Four Ways To Maximise Assets And Reduce Operational Costs In Oil And Gas Operations

Four Ways To Maximise Assets And Reduce Operational Costs In Oil And Gas Operations
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Four ways will be presented dealing with maximising assets and reducing operational costs in the O&G sector. By Jae Kyu Kim, Oil & Gas Manager, Southeast Asia, Rockwell Automation

The Oil and Gas (O&G) industry is undergoing tremendous transformation, challenged to remain operationally effective, whilst maintaining margins amidst fluctuating commodity prices and enduring the highest downtime cost of any industry – often surpassing US$1 million per hour. In such an increasingly complex marketplace, O&G operators want to simplify their businesses to drive efficiency, protect profits, manage the massive volume of mission-critical data across disparate silos, maintain ageing infrastructure, and juggle the effects of a dwindling skilled workforce.

At the same time, the US Energy Information Administration (EIA) International Energy Outlook 2014 reports global energy demand is set to grow by 37 percent by 2040, though the global distribution of energy consumption will change dramatically. Energy use is projected to be essentially flat in Japan and South Korea, but concentrated in the rest of Asia – which will account for 60 percent of global consumption by then.

In the next fifteen years, China is expected to become the largest oil-consuming country, overtaking the US. As such, global competition for depleting resources will continue to drive the need to increase extraction from new and existing fields, capitalise all assets, improve safety standards and uptime, and lower operational costs to boost productivity.

Automation technology can help plant operators to achieve these goals by focusing on getting the most out of production assets and decreasing overhead.

Four Ways To Maximise Assets 

1. Optimising O&G Production

Nearly half of the global increase in O&G production will come from unconventional sources. Advancing technologies, combined with the constant need to find new resources and novel exploration locations – including production platforms located on the sea floor – require leveraging existing facilities and processes, whilst evolving operational expertise. An integrated process-automation system – from exploration and extraction to production, processing, transportation and storage – will provide plant operators the open, integrated architecture needed to address their individual requirements, achieve faster time-to-first-oil, lower operational costs and improve competence.

2. Increasing Efficiency And Productivity Via A Single, Integrated Platform

Today’s volatile global marketplace demands O&G companies react promptly to ever-changing energy demands, conventional and unconventional resources, process conditions and environmental concerns. As such, utilising automation and contextualising existing data are critical to significantly reduce operational expenditures and diminish engineering time for enhanced performance and increased profitability. World-class manufacturers enable operators to implement and maintain automation processes using one integrated platform – assimilating information, control, power, and safety.

3. Asset Management And Condition Monitoring

In order to increase profitability, O&G companies are pressured to increase output and lower costs by minimising downtime. Pumps, compressors, and associated control systems and instrumentation need to be in prime condition constantly to maintain throughput targets and optimised uptime. Best practices in asset management help plant managers to better monitor, measure and manage their legacy equipment, without compromising performance or safety.

Industry-leading strategies include:

  • Providing a facility- and enterprise-wide view into asset performance
  • Circumventing unplanned shut downs
  • Systematically maintaining resources. Customisable dashboards can pull data from disparate sources and contextualise it for specific tasks, whilst predictive-control software can help to achieve optimal control performance, maximised yield and minimised energy consumption.

4. Skills Gap And Remote Operations

An unprecedented shortage in skilled labour is one of the most daunting challenges for O&G producers – with 30.6 percent of employers surveyed expressing their concern about this talent gap, which exceeds norms in other industries. Many state-of-the-art O&G facilities are now built to operate with a minimum core crew in a move to reduce logistics and support, whilst minimising hazards and risks. O&G expertise is being shared across many assets utilising Internet-based tools and cloud computing. At the same time, remote resources can be vigilantly monitored with increased automation and connectivity to enterprise IT networks.

Case Study 1: Austral Pacific Energy Cheal Oil Field Maximised Production with a New Unified Control Approach

In New Zealand, an unconventional source of energy comes from a vast reserve of solid, waxy oil that can only be extracted after it is heated and softened. Austral Pacific Energy Ltd. owns this unique reserve, known as the Cheal oil field.


Austral Pacific Energy sought an automated system that could accelerate time-to-first-oil. In addition, the company wanted to a unified system to control and monitor their entire operations from oil temperature to equipment performance, whilst complying with regulatory standards. They determined they needed more than standard system with DCS functionality, and explored options that could concurrently leverage an open multi-disciplined control platform – to integrate discrete, process and safety I/O points – and provide a global view of all their remote sites.


