April 2008

Cover story

Oil company of the future

Wireless, real-time data keys to growth for Statoil technology consortium


  • Wireless networks and devices mandate maintenance techs' continuous access.
  • Migrate functions and personnel from costly offshore sites to onshore locales.
  • The point is to improve operations at fields approaching the end of their life spans.
By Trond Michael Andersen, Svein Vatland, and Paula Doyle

The report was straightforward. Act now and increase revenues by $41.4 billion. Maintain status quo and see $10 billion in potential income disappear over the next three years.

The report emanated from the Norwegian Oil Industry Association (OLF) and bore the title "Potential Value of Integrated-Operations on the Norwegian Shelf." OLF released the report in 2006.

The report found if oil and gas companies active in the Norwegian shelf quickly were to integrate their operations, they could increase their revenues from the shelf by $41.5 billion. If they do not, they can expect to miss $10 billion in potential revenues within the next three years alone. These staggering figures reflect an array of challenges the industry faces and the scale of the prize at stake.

Although the prescribed solution to these challenges goes under different names-Integrated Operations (Statoil), eOperations (Hydro), Smart Field (Shell), Field of the Future (BP), and i-field (Chevron)-the key elements are broadly the same.

  • The widespread use of advanced information and communication technology (ICT) and real-time data
  • The introduction of new work processes based on real-time access to that data
  • Organizational change, in particular the migration of functions and personnel from costly offshore sites to consolidated onshore locations

By integrating their operations on the Norwegian shelf, the report concludes, oil and gas companies will be able to accelerate and increase production, reduce operating costs, improve safety, and extend the life of their oilfields.

Consortium and Statoil

Statoil defines integrated operations (IO) as "collaboration across disciplines, companies, and organizational and geographical boundaries, made possible by real-time data and new work processes, in order to reach safer and better decisions-faster."

To help identify the methods, technologies, and work processes necessary to integrate its operations, Statoil created a research and development consortium of companies-ABB, IBM, SKF, and Aker Kvaerner.

The project, known as "TAIL - Integrated Operations" began in January 2006 and assigned these targets.

  • Increase daily production by at least 5% by reducing production losses caused by operational failure, maintenance stops, and inadequate equipment performance.
  • Reduce operating, construction, and maintenance costs by 30%.
  • Reduce the number of unwanted incidents relating to health, safety, and the environment by 50%.
  • Extend the lifetime of Statoil's oil and gas fields.

The consortium and Statoil are each contributing equally to the project in terms of input and resources. In addition, the Norwegian Research Council is a major contributor to the funding of the project, which has a budget of $24 million and will run for a period of three and a half years.

Statoil's extensive assets

Statoil produces 1.1 million barrels of oil equivalent a day and is the world's third largest net seller of crude oil.

It operates 25 offshore installations, some 6,000 km of pipeline, and onshore facilities and terminals in five European countries along the North Sea rim.

Statoil is also one of the world's most environmentally efficient producers and transporters of oil and gas, and Dow Jones consistently ranks Statoil in its Sustainability World Index as the world's best oil and gas company.

The implementation of IO across these assets requires both short- and long-term strategies. In the short term, the focus is on making improvements in daily operations and maintenance. These range from establishing support centers onshore, improving existing work processes, training staff in IO and cross-border cooperation, and investing in ICT to make real-time collaboration possible. An essential component of the process is the involvement of suppliers and external resources to support facility maintenance and operation.

In the long term, investments in new technologies, work processes, and competence will be necessary to make the transition to an IO company successful.

Statoil is highly dependent on contractors and suppliers throughout the value chain to achieve its short- and long-term objectives. The traditional R&D model for asset management rarely involves suppliers and external competence in an optimal way.

To rectify this, Statoil initiated a new partnership model with leading suppliers, the result of which, in the field of asset management, is the contract between Statoil and the ABB consortium.

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The R&D collaboration model is an IO initiative in its own right. It requires cooperation between different companies, cultures, and functions (R&D and business units), as well as joint management and the use of a gate process for project control.

More importantly, the lessons learned from the partnership will demonstrate how Statoil and its leading suppliers create value by allowing their best R&D resources to collaborate in an environment without borders. Collaborative research is about common objectives, it is about trust, and it is about working with meaningful targets.

