Digital Innovations in Oil and Gas with Geoffrey Cann

This week concludes a series I started last week on the trends to watch in 2023. 

As a reminder, at the start of every year, I take a step back from the daily news feeds about energy to dwell instead on the many longer-stride trends that are impacting oil and gas.

There are many ways to frame such analysis, and the framework I'm using goes by the name STEEPLE. The letters form a mnemonic, which refers to Social, Technology, Economy, Environment, Politics, Legal, and Ethical. The mnemonic started life as PEST, then evolved into STEEP, PESTLE and STEEPLE by progressively adding additional categories.

This episode will focus on the back half of STEEPLE: Environment, Politics, Legal, and Ethical. 

The environmental trends are those that concern themselves with our natural world.

At times, the energy industry seems to be driven by a singular environmental factor—rising levels of atmospheric carbon concentration. However, there are many other worrisome trends to keep front of mind.

Political trends are almost by definition country specific, but there are a few biggish ones that factor into energy calculations.

The first trend is aggressive energy geopolitics. Russia has demonstrated how an autocratic political regime over time can be tempted to use a carefully constructed energy market monopoly to bend market dependents to its will. Energy importers will be careful not to lock into such dependencies in the future, and the trend will clearly be to diversify energy supply or move to self sufficiency in energy.

The legal environment for energy is not static, but it doesn't change quickly either. Nevertheless, I keep an eye on a few important trends.

Activists have been successful in weaponizing legal systems in western economies to tackle the energy industry. Approval cycles for energy developments (and even housing for veterans) in the western world continue to slow down and are now structurally out of step with both the rising demand for energy and the speed society demands to deal with climate effects.

It has long been recognized that there is an ethical dilemma at the very heart of the industry—the production and consumption of petroleum delivers great benefits for society but at a serious environmental and social cost. Halting the industry will quickly starve us and continuing the industry will slowly cook us.

"It is very similar to what we've been doing an oil gas for many years, in an exploration sense. The mindset is there's risk. At the beginning... you look at data."

In this episode, I'm in conversation with Patrick Ng, the CEO and Founder of ShaleForce, a geothermal company, on generative AI and how it has been used by ShaleForce. If we drill deep enough, we will find geothermal resources, but not all are suitable. One application idea is to aim for geothermal resources where there are existing coal power plants. These plants will eventually be retired, but with a different kind of boiler, the plants could find renewed life. Geothermal energy is also applicable to many industrial processes currently supplied by hydrocarbons, including steel making, cement, food processing, pulp and paper, and many others. 

"Early in the shale revolution before 2010, people will say, hey, there's shale everywhere. I look at it like factory drilling. I look at so many acres, and look at how many wells I can place and go with it. Very quickly, they find out if that's the way you go, you're gonna blow a lot of capital. The reason is geology is not uniform or costs, right? It has the variabilities."

Patrick Ng is the founder and CEO of ShaleForce, a data analytics and energy intelligence company. Patrick started his career in R&D, and eventually moved into analytics, primarily software development, geophysical imaging and inversion applications / services for the oil & gas sector. His passion is helping communities thrive during energy transition by leveraging his background in technology application and petroleum geology to expand the energy supply and radically lower emission for industry, such as geothermal.

"If our target, our goal is to radically reduce carbon emission for industry, let's say not just electrons, not just electricity, there are a lot of industries with heavy use of energy, that can benefit from direct heat, or superheated water."

• LinkedIn profiles (personal, business): 

• Personal: https://www.linkedin.com/in/patrick-ng-6421b5 

• Website: 

•  https://www.shaleforce.com

• Reference paper: 

• https://energy.utexas.edu/research/geothermal-texas

I admit it. I'm an energy industry junkie. My news feeds are chock full of energy stories, I chase down obscure items that interest me, and I scrutinize energy industry changes to understand their hidden meanings and bigger implications. It's for this reason that every year around this time, I step back from the task of satisfying my daily energy news fix and focus instead on the many bigger swinging trends that are buffeting the world.

In this episode I'm using a framework called STEEPLE, which refers to Social, Technology, Economy, Environment, Politics, Legal, and Ethical. It's a way to categorize ideas into manageable buckets.

The category of social trends includes topics like demographics, shifts in settlements, human migrations, and cultural changes.

I like to consider the social trends with the biggest impacts on the energy industry which tend to be those that drive demand and supply.

Tech trends cover more ground than just digital, and include science advancements, materials, new energy, health care, and many others, but I'm mostly focused on digital for this article.

The pace of digital innovation is not abating, and is likely accelerating as investments in select foundational capabilities come to fruition.

Economic trends covers such topics as markets, commodities, interest rates, employment, and much besides. Looking beyond commodity price reveals a host of important trends in the global economy.

"There's a move towards digital transformation. And there's two aspects of that. There's digitisation and there's digitalization."

"If it's digitized, you're simply taking, like a hardcopy, and you're scanning it near attaching it to a record of some sort."

