Smart-Connected Pipeline Serves as Critical Step in Journey to Success

By Alan Acquatella, Director, Oil & Gas Solutions, Midstream, Schneider Electric, McKinney TX

Architecture that enhances control, safety, and performance is the foundation for forward-thinking companies within the oil and gas industry. Embracing the IT-OT convergence lies as the digital bedrock-optimized collaboration between people, processes and technology. The application of a smart-connected pipeline solution curbs the chance of errors that hinder energy providers while also offering a competitive edge to those utilizing the framework.

While saving money should be a priority for every organization, harnessing new technologies lies as the pivotal factor for success. Henceforth, companies have a critical decision to make: Ride the crest of the wave by embracing IT-OT convergence, or attempt to navigate the turbulent economic landscape by emphasizing cost-cutting rather than ingenuity and innovation.

Reality Check

The reality is that the oil and gas industry is going through tumultuous times. Operations are criticized and responsible for pollution. The industry produces a non-renewable natural resource, leading to inevitable depletion – this is advanced further by dramatically increased U.S. production. This problem is exasperated by diminishing storage space for crude, heightened geopolitical risk and an overall weakening demand – especially in China.

In addition to worldwide production exceeding demand, oil and gas companies struggle to use real-time operating data to improve functional and business capabilities due to a deluge of data.

Turning the Tides

Though oil and gas transmission has gone through rough patches and undoubtedly will go through more, the industry has much to capitalize on. Research conducted and information aggregated by the National Association of Manufacturers provides a glimpse of the benefits that may be gleaned from investment in smart connected pipeline solutions.

Economic improvements are expected from further development of oil and gas pipelines including increased real gross domestic product, disposable income and additional jobs within the U.S. Technological advancement and improved efficiency leads to greater production for a cheaper manufacturing cost, raising overall product and disposable income. Saved costs by companies within the oil and gas industry can be allotted to invest in additional workers, creating jobs.

The “Manufacturing Renaissance” is anticipated by industry experts and scholars from these effects. The identified benefits of improved GDP, disposable income and job creation leads to greater stability of oil and gas prices. Increased stability contributes to enhanced long-term investment planning, benefitting both the manufacturer and consumer.

“Lower [oil and gas] prices serve to directly reduce the energy costs of households and businesses. Going forward, consumers have greater purchasing power and higher confidence, businesses experience higher profits, and domestic manufacturers are more cost-competitive relative to their international competitors as a result of lower [oil and gas] prices.” – America’s Natural Gas Alliance

This future is not far off. And it can be brought to fruition sooner through utilization of an untapped resource. For the first time, there is an opportunity to make IT services a commodity in the business, creating the potential for dramatic cost reduction and improved efficiencies. This achievement is enabled through digital technologies powered by the Internet of Everything (IOE) – the networked connection of people, process, data, and things.

Integration Breeds Efficiency

To thrive in the current industry, oil and gas companies should consider multi-vendor, integrated solutions that offer the opportunity to create a “best of both worlds” solution. For example, a powerful option exists when unifying the offerings can create a flexible, modular approach to facilitate safe and efficient operations. This type of solution utilizes an end-to-end integrated solution for process, safety, power and security for utilities. This type of smart-connected pipeline solution creates an architectural framework for steady and consistent improvement.

Data integration is a facet of this solution. Integrating data from various, highly distributed sources is difficult. Collecting data into one centralized location is not practical due to cost, regulation and technical difficulty. Thus, data virtualization is implemented to integrate dispersed data, aggregating information into one comprehensible and accessible database. This value aides IoE application which requires data of many forms and collected from many sources.

Data virtualization supports integration on demand and omits the need for physical storage. This virtualization tool is one example of integrative systems benefiting pipelines, and how integration adopted through the entire operation can drastically improve production – a gift to both the operator and consumer.

Integration breeds efficiency. By abandoning the antiquated and ineffective practice of isolated operations – transactional interactions that impede collaboration – consistent improvements and insights can be made through integrated pipeline management. And, data virtualization is just one example of this. Integration of utilities generates data. As the vice president of Major Capital Projects states, “More data means more efficiency. Better data means more opportunity for analysis.”

Bad Data May Be Devastating

Data acquisition has become the backbone of all oil and gas operations, a necessary crux for production as technological innovation consistently advances within the industry. And, one doesn’t have to look far to spot one of many disastrous examples that underline the importance of integrative data collection. Because when information collection or integration goes awry, devastating results may follow.

Dec. 1, 2010: Chevron Pipe Line Company continues its daily delivery of crude oil from Rangely, CO to its refinery in Salt Lake City, UT. However, erratic data acquisition (SCADA) information quickly disrupts this process. Incorrect processing of data leads to incorrect pipeline operations. In this case, an inordinate release of crude oil.

Excessive oil release led to an overflow and eventual spilling of the viscous substance – congealed due to low temperatures – outside its containment area, flowing downhill toward Red Butte Creek. Much action was required. Chevron Pipe Line Company enacted its emergency response procedures. Numerous city, county and contractor personnel were called onsite. Local fire department and air monitors were dispatched to facilitate the safe recovery of oil. In total, there was over $7 million worth of property damage. Crude oil drained into Red Butte Creek up to Liberty Park Pond, roughly 7 miles of contamination. And 500 barrels’ worth of oil was spilled.

Strong as Weakest Link

Compatibility is the key. Communication between infrastructural assets (IT -OT) is a required dynamic for modern-day pipeline operations to prevent potential weak points. Failure to properly integrate pipeline assets creates vulnerability throughout the entire pipeline process – remember: a system is only as strong as its weakest asset. These vulnerabilities may be catastrophic, as oil and gas projects are constantly growing in size, scope, and complexity. The reality is organizations within the pipeline industry must manage greater risks, particularly in the area of potential cost overruns that directly impact the bottom line and workforce.

However, managing risk and finding success is not a singular milestone, but a journey. Consistent development and enhancement is necessary for companies to maintain efficiency and effectiveness in the current landscape. Implementation of a smart-connected pipeline solution sets a foundation for incremental improvement, granting application of inevitable upgrades made available over time.

The purchase and installation of high-powered IT-OT investments are only beneficiary if they are in sync with the entire operation. Piecemeal components fragment the pipeline process and stunt performance – it is necessary to invest in an operation that runs harmoniously, is integrated properly, and performs all tasks within the enterprise – a one-stop shop.

Investment, Not Purchase

Ultimately, investing in a smart-connected pipeline solution is an investment that stands to provide a return over many years. This type of purchase can provide the building blocks for faster innovation and achieving desired business outcomes long term. Success is reliant on the integration between:

  • Technology (to access data): Fund data management and analytics as a business case at the enterprise level. Strive to ensure availability of high-quality, actionable, trusted, and complete data.
  • People: Build skills in advanced analytics and complement those capabilities with a culture of collaboration. Apply analytics-driven insights to management decision-making. Work with data scientists and the business to ensure that data analytics align with business objectives.
  • Processes: Emphasize development of governance and performance measurement capabilities, internally or externally. Governance skills are critical to ensure proper deployment of data analytics. Also, create processes for information management and application development, along with information consumption.

As business conditions continue to increase in complexity and competitiveness, oil and gas companies will be challenged to remain profitable and viable. New approaches involving collaboration between organizations and solutions providers can be a powerful approach to overcome these challenges. A good plan is to consider establishing an integrative, smart-connected pipeline strategy that can provide exceptional operational and competitive advantages.

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