GE Oil & Gas Annual Meeting 2017, Florence

IEA sees growth slowdown but ‘no demand peak.’ Total’s 'RAID,’ digital diagnostics and maintenance. BP CEO, ‘oil and gas digital way behind aviation.’ Apple/Siri creator on Predix and the digital transformation. GE’s take on the digital twin. Watson-like digital assistant for Predix. System 1 and Meridium mash-up. More from Baker Hughes, Amec and Reliance Industries.

GE reported upwards of 1,000 customers in attendance at the GE Oil & Gas annual meeting held earlier this year in Florence Italy. There were likely as many GE personnel present. GE’s flagship event includes displays of the company’s diverse line of ‘big iron,’ compressors, pumps and more, alongside its evolving digital solutions platform, Predix. But what is equally interesting is the snapshot that the GEAM provides of the state of the industry with commentary from a veritable Who’s Who of notables from operators, suppliers and politicians.

Fatih Birol was first up with a summary of the IEA’s latest energy outlook for the next couple of decades. In 2016, over half of new capacity was from renewables which are ‘no longer a romantic story.’ The IEA does not see oil demand peaking but there will be a ‘slowdown in growth.’ New conventional project approvals are at the lowest level since the 1950s. 2016 discoveries were the lowest in 70 years. An unprecedented effort is needed to avoid a supply-demand gap ‘in a few years’ time’. US shale oil is reactive but will have a hard time reacting enough. Birol foresees a ‘period of huge oil price volatility.’ With the current focus on climate change, some argue that there is no need for upstream investment. But this is not the IEA’s position. ‘Continued investment in oil and gas remains an important component of a smooth, least cost energy transition.’ Moreover, LNG is a catalyst for the second natural gas revolution with far reaching implications for gas pricing. Digital technology and electrification make for new opportunities and challenges as a major IEA study has shown.

Total’s Arnaud Breuillac recalled the shale revolution that has provided abundant resources but also created a huge downturn cycle! This hurt at first but has resulted in efficiency gains. Total, like the IEA, believes that, despite volatility, oil and gas will remain Total’s core business for decades. Digitalization is key to lower costs and to turning constrains into opportunities. In which context, Total’s digital ‘Raid’ (remote assistance intervention and diagnostics) will see some 35,000 sensors installed by 2018. ‘Digital will help cut costs and transform production.’ Operating costs fell 50% between 2014 and 2018, from $10 to $5/bbl. Total has reduced its supplier count by 2/3 and in West Africa, downtime is down 25%.

Bob Dudley (BP) concurred on the importance of digital, observing that oil and gas is ‘way behind aviation.’ Big digital data is set to be disruptive to industry. On climate change, BP is a believer and contributor to the Oil and gas climate initiative, a $1 billion fund for methane mitigation and carbon capture. On current trends, with world population set to grow to 9 billion, a 2°C plus rise is ‘all but inevitable.’

GE has hired some impressive talent to bolster its digital team. Ex-Apple creator of Siri, Darren Haas came on board last year to help out with Predix and with clients’ digital transformation. While many companies are working on the cloud-based platform for the digital twin (see this month’s lead), ‘a lot are getting it wrong.’ Predix’ embedded graph database will soon allow the complex relationships of sensors on a plant to be captured. The graph database has been announced for some time but seemingly it is only really available now and will be integrated with Predix over the next few months. Along with the cloud option, Predix can be delivered as an on premises Predix Box, a lightweight analytics appliance. Upcoming ‘data at the edge’ workloads ‘will change the industry.’ These are driven by Predix-ready controllers, gateways, appliances and the cloud, ‘several [of which] are coming online in Q2.’ Haas warned, ‘Note that we are all in on Predix, there is no plan B!’

GE’s Colin Parris provided a captivating explanation of the digital twin (DT) concept. Successful companies like Apple, Amazon and Google have cornered the market in their respective fields, ‘there is no number 2.’ This they achieve by making a numerical model of the consumer, i.e. you and me, to be able to target their advertising. GE is doing the same, not just for asset classes but for each individual compressor or pump. Instead of using averages or assumptions to predict performance, the data for the exact operating environment, costs and so on is rolled up into the digital twin or, as Parris prefers, the asset’s own ‘profit and loss account.’ Along with early warning of bearing failure and continuous prediction of remaining useful life, Predix supports dynamic optimization, balancing KPIs in real time by combining the physical (sensor) and digital (simulation) worlds.

Parris then fired up a rather Siri-like digital assistant that proffered production optimization advice and interaction in a natural language dialog. The speech interface warned of ‘scale build up in the Miss. lime!’ Harris queried ‘OK twin, what are my options?’ The machine came back with suggestions for remediation, costs and payouts. The rather contrived dialog was reminiscent of the Woodside/IBM Watson ‘Willow’ interaction that we reported on last year.

