How to navigate through Uncharted times of Challenge in Oil and Gas

The oil and gas industry has been hit very hard by the current pandemic. The reduced demand due to global lockdowns combined with oversupply has created a 20% imbalance, which caused the plunge in prices from +$60/bl to -$37/bl within weeks.

Posted: April 27, 2020

Oil and Gas

How to navigate through Uncharted times of Challenge in Oil and Gas

One month ago, I do not think anybody could have imagined that crude sellers would pay $40 a barrel just to have somebody take oil off their hands.

The oil and gas industry has been hit very hard by the current pandemic. First, reduced demand due to global lockdowns combined with oversupply has created a 20% imbalance, which caused the plunge in prices from +$60/bl to -$37/bl within weeks. Second, refiners are challenged with significant reductions in product demand, notably gasoline and jet fuel. This is forcing refineries to reduce throughput or temporary cease operations.

As companies move fast to manage supply, demand and pricing issues, a new challenge emerges: potential outbreaks of the pandemic. Closed working environments like FPSOs, oil rigs have potential cases of the virus, posing health hazards to workers and further disrupting operations.

Safety, Efficiency and Operations Continuity
According to a recent Accenture report, ‘ Enable Workforce and Supply Chain’ has been identified as one of the critical steps companies must take now to build resilience in this crisis. As safety, efficiency and operations continuity are becoming the top focused imperatives for most to sustain in the midst of chaos, digital transformation is even more important today than ever. Only with the right digital tools will successful companies manage the de-manning of production facilities while optimising the entire value chain.

Four key areas where Digital Transformation can enable oil and gas operations:

Organizational Agility

1) Protect Workforce and Operations continuity
Safety is always the top priority in oil and gas operations. Now, the biggest threat to workforce safety and operations continuity is proximity to co-workers. Connecting an agile but remote workforce to perform digitally-enabled tasks such as remote maintenance, engineering and operations is key to protecting teams’ safety and reducing risk of outbreaks. This is key to business continuity in today’s world. Reducing onsite operations teams has been a long-term goal in the industry. The de-manning priority has just been accelerated by the current crisis, we are excited to see how necessity today will transform operating models tomorrow.

2) Supply Chain Agility
The recent heightened volatility in crude and product prices and demand are making even the most current production planning and process models far from optimized. In addition to the demand uncertainty, process constraints due to IMO 2020 are creating more uncertainties in terms of feedstock availability and pricing. Making production choices today to optimize a plant can be a daunting task for most that could take days or even weeks to finalize the plans. A robust Supply Chain Management cloud platform combined with real-time crude management tools enables rapid modelling of refinery production planning that reduces business risks while improving collaboration between globally dispersed teams. The supply chain tools enable refiners to source the most profitable feedstocks based on plant models and economics in volatile markets. Now, decisions that previously took two business days can be made in two hours.

3) Operations Agility
Process optimization capabilities enable operations to respond to changes in feedstocks and product specifications as well as process performance and constraints based on first principles simulation techniques to maximize profits. It uses real-time process and economic data to determine set points that guarantee maximum operating profit. Blending optimization systems and advanced process control ensure that all constraints and regulatory requirements are satisfied at minimum cost

4) Maintenance Agility
Companies may bring maintenance work turnarounds forward with declining demand due to the crisis. Keeping critical assets productive is becoming more challenging due to the changes in maintenance schedules and utilization in this heightened uncertainty period. Predictive Analytics enables hydrocarbon producers and refiners to not only remotely monitor asset health but also improve asset reliability by providing early warning notification and diagnosis of equipment issues days, weeks, or months before failure. This helps reduce equipment downtime, increase availability, and improve performance while reducing operations and maintenance expenditures.

Future state of oil and gas
Market rebalancing will take a while when the economy recovers. I can only imagine that a renewed oil and gas industry will emerge when the dust settles. One that is more agile and efficient, much more ready than before to tackle the next long-term structural challenge in sustainability.

