Volume 23 Number 6


Editorial Better than ‘digital disruption’ here’s a real business transformation program for oil and gas

Circular Energy BV has a cunning scheme to a) produce stranded gas, b) sequester CO2 and c) balance intermittent electricity loads from offshore windfarms.

A popular notion that is often used to justify the ‘disruption’ of digitalization is that digits will enable new business models. If you consider that using blockchain to settle transactions in oil and gas is a new business model well, good luck with that. But in general, as I have said before, it is hard to see quite how more digitization can truly disrupt an industry whose business is to produce, transport and refine oil and gas. Seeking a digital technology that is going to change the way oil and gas does business is putting the cart before the horse. Much better to sit back and think about what new business models (or even better, new businesses) there are out there and then, if needed, tailor a digital solution to the problem.

The difficulty is that oil and gas has for a long time been seeking new business models, increasingly so as it is attacked from many sides as a polluting, CO2 generating twilight industry. These new businesses usually involve something like, buy a battery manufacturer, a windfarm or photovoltaic operation. The problem here is that, being an oil and gas company does not really put you in a much better position than say, venture capitalists or other investors and it likely puts you in a worse position than the incumbent utilities working these new spaces already. Oil and gas really needs some new business that dovetail, in a profitable way, with oil and gas production and that, if possible, is green. And it so happens that I have one such business teed-up and waiting to go.

Speaking at the 2018 ‘Meet the Projects’ meeting of CATO* chez TNO in Utrecht, Circular Energy CEO Arnold de Groot presented an elegant solution to a three-way problem, of simultaneously producing stranded offshore gas, sequestering CO2 and load balancing the intermittent output from offshore wind farms. Oh, and, by the way, making money while doing it. The Dutch North Sea makes for an excellent testing ground for Circular Energy’s approach. The sector has a significant number of stranded gas fields, ones that are too small or awkwardly placed in regard to infrastructure to justify being put into production at current gas prices. There are also a large and growing number of offshore wind farms. And the Netherlands government’s climate legislation is strongly supportive, with CO2 reduction targets of 50% by 2030 and 95% by 2050 compared to a 1990 baseline.

Circular Energy’s grand plan is to burn gas on an offshore production platform above a stranded gas field, to produce electricity on-the-spot, to capture flue gas CO2 from the generators and to pump it back into the reservoir. Circular Energy has modeled the propagation of CO2 in producing reservoirs and deemed it problem-free and has patented some aspects of the simultaneous injection of CO2 and production of natural gas from the same reservoir. The electricity produced is exported to nearby offshore windfarms (BorWin, Gemini, DolWin, etc.), feeding into the existing electrical grid and providing scalable load-balancing to the windfarm. When the all the gas has been produced and the reservoir filled with CO2, the whole caboodle jacks down, moves over to another field and repeats the process.

There is an ongoing debate in the press over the cost of carbon capture and storage (CCS) which some believe to be prohibitively high. de Groot will have none of this. Circular is economic at current EU carbon prices and the activity also receives revenue from selling its electricity. A further advantage over other CCS approaches is that the stand-alone platform needs no long CO2 flow line, unlike other ‘end-of-pipe’ solutions. Circular expects to benefit further from volatility in power prices, ‘we can supply our electrons to the grid at the best time’. Overall a 12% rate of return is expected, assuming a modest rise in electricity prices.

We have been skeptical about the very high capex involved in purpose-built CCS installations. de Groot puts the cost of the US PetraNova plant at over $1 billion for 25 years at 1.4 megatonnes/year. Circular’s is far cheaper at €83 million for 25 years at 0.6 megatonnes/year CO2 sequestered.

A €5 million initial fundraising in September 2018 was undersubscribed, in part because a number of prospective investors advised that a larger float would get a better reception. Consequently, Circular is about to announce a scaled-up, €100 million fundraising to kick-off an initial pilot codenamed ‘Cranberry.’ Cranberry is to cost around €300 million and Circular already has a 40% joint venture partner in EBN, the Netherlands state oil company. Other JV partners have been identified, leaving Circular with a current stake of around 30%, along with operatorship of the facility. The company is open to other partners joining the consortium.