Another presentation introduced a calibration scale for companies setting out on the journey to ‘digital maturity,’ with a DAMA-like maturity scale from level 1 (data collection) right up to level 5, with AI-supported autonomous, de-manned operations. GE, along with other industry partners is targeting the ‘$200 billion opportunity’ for industry represented by a cloud-based asset performance management (APM) strategy. Concerns over security? ‘Don’t be worried, these things are being solved.’

GE’s Erik Lindjhem presented a mash up of GE/Bentley’s System 1 and Meridium portfolio. System 1 has been re-cast as an ‘edge device’ that assembles information (some may not leave the plant) and passes it up to Meridium. Both System 1 and Meridium are linked not by Predix, nor the digital twin, but by an ‘Enterprise Impact’ system that exposes data in different ‘personas.’ Thus, data is presented appropriately to field personnel or top-level strategists. Poster child for the Enterprise Impact approach is the Origin LNG mega project.

Binu Matthew, GE Oil and Gas’ head of software, led a special session on asset performance management (APM). GE had its own APM solution before it acquired Meridium in a $500 million deal last year. GE is in the process of integrating the two solutions, combining Meridium’s strategic top-down approach with its own more tactical toolset. The plan leverages a central data platform and expands APM from downtime mitigation to a more comprehensive role in production optimization, ‘leveraging the power of the digital twin.’ ‘APM in oil and gas has the largest potential of any industry we have seen.’

We chatted with Binu Mathew about the state of the Predix art. Predix is a data abstraction layer developed on cloud technology from Pivotal. This embeds Hadoop Spark and the BitStew platform for the Industrial Internet acquired last year. GE plans to pick up more state of the art software components as Predix develops. We pressed Mathew on how a mature application such as Meridium could now be presented as ‘Predix.’ He explained that the Predix roadmap is underway and that Meridium is being refactored to Predix so it can talk to other apps. ‘True’ Predix apps to be rolled out in 2017 include Predix pipeline corrosion management. This will blend radiography, ultrasonic sensing and flowmeter data. The Predix ecosystem extends beyond oil and gas. We also asked Mathew on whether having ‘20,000 developers’ working on Predix was a good thing. Mathew replied ‘That’s my mission. We have seen a lot of customer-specific work but now we are fixing on common patterns. We are moving back from the army of developers as we rationalize in phases. However, APM is not just one shrink-wrap product, we will need some service-related customization for specific client needs.’

In another keynote, Baker Hughes’ Martin Craighead laid-into inefficiencies in the industry supply chain. Globally the industry is ‘at best 50% efficient’ across the supply chain because of hundreds of hours of downtime and millions of dollars in excess costs. ‘This is costing us all in credibility with shareholders.’ Craighead considers that the return of capital employed (ROCE) as the best measure of long term value creation. Here, ‘We need to do better!’ In the period 2009-2014, ROCE was a meagre 2-3% over the cost of capital. In North America the industry was 5% underwater! ‘We need to operate fundamentally differently.’ BHI has started the discussion on ‘radical efficiencies’ with for instance, R&D in designer chemistry and EOR which is ‘a nearly untapped technology.’ Other promising new technologies include virtualization, automation tools that ‘think, act and heal themselves.’ Additive manufacturing, aka 3D printing will soon bear fruit with the announcement of the first 3D printed drill bit for later this year.

In a panel session on ‘collaboration,’ AMEC CEO Jonathan Lewis agreed that collaboration across the supply chain needed improvement. AMEC commissioned a study from Bain & Co. and found that oil and gas is in the ‘middle to lowest quartile,’ aerospace is better. Commenting the digital innovation theme Lewis asked ‘are we ready for collaboration and data sharing a la Predix? Some are, others not.’ While there is much talk of collaboration in the C-suite, this does not trickle down. ‘I’m not sure that the recent pain has been enough to force significant change in our way of working internationally.’ In North America however, collaboration has been much more successful, with un-conventionals as the disruptive/driving force. Even so, ‘we are inhibited by fine grained specification from procurement departments.’ This contrasts with the mining industry that has a track record of sharing the big picture with suppliers.

India’s Reliance Industries is in a good position to talk digital. Not only does it operate the 1.2 mmb/d Jamnagar refinery, ‘the world’s largest,’ it also runs India’s Jio telco and has its own digital services business. CIO Manoj Chouthai enumerated some of the tools deployed in Jamnagar, notably Meridium and GE SmartSignal along with AspenTech’s IP21 historian. Reliance is to partner with GE on Predix, now a core component of its digital future, along with an eclectic assembly of third party solutions from Honeywell, Schneider, Emerson and others. These are being co-developed in the Reliance Foundry aka the Digital Innovation Hub.

More from the GEAM home page.

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