Peter Maier, SAP Global Head of Industries, observed that the energy industry is in good company regarding transition, ‘all industries are changing, notably pharma’. The outcome of the energy transition is unclear. But it is likely that many routine jobs will be eliminated as they are handled by machines. Investment in business intelligence is a smart move in the face of ‘big landslides only a few years out’. Climate change is indeed a threat to the long term viability of oil and gas. Here it is hard act as oil possesses a ‘super high’ energy density. Oil and gas also play a role in chemicals and infrastructure. Shutting all this down in a world addicted to hydrocarbons would cost ‘zillions of dollars’. Finger pointing at oil companies is ‘stupid’. Energy companies are paving the way to the transition, as indeed is the software business. ‘There will never be the new normal, continuous change is the new normal.’
SAP Global VP Oil, Gas, and Energy Benjamin Beberness cited a McKinsey study that found that although renewable energy will grow in the next few decades, oil and gas will still supply about 44% of world energy in 2050 (down from 53% today). SAP has a 40 year track record of supporting energy companies and is well placed to help address the ‘dual challenge’ of the energy transition; more energy and less carbon. Alongside renewables, this will be achieved with a shift to natural gas and hydrogen. Across the bard, ‘disciplined capital planning and productivity will be a differentiator. Berberness stated that ‘95% of the most successful oil and gas companies in the world run SAP solutions’, and 87% of the Forbes Global 2000 oil and gas companies are customers. SAP’s upstream oil and gas effort is informed by the SAP Oil and Gas Consortium, described as the custodians of the industry solution (IS) scope, reviewers of innovation priorities and early adopters of the new cloud services. The SAP S/4HANA Cloud for upstream oil and gas is augmented with quarterly delivery of scope items. In 2021 these include new functionality in JVA/Finance, US hydrocarbon accounting, field logistics and EPPM. Berberness also highlighted the flagship Digital Service Station initiative, more of which below. ETM.next got a plug, Bearing Point’s geolocation tools and equipment tracker as did DNV GL’s Corrosion Under Insulation manager and Flexinergy, an energy management solution from Evolution Energie. Finally the curiously-titled Rise with SAP got a shout-out as SAP’s ‘concierge service to the intelligent enterprise’.
Stephane Lauzon outlined SAP’s plans for upstream oil and gas. These include using machine learning to predict inventory shipment dates to allow users to take action and manage delivery delays. An ‘Overdue Materials – Stock in Transit’ module tracks materials and open stock transport orders which have exceeded the estimated time in transit (probably a lot of these today!). Lauzon addressed the ‘industrialization’ of the SAP S/4HANA cloud. This is an intended shift from today’s ‘complex, siloed, customized IT solutions and processes’ to a future state (Lauzon puts this a surprisingly long way off, on the order of ten years!) of ‘simplified, market standard IT solutions and business processes’. As we have reported previously, SAP carves-up the buy vs. build conundrum with solutions being 80% ‘market standard’ (i.e. unmodified SAP deliverable) and 20% custom. The latter is where clients need to ‘focus the effort and drive innovation’. The latest S/4HANA Cloud asset management scope items are described here. Lauzon concluded that while there are many paths to S4 deployment success, some rules should be observed. Use pre-configured solutions with predefined processes, use modern integration technologies, preferably white-listed APIs, and ‘document your customizations’.
Jean-Marc Delbos presented SAP’s Digital Service Station, now backed up with some very futuristic graphics. DSS will let fuel retailers transform conventional vehicle-centric service stations into ‘preferred multipurpose destinations’ offering a ‘personalized consumer experience’. Behind the scenes SAP automates sales and purchase order generation and optimizes fleet usage with automatic reconciliation, replenishment and settlement processes. The DSS embeds SAP Secondary Distribution Management for Oil & Gas and SAP Retail Fuel Network Operations. E-Mobility adds intelligent electric vehicle charging and circular battery management. E-Mobility, a.k.a charge point operations, is integrated with SAP Analytics Cloud, SAP Concur and non-SAP components. The Open Charge Point Protocol OCPP 1.6 is supported as is Gireve, the pan-EU e-mobility roaming platform.