From the consortium's point of view, the project is a unique opportunity to get customer feedback at a very early stage of the R&D process. This enables the consortium partners to focus on real customer needs. It also ensures the technologies and methods developed see validation in pilot installations in an operational environment.

With each R&D team composed of representatives from all five partner companies, the project offers team members the opportunity to experience and learn from different R&D cultures and to exchange knowledge and expertise.

TAIL-IO is an ideal opportunity for the consortium to develop the oil technologies of tomorrow in cooperation with a leading end user like Statoil, and to field-test new concepts and technologies before taking them to the global market.

Tail-end production

As its name suggests, TAIL-IO initially aims at improving operations at fields approaching the end of their life spans. Tail-end production is a major challenge facing all oil and gas companies. It is the stage where the production rate is declining, the facilities are aging, and the cost of operation is high. Extending the economic lifetime of these fields is vital to all companies, especially those operating in the Norwegian shelf.

TAIL-IO is six subprojects, also known as technology areas. Each technology area links closely with the others and collaboration between them is encouraged.

  1. Condition-based maintenance and performance monitoring: The objective is to create a condition-monitoring portal that will contain plant condition data on all critical subsea and topside equipment and support work processes at IO centers. The project will develop methods for early fault detection and residual life prediction and for condition monitoring of critical assets like pumps, valves, and electrical, rotating, and static equipment.
  2. Corporate decision support model for strategic planning of turnarounds and shutdowns: The goal is to develop a tool that can accommodate a vast and complex range of data with the ultimate objective of eliminating asset shutdowns.
  3. Wireless communication and sensor systems: Among the objectives are the designs of new and open communication systems, the installation of wireless -instrumentation to reduce cabling and capital expenditure, and the automation of maintenance tasks to reduce maintenance person hours.
  4. Collaborative visualization tools for preparation, training, executing, and supporting maintenance operations: The aim is to develop a tool that can support a wide range of functions (including multi-organizational team collaboration) to perform maintenance operations and diagnostics and improve the level of assistance from centers of excellence.
  5. Mobile ICT: The focus is on man-machine technology, work processes, and mobile ICT infrastructure that support plant personnel. The growing deployment of wireless networks and devices is increasingly making it possible for maintenance technicians to have continuous access to support systems and personnel via a wireless connection and personal digital assistant, or PDA.
  6. Robotics: The sixth subproject concentrates on robotics technology to supplement and extend human inspection and intervention capabilities at subsea, topside, and onshore facilities. The objective is to develop solutions that combine tele-robotics and advanced visualization to enable remotely operated inspection and maintenance operations, as well as to identify and close technology gaps.

Translate ideas to answers

Establishing a project culture that nourishes creativity and innovation is a concern when so many partners and interests are involved.

To add to the complexity, a large number of external research institutes are also taking part in the project. Indeed, TAIL-IO is hosting five Ph.D. students and five postdoctoral candidates.

By providing researchers with a supportive and challenging environment conducive to sustaining high levels of creativity in individuals and teams, the atmosphere seems right for success,

By offering researchers a variety of challenges with respect to technology, work processes, and collaboration-and the possibility to follow the R&D process from idea generation to pilot installation-the TAIL-IO project is already proving successful.

Openness and sharing of new ideas is likewise a challenge. To ensure good ideas flow freely and the originators of those ideas get credit, we have established a system for registering invention disclosures. The objective is to translate those ideas into solutions, turn successful pilot installations into Statoil assets, and for the consortium members, release the technology into the global marketplace.

TAIL-IO is now entering the phase of pilot rollout, with a number of technologies and solutions ready to proceed to the pilot stage. For instance, extensive testing of wireless technology for industrial environments has taken place in the laboratory and is about to be piloted at several Statoil sites.

A large-scale robotics test rig is ready for installation at a laboratory, and several condition and performance monitoring technologies that enable access to data independent of location-true IO enablers-are due to be piloted.

The proof of the success of these technologies and solutions developed in the TAIL-IO project will come with their eventual deployment over a wide range of assets and installations.


Trond Michael Andersen (tman@statoil.com) is an engineer with Statoil R&D out of Trondheim, Norway. Svein Vatland (svein.vatland@no.abb.com) and Paula Doyle (paula.doyle@no.abb.com) are engineers at ABB Strategic R&D for Oil and Gas in Oslo, Norway.


Wireless: Reliability, security issues wane

By Gregory Hale

When decision time comes, users usually have two fears about whether they want to deploy wireless. They want to know if it is reliable and if it is secure.