Initially, Austral Pacific Energy switched from a legacy DCS to a Rockwell Automation unified-control approach based on the company’s integrated architecture. Then, the operator invested in an Allen-Bradley ControlLogix multi-disciplined controller, which helps integrate the oil field’s process and discrete applications. Furthermore, it deployed aFactoryTalk integrated production and performance suite for enhanced data-management capabilities, as well as RSLogix 5000 programming software. Next, the company deployed a DeviceNet, ControlNet and EtherNet/IP network to support a common language and seamlessly connect production devices to the rest of the enterprise. Finally, Austral Pacific Energy entered into a TechConnect support agreement for real-time access to a global network of technical resources.


The integrated-control system helped accelerate setup by streamlining the intensive commissioning process to under 10 months, saving more than two months. In addition, reporting, diagnostics and trending systems have kept production flowing − which is vital since after just five hours of downtime, it takes up to two weeks to reheat the wells to resume production. With heightened scalability, Austral Pacific Energy quickly incorporated a newly discovered oil field located nearby the recently installed control system. In addition, by leveraging the sophisticated control, networking, information and visualisation technologies, the remote facilities are now staffed with a minimum core on-site crew.

Four Ways to Reduce Operational Costs

1. Keeping Downtime Costs Under Control

Savvy O&G companies seeking to discover new reserves, build additional capacity and upgrade existing infrastructure, utilise process automation and IT to meet regulatory requirements and safety goals, whilst maximising production-asset performance. Additionally, the industry players have to be able to leverage field data to ensure that investments in equipment, processes and people meet uptime goals and optimum ROI.

2. Reducing Energy Consumption

Managing water, air, gas, electricity and steam (WAGES) is vital to containing how much energy any operation consumes. Improved awareness and visibility of energy usage is the foundation to any strategic energy-management programme – enabling operators to understand where, when and how the company utilises energy. Only then can they define key metrics, set energy-savings goals, and take advantage of automation and IT to achieve their energy objectives.

3. Migrating From Ageing Equipment

Many O&G reservoirs continue to generate viable output, despite an ageing asset base. Some producers understandably postpone their DCS upgrades or migration decisions when faced with the combined cost and associated production risks. A modern DCS uses scalable, multi-disciplined control technology to provide a unified automation platform where it can communicate directly with other controllers for seamless integration between the operating technologies and the business information technologies.

However, once fully understood, a well-planned migration can offer invaluable benefits including: process-wide control and optimisation for increased system performance and response; a scalable control platform that provides the exact control size at a manageable cost; improved uptime, reliability and productivity; reduced spare parts and costly support requirements; lessened energy consumption for lower total cost of ownership; as well as an open, information-enabled and secure network.

4. Safety Systems And Their Impact On Production-Asset Performance

Best-in-class safety systems not only protect people, facilities and the environment, but also significantly improve productivity. According to a study by Aberdeen Group, excellent safety performance can increase overall equipment effectiveness (OEE) by five percent, reduce unscheduled downtime by four percent, and significantly diminish the number of accidents. Performing a risk and safety assessment will help production managers to identify and mitigate risks by selecting, designing, deploying and supporting the right safety system for each application.

Case Study 2: Daqing Refinery Plant Reduced Energy Consumption and Earned Return on Investment in 2.5 Years

Established in 1963, Daqing Refinery is a subsidiary of the largest petroleum producer in China, Petro China Group – which commands 50 percent local market share with revenue exceeding US$10 million annually.


Since joining the World Trade Organisation (WTO), China’s industrial sector has been increasingly under pressure to compete globally by reducing costs and boosting productivity. Daqing Refinery produces 600,000 tonnes per year of a variety of petroleum products sold throughout China.However, they were using a crude-oil pump that not only consumed a large amount of electrical energy, but also the pump’s motor ran at full speed, regardless of the production output levels.Consequently, the pump required regular maintenance every 8,000 hours, costing two days of downtime each year − amounting to an average annual economic loss of US$33,000.In addition, the legacy valve-throttle control method was inefficient as the wear and tear on the high-speed pump created increased pipe pressure, causing oil leakage and the need for frequent seal replacement.


Daqing Refinery installed an Allen-Bradley PowerFlex 7000 Medium Voltage (MV) drive system that uses Current Source Inverter-Pulse Width Modulation (CSI-PWM) technology to provide a simplified modular power structure using lower power. The project provided such strong overcurrent protection capability, that after just one year, the installation was introduced in all sister plants at Daqing Petrochemical.


After installing the Rockwell Automation solution, Daqing Refinery’s energy consumption was reduced by 30-41 percent, depending on the production output, which varies from 9,000 to 10,500 tonnes per day. In addition, the new system safeguards the pump motors against over currents and simplifies the drive systems by eliminating fuses and electronic-fusing circuits – saving US$15,000 annually.The power structure uses a module design, few device components, and strong overcurrent protection capabilities – simplifying drive complexity and increasing uptime. Finally, the project yielded a return on investment for the refinery in just 2.5 years, well exceeding expectations.

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