"By digitalizing, it, I'm actually putting it in a format that the computer can process. It's much more efficient..."

In this episode, I'm in conversation with Tony Ciliberti, who is the founder of Reliability Dynamics. Tony is an authority on digitalization of equipment operating data, which is near and dear to my heart. Without good data, you can't really get the full benefits of digitalization. Worse, poor quality reliability data costs money, and carbon, as engineers have to drive to visit facilities when they don't need to. Better quality reliability data pays back very quickly. 

"[Reliability] means is being able to make equipment perform better by having the information necessary to make better decisions for the equipment."

Tony Ciliberti is the Founder and Principal of Reliability Dynamics. He is a chemical engineer with 30 years of experience in equipment reliability and risk management in the petrochemical and oil and gas industries. He is an authority on data digitalization and the application of ISO 14224 methods. He developed and patented engineering methods that resolve pervasive equipment performance data quality issues in EAM solutions. He chairs the CCPS Process Equipment Reliability Database (PERD) Project. He participates actively in ISO technical standards development as the ANSI-appointed US Expert in ISO/TC67/WG4/PG1 and is a contributing author of the ISO 14224:2016 standard. He teaches the ISO course on how to apply ISO 14224 in enterprise software.

"If I'm thinking that I'm gonna get information from the field, and I want to be able to validate it with a system, which I do, right, I've got to make sure that the data requirements aligned with the type of work."

• LinkedIn profiles (personal, business): 

• • Personal: https://www.linkedin.com/in/tciliberti

  • Business: https://www.linkedin.com/company/reliability-dynamics-llc/

• Websites: 

• •  https://reliabilitydynamics.com/

  • https://pf-prod-sapit-partner-prod.cfapps.eu10.hana.ondemand.com/profile/0001223132

  • https://store.sap.com/dcp/en/product/display-0000060110_live_v1/industry-standard-solution-for-plant-maintenance

  • https://www.sap.com/dmc/exp/2013_09_adpd/enEN/#/partners?search=ispm&id=p:p10016

• Patent

• • System and Method for Enterprise Asset Management and Failure Reporting System and Method for Enterprise Asset Management and Failure Reporting, US 11,157,519 B2 · Issued Oct 26, 2021

There are a handful of oil and gas industry conferences (ADIPEC, Gastech, CERAWeek) that are distinguished by their global nature, the topics being discussed, the scale of their trade show floors, and their enduring focus. Gastech is one of the biggest and best of the lot. I first came across Gastech in 2015 when I was living in Australia, and the Gastech conference was then being held in Singapore—unsurprisingly, as Australia was then building out its world-class liquefied natural gas (LNG) industry, gas prices were off the charts in Japan (US$18 per gigajoule), and the talk was all about expansion potential. Today $18 seems like a bargain and LNG is back on the table in a big way.

Gastech moves around the world to different locations, but is planned out years in advance. Sometimes the gods place favour on locations by dint of world happenings, and this year's affair was conveniently located in Milan, Italy, a mere 6 months after Russia's invasion of Ukraine. Energy security suddenly leapt onto the agenda.

Not everyone has the budgetary wherewithal to travel to distant centers for conferences (I know I don't) and time zones get in the way of attentiveness. Here's a snapshot of the key topics discussed at the conference.

Overshadowed by events in Europe, the drive to digitalize the energy industry took a back seat to energy security and energy transition at the conference. Read between the lines, however, and the importance of a robust digital foundation in a rapidly evolving energy landscape has never been greater.

The world is getting a stark lesson on energy geopolitics and energy security in light of Russia's invasion of Ukraine.

It's useful from time to time to view the decisions that major energy exporting nations are making that impact the energy security profile of consumer nations, and the risks of man-made catastrophic supply disruption, including the aftermath of the pandemic and the Russian invasion of Ukraine.

For example, China, as a big oil importer but with a strong industrial policy towards clean energy, will be able to seek favourable trade deals with exporters, in exchange for market access. On the horizon is the shift to new drivetrain technology for mobility. The list of countries that have banned the sale of internal combustion engine cars beyond 2030 is starting to grow impressively.

Digital issues factor into this kind of analysis, which gives rise to the question: how does digital innovation play into the geopolitics of the global oil industry? Digital innovations will increasingly play a role in the geopolitical world of oil and gas, and with unpredictable effects.

"The kind of customer centric focus, despite the industries being so different, [means] that the customer has a need for an easy to use interface and fully supported software as a service that has no downtime, because the people have no downtime either."

In this episode, I'm in conversation with Kate Allen, who is the Product Manager, PetroChemical Division for TruSolutions. Kate's team focuses on supporting both third party and owner/operator inspections of industrial equipment, which historically has been a pen and paper process, with lots of manual reports. But in the face of staffing shortages, new tech savvy employees, and the pending retirement of aging experts, companies are transforming their inspections practices and technologies, and gaining important strategic benefits alongside proven ROI. 