AVEVA helps customers achieve superior performance by driving value, agility, and sustainability throughout their asset and operations lifecycles. Learn how we can help you navigate the uncertainty.

Written By
Eddy Lek

Eddy Lek is the Global Industry Marketing, Senior Manager for Energy. He is responsible for leading industry marketing campaigns in Oil and Gas. With over 15 years of experience in varying roles from sales to product management and marketing, he is a strong advocate for leveraging technology to improve efficiency and reduce waste. He has a MBA from National University of Singapore and an B.Eng from Nanyang Technological University.

Download the Whitepaper:  Digital Agility Forges Digital Resilience    

Related Blog Posts

Stay in the know: Keep up to date on the latest happenings around the industry.

Oil and Gas
Agility Beats O&G Market Volatility​

Agility Beats Oil and Gas Market Volatility​ - Value Chain Optimization can lower the risk and uncertainty due to market fluctuations during this unprecedented ...

Oil and Gas
How to navigate through Uncharted times of Challenge in Oil and Gas

Oil and gas industry has been hit by the pandemic. Safety, efficiency and operations continuity are critical for de-manning while optimising value chain.

Oil and Gas
The role of technology to face the challenges raised by the current oil price instability

Against the backdrop of the current global situation, this interview with Hege Dammen, Consulting Director for Digital Acceleration at AVEVA, focuses on the ...

Oil and Gas
Ensuring a Winning Strategy for Value Chain Optimization of the Refining and Petrochemical Industries

Learn how to ensure a winning strategy for value chain optimization of the refining and petrochemical industries

Oil and Gas
With oil prices fluctuating every minute, is your team equipped to capitalize on change?

Learn about the strategies and solutions to tackle the current economic challenges and have the capability to optimize your entire value chain.

Oil and Gas
Challenges of Achieving Value Chain Optimization in the Refining and Petrochemical Industries

Understand key challenges of value chain optimization in the refining and petrochemical industries to reduce risk and guarantee high adoption rate and optimal ...

Oil and Gas
2019 Hydrocarbon Processing Awards recognizes AVEVA

AVEVA was recognized by the best solution for Digital Twin and Operator Training, and also process optimization and plant operations optimization.

Oil and Gas
5 Tips to Make Digital Transformation easier in the Oil and Gas Industry

Undergoing digital transformation presents many challenges along the journey. It's essential to understand the issues you may face and how you can overcome ...

Oil and Gas
Maximize Oil and Gas Pipeline Efficiency with Integrated Digital Twins

How pipeline companies lean towards digital transformation to improve operational efficiency with AVEVA while enhancing the safety measures

Oil and Gas
$1 trillion to be unlocked in Digital Transformation?

Data is the foundation of Digital Transformation of Oil and Gas. Data feeds into predictive analytics, optimises process, predicts machine failures.

Are you ready to ride the wave of the petrochemical industry growth?

To overcome business and operational challenges, companies will need to increase their level of digital maturity through value chain optimization.

Oil and Gas
Understanding the Refining and Petrochemical Value Chains to Drive Optimization

Understand the complexity of the refining and petrochemical value chains to create a solid digital transformation strategy that optimizes the entire enterprise.

Oil and Gas
When Digitalization and Transformation are not Enough: Accelerate.

Market-disrupting industrial organizations differentiate themselves by transforming business through innovating and accelerating past the competition.

Oil and Gas
Optimizing my Refinery Blend is Much Harder than Baking Cookies

Refinery products are blended to get final products with desired quantity, quality and schedule specifications. However, rigorous planning, scheduling and ...

Oil and Gas
3 Steps to Maximising Pipeline Integrity

Ageing infrastructure is posing huge challenges for pipeline operators in keeping their pipelines running optimally and profitably in the face of increasing ...

Oil and Gas
How Can Predictive Analytics Reduce Unplanned Downtime in Oil and Gas Production?

