Maintaining oil and gas industry productivity and profitability

By Bill Lydon

I had the opportunity to talk about automation with Siemens’ Wolfgang Rubrecht, vice president – Digital Factory United States, during the Siemens Oil & Gas Conference 22 April 2015 at Minute Maid Park in Houston, Texas. Rubrecht noted that the current low oil price is a punishing stress test and brings into sharp focus the urgent need for advanced automation. He believes the U.S. slowdown in the oil and gas industry, due to lower prices, gives companies the time and motivation to focus on increasing efficiency with automation to be competitive. Automation investments can lower production costs to effectively increase profit margins. Industries running at high capacity typically have no time and little incentive to pursue automation to increase efficiency and productivity. During slow times these industries have the time and incentive to pursue automation. This phenomenon has happened before in other industries; Rubrecht cited automotive and aerospace as prime examples. In the case of the automotive industry, major automation investments were made that are now paying dividends in higher efficiency, productivity, and profits.

Rubrecht believes the oil and gas industry is just learning and going through the process of understanding and implementing automation. He mentioned that many of the companies in the shale fields have not adopted automation and use a great amount of manual labor. He cited an ARC study that found the attitude and mindset of the people who operate the fields in the industry tends to be conservative about automation and they have not adopted automation at the rate of other industries. Automation also provides information that can be applied to optimize operations and make future investment decisions using actual data rather than conjecture. He commented, “The weakest link in the production chain is the human being; nobody makes as many mistakes as humans, and we all know that because we are human beings.” If you automate the process, you improve quality and reliability.

There has been progress, as noted in a presentation at the conference by Don Norman, director of economic studies with the Manufacturers Alliance for Productivity and Innovation Foundation. He illustrated that Bakken oil production per rig has been increasing.

Rubrecht noted that National Oilwell Varco is an example of an early adopter reaping the benefits of automation investments in its oil rig control systems simulating designs, using hardware-in-the-loop testing, advanced automation, training simulators, remote management, and diagnostics. These investments have increased reliability, productivity, and safety.

Major factors affecting the oil and gas industry include the aging workforce, cybersecurity threats, competitiveness in a shrinking market, and increased regulation. Thirty to forty percent of the workforce will be retiring in the next 10 years. In the near term, the impact of the aging workforce is less because of production cutbacks. As the industry recovers, this will be a compound problem experienced by other industries with a need for a large amount of skilled labor. Everyone in the value chain, including machine builders, oil service companies, and super majors, is feeling the crunch from lower prices and demand. It can be mitigated using automation. Complying with increased regulation and new standards is another factor that can be accomplished efficiently with automation.

Wolfgang Rubrecht suggests that if an oilfield is professionally operated it is almost a manufacturing operation, “the product produced is oil or gas, and you want to do that most efficiently, safely, and sustainably.” Rubrecht believes the oil and gas industry can “benefit mightily” from a high degree of automation.

About Wolfgang Rubrecht

Wolfgang Rubrecht Wolfgang Rubrecht is vice president and head of the factory automation business unit within Siemens Digital Factory United States. He is responsible for the industrial automation systems business of Siemens in the U.S., which includes the SIMATIC S7 PLC, Industrial PC, and HMI Panel product lines, as well as the TIA Portal and WinCC HMI software suites. Previously, Rubrecht was the general manager of the Motion Control Business of Siemens Energy & Automation, Inc. He has also worked in the Siemens Motion Control Business’ global headquarters in Erlangen, Germany, where he held a variety of managerial positions, including sales, business development, procurement and post-merger integration. Before joining Siemens, Rubrecht worked in various positions in marketing and procurement with ABB and Robert Bosch. Rubrecht holds a master’s degree in business administration and electrical engineering (Diplom-Wirtschaftsingenieur) from the Technische Universitaet Darmstadt in Darmstadt, Germany.

About the Author

Bill LydonBill Lydon is chief editor for InTech. Lydon has been active in manufacturing automation for more than 25 years. In addition to experience at various large companies, he cofounded and was president of a venture-capital-funded industrial automation software company.

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