Does digitization have anything to do with this? Of course it does and there is plenty of new stuff for oil and gas and process control engineers to get their heads around, as oil and gas gets electrified. We offer you a quick start guide to digital transformation of the electrical industry-at-large elsewhere in this issue and, in our first issue of 2019, we will be reporting more from CATO.

* CO2 Afvang, Transport en Opslag (CO2 capture, transport and storage), the Dutch national R&D programme for CO2 capture, transport and storage, a consortium of nearly 40 partners including Gasunie, NAM (Shell/Exxon JV), Schlumberger, Shell, Wintershall, cooperate.

@neilmcn

Headlines

Taking AI into production. Total’s AI-based ESP predictive maintenance.

Octo on the ‘curse’ of moving artificial intelligence into production. ‘Hype is in the air!’ Avoiding the data science/IT/business ‘War of Thrones’. AI prolongs Total’s subsea pump run-life.

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Extreme-scale seismic data processing library

Tullow Oil-led researchers release ExSeisDat as open source software.

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More from the 2018 ECIM Data Management Conference, Haugesund

Equinor on DIY spatial analytics. Landmark’s well planning decision support. Interica’s new OneView platform and Tinkerpop graph metadatabase. PARS roadmap to the multi-cloud. RoQC QC’s Petrel data. Kadme sales to Petronas, TatNeft. Cognite conquers siloed data. IO-Data’s open source GIS.

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SEG hears from real world test of RESQML data exchange.

Kepler project trials Energistics’ vendor-independent protocol on Na Kika deepwater Gulf of Mexico data exchange.

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Software, hardware short takes

Amphora’s AssayLocker. Arria NLG Studio for BI. Badley Geoscience ‘ORC’. Barco’s ‘Ideation’ wall. BHGE ‘EngageSubsea’. Billington Petroleum Technologies DOSS. Ikon Science RokDoc 6.6. Emerson/Roxar Tempest 8.3. Halliburton ‘Cerebro’. Interica EPShare. PDS Ava Clastics 2018. Intel Neural Compute Stick. Laser Technology and ProStar Geocorp. IntOp text analytics. Arundo/Dell IoT bundle for oil and gas. Drillinginfo OptiFlo Gas. SPEE surveys software. Schlumberger Concert welltest technology. Spectro Scientific FluidScan. Tatsoft FactoryStudio. Weatherford Vero. WoodMac Lens.

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IP.com adds OnePetro to InnovationQ platform. SPE contracts i2k Connect for AI-based search.

Oil and gas content auments IP.com’s 100 million patent database. i2K Connect’s adds AI-based search to OnePetro.

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OSIsoft PI World Europe Barcelona 2018

OSIsoft president Pat Kennedy ‘PI-addressed hardware is here to stay for another 20 years’. PI Cloud Services central to IoT. Iberdrola on EU energy market revolution. Digital Transformation Forum. Sirius JV to build semantic digital twin. Data quality and TransCanada. Shell’s predictive asset management. Toumetis, Seeq on machine learning and visualization. PI central to BP operations. DCP Midstream’s Energy Lab transforms with PI AF.

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Folks, facts, orgs...

Anadarko, American Petroleum Institute, Arria NLG, Battelle, BRAeMar, Unique Group, Chevron, Clariant, Colony HB2, CSI Compressco, Desert Downhole Tools, National Energy Technology Lab, DNV GL, GE, Halliburton, Infoscience Technologies, Oceaneering, Natural Resources Canada, Open Geospatial Consortium, Perma-Pipe, Petrofac, Takatuf Oman, Petrotranz, Piper Jaffray, Simmons Energy, PRCI, ProStar Geocorp, Quorum Software, Rose & Co., Railroad Commission of Texas, SCF Partners, Swagelok, Utegration, WEC Energy Group, Wild Well Control, W&T Offshore, IFP Energies Nouvelles, Teradata, Wintershall DEA, Aveva, CDA, Oil and Gas Authority, Ryder Scott, Flicq, NOW.