Production can increase either by developing new fields or improving asset uptime in existing fields, but asset downtime due to facility maintenance – planned ...

Oil and Gas
My Car Has Predictive Analytics, Why Shouldn’t My Refinery?

Rebroadcast of Air Liquide's experience with predictive analytics and AVEVA

Oil and Gas
How Digital Transformation in Engineering and Design boosts Project Profitability

Low oil prices had sanctioned almost every large Exploration and Production (E&P) projects in the oil and gas industry. Today, with the recent recovery of oil ...

Oil and Gas
The Price of Optimizing Your Process Is Asset Reliability

Predictive maintenance (PdM) strategies enable front-line personnel to act before costly failures occur and maximize value throughout the entire asset ...

Oil and Gas
How Closed-loop Operations Enable Digital Transformation of Oil and Gas Fields

Today, the advancement in technology – cloud platform, analytics and computing power – is revolutionising the way how companies can leverage big data and ...

Oil and Gas
How Pipeline Operators are Working to Improve their Asset Reliability

Asset reliability is a key component of an overall asset performance management strategy. And it plays a big part in helping midstream oil and gas operators ...

Oil and Gas
Maximizing Midstream Profits with OT IT Convergence

Historically midstream oil and gas organizations have kept two critical functions within their businesses almost entirely separate – IT and OT. One of the ...

Operational Excellence: Likely the Most Overused Term in the Process Industries

Operational Excellence isn’t achieved overnight. It is a methodology that takes a commitment to focusing on continually improving the process, and its ...

Oil and Gas
How Virtual Reality Compresses Operators Learning Curve in Oilfields

Unlike a traditional classroom environment, the VR immersive training system facilitates interaction between equipment and environment and scenario simulation ...

Oil and Gas
How Advanced Analytics improve Margins at Natural Gas Processing plants?

mproved fracking technology in oil and gas fields is creating an unprecedented boom in natural gas production, exerting tremendous pressure on natural gas ...

Oil and Gas
Implementing a tiered methodology for pipeline integrity significantly improves business’ chances of preventing leaks

With pipeline operators facing increased scrutiny as of late, the conversation must shift to pipeline integrity. Pipeline integrity encompasses three methods: ...

Oil and Gas
Digitizing the Mobile Workforce

The front-line opportunities to improve plant reliability, safety, and profitability are infinite. Value lies in digitizing the mobile workforce.

Oil and Gas
Why IIoT in Refineries Now?

IIoT in refineries is trending fast and promises great short and long-term results, allowing for smoother refinery optimization.

Oil and Gas
IIoT: Acting on All Big Data

The importance of IIoT, big data and closed-loop operations to bridge the gap between unused data and profitability in refineries.

Oil and Gas
Strategic Implementation of IIoT in Refineries

Delivering Closed Loop Business Operations for the Refinery Enterprise with Schneider Electric Software. Strategic Implementation of IIoT - Refineries.

Oil and Gas
How are you minimizing risk throughout the three phases of pipeline integrity?

Pipeline integrity includes three phases: prevention, detection, and mitigation, which together minimize the chances of a leak and the ensuing repercussions.

Oil and Gas
IIoT: Three Trends Impacting Upstream Producers

Many producers have started looking to IIoT to help them navigate through the digital evolution and create a competitive edge for their operations.

Oil and Gas
How the Internet of Things has Influenced Midstream Pipeline Operations

IoT Internet of Things has provided increased ability to connect, measure and analyze variety of behavioral statistics for midstream pipeline operations.

Oil and Gas
How Big Data and Analytics increase Production Asset Uptime in Oil Fields?

Oil companies must continue to make investments in improving operational efficiencies to sustain and improve their profitability.

Oil and Gas
How Digitalization of Process Design and Operations boosts Profitability in Ethylene production

Learn how to apply impacting digital technologies in ethylene production plant design and operations for higher profitability.

previous next

Sign up for our newsletter and get all the latest information straight from the source.