoptica also enables project teams situated in different locations to review designs in a virtual space, interacting with their 3D models as though they are in the same physical space. That facilities a collaborative approach that allows teams to work together to increase the likelihood of catching potential design errors before the project progresses to construction phase, said Kelly Wilkieson of VizworX business development.
“It really empowers a collaborative approach to the team that are working on it because, instead of being on the phone during engineer design reviews or being disengaged for part of the process, everyone is together having conversation together, and going around the model, seeing it in one-to-one — that has a really big impact for our clients.”
VizworX anticipates Panoptica will save customers hundreds of thousands to millions of dollars per major engineering project through both reductions in design review time and improved design review outcomes that will increase operational efficiencies, improve safety and security, improve ergonomics and reduce maintenance costs.
A spin-off of the University of Calgary-lead NSERC Strategic Network SurfNet (a cross-Canada research network), VizworX maintains close ties with the university as well as collaborating with companies in the oil and gas and other sectors to advance the leading-edge technology application.
Initial development of Panoptica came out of a joint digital twin project in collaboration with Cenovus Energy Inc., where Panoptica evolved into a design review product based on client feedback. “We realized that we could affect the [project development] pipeline even earlier,” said Wilkieson, “if we pivoted into Panoptica, what it is today, as a engineering design review tool.”
Digitizing the pipeline
At a time when building new pipelines has become a national issue, due in no small part to fears over leaks, a new fibre optic-based pipeline monitoring technology has arrived at an opportune time.
Hifi Engineering Inc.’s high fidelity dynamic sensing (HDS) system provides a fully distributed monitoring using a specialized fibre optic cable designed to detect high fidelity acoustics, temperature and vibration/stain. In addition to providing high confidence leak detection across every centimetre of the pipeline in real time, preventative conditions can also be detected, such as third party interference, machinery operating too close to the pipeline, thermal anomalies or geotechnical events such as earthquakes and landslides.
Hifi recently validated the ability to retrofit the technology to existing pipelines with a pilot with TransCanada Corporation on a section of the Keystone pipeline into Houston. The companies collaborated along with Alberta Innovates and the Alberta Small Business Innovation and Research Initiative program to develop a real time verification and diagnostic system to ensure the ongoing operation of the technology remained finely tuned and effectively operated.
Altogether, the company has some 400,000 metres of deployment, primarily on new pipelines and high consequence sections of existing pipelines, such as river crossings and near high population areas.
The company’s exceedingly sensitive fit-for-purpose fibre optic cables generate terabytes (one trillion bytes) of data every day — so sensitive they can discriminate between a full and an empty dump truck driving on a road above a buried pipeline, or an earthquake originating thousands of kilometres away. The real challenge is, from this richness of data, trying to figure out what is a concerning event and what are routine occurrences. False positives are the bane of most monitoring systems today.
Intelligent signal processing algorithms are required to transform the fibre optic sensing data into actionable information. A Hifi-UofC partnership is focused on harnessing the power of artificial intelligence and deep learning to provide the highest level of safety for pipeline operations.
While already an established commercial product, the company continues to refine the technology. “We generate a lot of data from the sensor, we have a number of algorithms that are running on that dataset, and they are looking for various events inclusive of a leak. We want to throw more and more intelligent-based algorithms on that and we have been working University of Calgary on how we can enhance what we are doing today to take it to yet another level,” said Steven Koles, Hifi president and chief executive officer.
Hifi has had a strong relationship with the university’s Schulich School of Engineering over the past number of years, including collaboration on the development of the company’s cutting edge leak detection algorithms, added Ehsan Jalilian, Hifi vice-president, R&D, himself a UofC graduate. Given the oil and gas industry's urgent need for enhanced pipeline safety, this industrial-academic partnership has potential national and global significance, he said.
“All this new cutting edge research that we are doing with the UofC has been I would say an integral component of our success,” said Jalilian. “We have hired quite a few super talented, cream of the crop, data scientists and signal processing engineers from the university to work full time with us. On our systems team, out of a dozen engineers, probably nine or 10 are U of C grads.
Final link in the digital chain
Pandell has applied digital technology to solve a long running problem for the oilpatch: invoicing. In 2018, the Calgary-based company introduced the final link in the chain for digital end-to-end billings management between oil and gas producers and oilfield services providers.
That link is the new cloud-hosted vendor invoice portal Pandell VP, which ties directly into Pandell AP invoicing and coding approvals and JV accounting and financial reporting to deliver a seamless invoice-to-pay workflow solution. By the end of 2018, 10 producers had implemented it into their payables workflows, more than 1,000 vendors came onboard to submit their invoices and almost 37,000 invoices were processed through it, the company reported.
Previously, producers and vendors struggled to connect their data through either inefficient, manual, paper-based billing processes or cobbled-together, multi-source solutions that failed to streamline workflow for either of them. Both internal and external barriers hindered workflow, resulting in incomplete or incorrect data transferring from vendors to accounts payable groups. Invoices received through a variety of channels and templates required extensive time to consolidate, leading to errors, coding discrepancies and invoices being lost entirely.
A Pandell analysis of 50 Alberta-based service companies using a paper invoicing process showed an average invoice-to-pay cycle of greater than 60 days.
There had to be a better way. And Pandell knew where to find the answer. Many of the over 400 users of Pandell’s JV financial accounting software provide input on a quarterly basis through the company’s Client Advisory Board sessions.
Through these sessions, two digital workflow opportunities were identified that could reduce industry challenges and improve the invoice-to-pay process — one between the producers’ accounts payable and financial accounting groups and the second between their payables groups and service vendors. The first was solved through a cloud-based accounts payable system that automates invoices through a configurable approval process via the web and the second with a web portal that extends AP and JV’s financial validation tools, audit controls and digital workflow to the supply chain in real time.
Vendor challenges have resolved through the introduction of single-source invoice data validation with their clients’ master file data, and real-time invoice status transparency, from submission to payment. And unlike most vendor networks that maintain a vendor-pay business model that charges a fee for every submitted or revised invoice, Pandell does not charge for digital invoicing. By removing this hurdle, the company said its solution has triggered an industry-wide shift toward adoption of a more efficient digital invoicing workflow.
The Energy Excellence Awards will be presented at a reception on May 2, 2019 at Devonian Gardens in Calgary. Click here to buy tickets!