"Third parties are being asked to provide the same number of inspections with a significant shortage in staffing who are qualified to do so. Both industries are facing this great changeover with all of their subject matter experts heading towards retirement age."

Kate Allen is the Product Manager, PetroChemical Division for Tru Solutions, a company that provides quality assurance software for industrial companies. Kate describes herself as 'a wife, mother, and Petrochemical Product Manager from St. Louis, MO.' 

"If you're not capturing your data digitally now, how do you think you're gonna throw it into this awesome 3d modeling of your entire refinery?"

Kate began her career in software over 20 years ago with a small, local start-up serving the third party recruiting market.  Since then, she has worked in a variety of industries across various platforms helping clients standardize processes, improve efficiency, and leverage data for decision making. When she's not visiting the nation's finest refineries, you can find her screaming from the sidelines at a youth sports match, or perfecting her sourdough recipe. 

"Compliance and safety are a byproduct of conducting your inspections correctly."

• LinkedIn profiles (personal, business): 

• Personal: https://www.linkedin.com/in/kate-allen-57601061/

• Business: https://www.linkedin.com/company/tru-solutions-digital/mycompany/

• Website: 

•  https://trusolutions.com/solutions/api/

TradeLens, the IBM/Maersk venture to overhaul international shipping documentation handling, has been abandoned and will come to an end. Long live TradeLens.

Now, if you're wondering what this post has to do with digital innovations in oil and gas, consider that oil (and increasingly gas) is shipped internationally. The oil and gas industry is also a huge buyer of stuff that is sourced internationally and improvements in shipping are directly relevant to the cost of the industry. The underlying technology building blocks (cloud computing, blockchain, data standards, analytics) are common to many oil and gas innovations too.

TradeLens had a lot going for it:

• A big and global problem to solve
• A compelling business case for the customers
• Big global partners with deep pockets able to finance the development and actuate the marketing
• Deep skills in the key domains (shipping, technology)
• Alignment with the partners' respective business strategies (IBM as delivery partner  and Maersk as business domain expert)

The timing for the venture was not ideal. Despite being well hypothesized, the pandemic timing was not predicted, nor was the timing of the invasion of Ukraine. The pandemic has hammered supply chains globally, and the invasion has disrupted food movements, energy flows and lots besides. Participants throughout the supply chains likely have their hands full just trying to cope, let along embrace new ways of working. I can imagine uptake wasn't strong, but that's the reality of start ups and shouldn't be an excuse.

So here's to the death of TradeLens the platform, but long live TradeLens the idea of transformation international shipping to be more like Uber and less like Where's Waldo.

"There were some really important and interesting measurement problems that were non medical, but most venture dollars went into medical than what you'd think from the the market size for the most important measurement problems..."

In this episode Ian and I have a lengthy discussion on the challenges of data measurement and management in oil and gas. The industry is heavily dependent on the data it gathers from sensors, and dramatic improvements in telecommunications and analytics has thoroughly upended how companies can approach the management of their data. Topics include data uncertainty, how much measurement is too much, the impact of better measurement for careers in the industry, and much else besides. 

"When the original IT infrastructure was built, it was built with the assumption baked in that you had to curate most of your data before it left the field."

Ian Burgess is President and co-founder of Validere. He is the technical and innovation lead and has become one of the leading industry experts on commodity measurement, emissions and carbon sequestration measurement, and the emerging carbon markets.

"If you think about geoscience and all of the advances that have happened up to and including the shale revolution in downhole, it just seems like it can't be true that the reason why there's a data management problem, whether you're looking at emissions or quantities themselves, is because oil and gas operators don't like technology."

Ian is an interdisciplinary scientist whose inventions have been recognized with an R&D 100 Award and featured in Scientific American, Chemical & Engineering News, Nature Photonics, and Materials Today. He has a Ph.D. in Applied Physics from Harvard and a Bachelor's in Math and Physics from the University of Waterloo. 

"There's not enough emphasis placed on understanding the uncertainty in a piece of data, and accounting for what affects that uncertainty and what doesn't."

• LinkedIn profiles (personal, business): 

• Personal: https://www.linkedin.com/in/ian-burgess-35966337/

• Business: https://www.linkedin.com/company/validere/

• Twitter handles:

• @validere

• Facebook pages:

• https://www.facebook.com/valideretechnologies/

• Website: 

•  https://bit.ly/3Dw7fcF

• Interesting article by Ian:

• https://bit.ly/40wwCFc

Leaders lead by example, but what does that mean for the manager or supervisor of an oil and gas asset tasked with embracing digital?

In my book, 'Carbon, Capital, and the Cloud', I describe the stages of personal change that people go through as they deal with digital, particularly in heavy industry, such as oil and gas. People are so different—not everyone starts at the same stage, their pace varies dramatically, and many will not progress beyond doubt or skepticism. Their progress is influenced both positively and negatively by outside forces as well as internal influencers.

Digital adoption in heavy industry is hard work because it's about people and culture, but there are many small and immediate steps managers can take to get going.