Udayveer Singh outlined Cairn India/Vedanta’s move to S/4 HANA, in preparation for Cairn Oil and Gas’ ‘next phase of digital’. Cairn’s S/4HANA deployment was performed with help from SAP, IBM and Wipro. Cairn wanted to migrate from its old ERP platform which suffered from lengthy closing and reporting with delays in intercompany consolidation. Joint venture accounting (JVA) was also slow and overall the system was costly, due to customization and an inability to adopt the latest SAP software innovations. S/4HANA benefits include increased productivity from a ‘transformed’ user interface, mobile-enabled transactions and a unified web portal. Self-service functionality leverages the SAP Fiori UX. ‘Next generation’ finance and joint venture accounting (JVA) integration enable real time reconciliation and the integration of finance data, reducing monthly closing cycles time and facilitating value management in multiple currencies. Singh concluded with the observation that ‘S4 HANA Conversion is not only for ERP it impacts the entire SAP Landscape’. A ‘deep dive’ assessment report is essential, with attention to systems that use Java Webdynpro. There are some gotchas, the American Petroleum Institute QCI conversion modules are not compatible with S4. Singh recommends a homogeneous SAP landscape with a single database. S4 includes a major change in database replication techniques so it is key to check your business continuity systems. Migration is an opportunity to look at all stored data, with help from SAP’s DVM service. Cairn’s use cases include rig schedule automation and workflow, eliminating earlier ‘significant manual efforts to update the schedule whenever a new workover is added’ and extra work for the petroleum engineering team. Now an optimization algorithm combines multiple data sources to automatically generate rig schedules.
Madalina Ioana Trifan (SAP) presented a case history from a US oil producer client demonstrating the use of machine learning in operations. Using the SAP HANA automated predictive library (APL), Trifan built ML models for two use cases, scale/paraffin build up and well loading. The model was trained to detect and flag anomalies in measurement data and classify the root cause for downtime. The models proved good at predicting downtime up to three days ahead of time. Key inputs determined from the quantitative approach were verified by known physical relations such as water cut’s impact on well loading and Coriolis gauge temperature on paraffin build-up. SAP Predictive Analytics was used to visualize models’ ROC*.
* Receiver operating characteristic curve, a graph showing the performance of a model at different classification thresholds.
Brian Williams presented on SAP’s use of ISO Management System Standards (MSS) as embedded in SAP’s Asset Strategy & Performance Management. There are over 80 ISO MSS standards. All follow the ‘Plan, do, check, act’ (PDCA) cycle which is said ease the incorporation of multiple standards into core business processes in a consistent way. Management systems are not information technology systems, although information technology is an essential enabler for all MSS. Of particular note is ISO 55000 from the ISO Technical Committee (TC) 251 which covers asset management. SAP IAM is said to act as an enabling platform for ISO 55000. Another standard of note is ISO 14224, described as the foundation of oil and gas asset data governance and data quality. ISO 14224 addresses standard terms and definitions which are key when merging and analyzing data from different sources. Fields of application include failure recording, maintenance and the accurate use of location data assigned to a tag number. Williams also referred to the Oreda Offshore and onshore reliability database that leverages the ISO 14224 taxonomy. Looking to the future, Williams speculated on the use of SAP AIN to share ISO 14224 failure data. Other ISO standards mentioned en passant include ISO 15663 ‘Petroleum, petrochemical and natural gas industries — Life cycle costing’ and ISO 19008 ‘Standard cost coding system for oil and gas production and processing facilities’
Abdulmunim Balushi and his colleague from PDO, Abhinav, presented on the use of SAP Fieldglass Contingent Workforce (CW) module to add visibility into PDO’s burgeoning external workforce. Fieldglass CW now provides insights into ‘hidden workers’ in service contracts, enhances contracting and project management and standardized onboarding/off boarding while enforcing compliance. PDO is currently exploring the Fieldglass Service Procurement Module with an expected go-live at year end 2021.
Farid Akbari (OMV New Zealand) presented on DigitUP, OMV’s upstream digital transformation. DigitUP envisages a network of intelligent digital twins as the ‘digital backbone’ of the company. Field workers are (will be?) equipped with AR glasses to connect them with the digital twin/system of record. While Akbari did not specify whose technology was deployed, OMV has elsewhere been reported as trialing the AR headset from Clark Vision. SAP Asset Manager combines the feed with a visual overlay from the digital twin along with an IAM checklist.
The SAP in Oil and Gas Conference was organized by TAC Events. More from the conference home page.
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