Along those lines, suppliers continue to shout from the mountain tops their solutions should allay any fears for end users when it comes to those two issues.

That shouting seems to be working as an InTech Market Study on wireless shows automation professionals from all aspects of control disciplines from process, discrete, batch, hybrid, and systems integration feel the newest technology is reliable and secure. InTech conducted an e-mail Zoomerang survey among readers seeking a snapshot of what automation professionals in the industry are thinking about wireless technology. While this survey is not statistically rigorous, it does give an anecdotal view of what is on readers' minds.

One of the biggest issues fighting against adopting wireless is users fear the technology is not reliable enough. That issue seems allayed as 81% said they are happy with the reliability of their wireless system, according to the survey.

The other big issue users talk about is the need for a secure wireless system. As it was with reliability, 82% of respondents said they were happy with the security of their wireless system.

Continuous reinforcement

When asked about the main area of concern about wireless, the top two reasons ended up being reliability at 53% and security at 28%. Power was the third most thought about fear for users at 11%.

Whether they feel systems are reliable and secure, users are installing wireless to work in unison with hardwired systems.

When asked if they have hardwired and wireless communications at their facility, 67% said they had a combination, while 26% said just had hardwired, and 4% said wireless.

When asked if users had plans to implement (or implement more) wireless in their plant this year, 60% answered in the affirmative. And when asked about the next three to five years, 82% said they had plans for wireless.

Users are installing wireless, but what are they using it for? In a question where respondents could give more than one answer, the top selection was data collection, with 25%. Process monitoring came in at second with 23%, followed by communications (cell phones) at 14%. Sensing and control each recorded 12%.

When it comes to standards, 81% said it was either important or very important to have a wireless standard. Very important came in at 43%, and important hit 38%. Not very important ended up at 13%, and not important at all had 5%.

But when it comes to a wireless standard, no one seems willing to wait around, as 71% said they will not hold off until a wireless standard gains approval to purchase a wireless solution.

Top technologies

What wireless technology do users plan to use? These responses ended up with a few interesting developments; IEEE 802.15.4 - 2006 (Wireless HART) garnered the most tallies at 18%. IEEE 802.11g (Wi-Fi operating in the 2.4 GHz radio band) picked up 13%, and IEEE 802.11b (Wi-Fi operating in the 2.4 GHz radio band) earned 12%. One interesting development was 900MHz came in fourth with 6% of respondents answering. What makes this so interesting is respondents had to write in that selection under the "other" category.

In an open ended question where respondents had to write in an answer, when asked who was their preferred wireless vendor, the big winner was none or to be determined, with 17% not sure yet of a wireless vendor. Emerson came in second with16%, Phoenix Contact followed at 9%, and there was a tie at 6% each for Honeywell, ELPRO, Cisco, and Weidmuller. MDS followed at 4%. Numerous other vendors were also named.

Cost savings was the top reason why respondents implemented wireless, with 34% saying yes. Eliminating hard wire came in second with 29%. Gaining more visibility into the process reported 12%, and gaining more points of measurement had 10%.


Gregory Hale is the editor of InTech.

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TAIL - Integrated operations consortium

ABB is a Switzerland-based worldwide provider of power and automation technologies that enable utility and industry customers to improve performance while lowering environmental impact. 2007 sales were $29 billion.

Aker Kvaerner is a global provider of engineering and construction services, technology products, and integrated solutions in oil and gas, refining and chemicals, mining and metals, and power generation. Group revenues in 2006 were $8.4 billion.

IBM is a global supplier of middleware and the second largest software company overall. It is the leader in business consulting, with more than 3,000 oil and gas professionals worldwide, and has the world's largest industrial research organization, with some 3,400 employees and eight research laboratories worldwide. Group revenues in 2006 were $91.4 billion.

SKF is a supplier of products, solutions, and services in roller bearings, seals, mechatronics, services, and lubrication systems. Its reliability systems business unit provides value-adding systems, software, and consultancy in machinery reliability. Group revenues in 2006 amounted to $7.7 billion.

Statoil is an integrated oil and gas company and the leading operator on the Norwegian continental shelf. With exploration and production activities in 15 countries, Statoil is one of the world's largest suppliers of crude oil and a substantial supplier of natural gas to the European market. Revenues in 2006 were $71.7 billion.