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Done deals

Ametek, Spectro Scientific, GE, BHGE, Cold Bore Technology, Rice Investment Group, Geospace Technologies, PGS Americas, Ikon Science, Great Hill Partners, Chevron Technology Ventures, Energy Innovation Capital, Mission Secure, Nine Energy Service, Magnum Oil Tools, PDI Software, Outsite Networks, SCF Ventures, Ruths Analytics and Innovation, SAP, Contextor, Seequent, Siemens, Mendix, Validere, Sallyport Investments, Versa Integrity Group, Maintenance & Turnaround Resources, Weatherford, CSL Capital Management.

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2018 Oil and gas machine learning symposium

Geophysical Insights’ (GI) Paradise use cases. Geophysics on Microsoft Azure. ResNet on the Seismic Atlas. IBM ‘corpus’ for cognitive petrology. SEAM-style ML consortium mooted.

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Amazon Web Services Re:Invent 2018 oil and gas track

BP reports re-architected ‘cloud-first’ network. Amazon demos accelerated seismic pattern recognition, ML-backed geosteering and MWD.

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Sales, partnerships, deployments …

OmniTrax Energy Solutions, 1845 Oil Field Services, Software AG, Dell Technologies, Implico, SAP, Bluware, Bluefield, Flux Lab, Canonical, Eurotech, Kongsberg Digital, Gaslog, eDrilling, Geofacets, Esri, IBS Software, KBC, HTRI, Kongsberg Maritime, Stress Engineering Services, Blade Energy Partners, Orbital Gas Systems, Samson AG, Rockwell Automation, PTC, SPE, IOGP, Odfjell, TechnipFMC, INT, Yokogawa, Sphera Solutions, Greasebook.

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Standards stuff

IDS crafts next gen ‘DDR-Plus’ tour sheet schema. PODS V7.0. OGC on marine spatial data, Khronos, HDF5. OneGeology upgrade. W3 extends spatial sensor network ontology. Tim Berners-Lee to ‘clean up the web!’

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CGG shares survey files via Dropbox for Business

French geophysical contractor ‘reinvents’ its way of working, capitalizing on ‘unofficial’ Dropbox usage. Major US manufacturer migrates from Office365 to G-Suite.

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Blockchain update

Netoil ‘tokenizes’ oil bonds. NIST releases Blockchain technology overview. CMU/SEI releases Obsidian, opines on Oil IT Journal editorial. LR joins Blockchain Maritime Labs. VeChain’s ‘Thor’ LNG transaction manager. Siemens joins Energy Web Foundation. Nvidia suffers as mining declines - was September 2018 peak blockchain?

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A short report from CIGRE and the electrification front

Digitalisation, big data are impacting the power industry. Oil and gas itself is getting electrified with power to, and from the shore, electricity-powered frack units and really big energy storage systems for offshore. Digitzation is rife, along with open source software and new standards.

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Consortium corner

Marmot Passive Monitoring to test 5D Quantum Monitor for shale and EOR. ExproSoft investigates Norway’s BOP failures.

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IOGP recommended practice on remote offshore operations

New report covers the selection of system and security architectures for remote control, engineering, maintenance, and monitoring.

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National Instruments NI Days 2018

NI’s tools displace software at the network edge. Texmark refinery of the future. Neural nets and edge processing bring new life to BHGE ThreatScan. CRRC: Beijing to London in 20 hours?

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Energy Conferences Network’s 2018 IoT in oil and gas, Houston

PTC Kepware and Rockwell power Texmark’s refinery of the future. PTC joint venture with Nova Systems on digital twin for upstream. Realware’s wearable tablet. ToryTech’s ‘Smada’, scada for the IoT.

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On the pros and cons of the remaining useful life KPI

AspenTech critique of RUL estimator advocates ‘low touch’ ML. MathWorks predictive maintenance toolbox uses physical modeling to assesses RUL.

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