September 2018

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Digital: Riding the digital transformation wave

For refiners, the future is full of uncertainty. Due to market forces—e.g., the macroeconomics of oil and gas supply and demand, the increasing demand for petrochemicals and new marine low-sulfur fuel requirements—organizations are faced with many business challenges that require increasingly flexible operations.

Beck, R., AspenTech

For refiners, the future is full of uncertainty. Due to market forces—e.g., the macroeconomics of oil and gas supply and demand, the increasing demand for petrochemicals and new marine low-sulfur fuel requirements—organizations are faced with many business challenges that require increasingly flexible operations.

This is where digital transformation creates a clear opportunity: Digitalization, which flattens organizations and supports agility, offers the promise of competitive advantage in these unpredictable times, when business models are adjusting to changing operating conditions. With workforce demographics rapidly shifting, newcomers to the industry bring with them a greater level of comfort with new technology.

The excitement about digital transformation stems from the formidable complexity of a refining operation, as well as the promise of combining powerful data and models to unlock higher levels of performance. Several rapidly emerging technology, data and automation areas are expected to achieve disruptive improvements in business performance over the next decade. A 2017 study by the World Economic Forum identified more than $1 T in value available to the energy industry globally through digital transformation. However, the study cautioned that achieving value across the energy supply chain would involve active participation by several industry stakeholders and participants. Enterprises in key energy regions can work together across the value chain to achieve this reality and create an economic competitive advantage against slower-moving industry players.

Creating high expectations with digital transformation

Fig. 1. Digitalization evolution in refining over the past 40 yr.
Fig. 1. Digitalization evolution in refining over the past 40 yr.

In recent years, terms like “digital transformation,” “Digital 4.0” and “Industry 4.0” have caught the attention of industry pundits, consultants and business social media. However, these are not new concepts for the process industry, which has been pursuing digitalization for the past 40 yr (Fig. 1).

The best-performing companies are those that apply digitalization to business initiatives in a pragmatic manner. The emergence of new digital technologies, such as machine learning, advanced robotics and distributed high-performance computing, have added to the momentum for digitalization initiatives.

While abundant opportunity is seen for organizations in the process industries, some major roadblocks must be overcome. AspenTech surveyed global refiners and discovered that only 38% of several hundred respondents anticipate achieving a significant business return from digital transformation in less than 2 yr. Success will require focus.

Pulling the trigger on digital transformation initiatives

To achieve success with digital transformation, executives must first take a step back and look at the big picture. Some key factors to consider before embarking on digitalization include:

  • Maximize value from current technology. First and foremost, organizations need to understand their present level of digital infrastructures and solutions in place in refineries. Any new initiatives should be designed
    to fit in with, and build on, existing digital infrastructure. Areas such as refinery planning and scheduling systems, process historians, advanced process control, rigorous unit models and yield accounting are valuable and crucial underpinnings to further extensions of refinery digitalization.
  • Understand the organization’s maturity level. Digital transformation is strongly tied to organizational change, as digitalization enables collaborative work among operating teams. Traditionally, operating teams have worked within siloed organizational walls. With digitalization, workers are empowered to make immediate and informed operating decisions. Until an organization is mature enough to thrive in this type of environment, it should make stepwise moves in technology and business organization to evolve.
  • Define key business drivers and organizational challenges. All technology investments and digitalization initiatives should be undertaken with a clear view as to the expected business benefit, payback and return. This vision requires that executives sponsoring these activities pay close attention to “use cases” and “case studies,” which can demonstrate and guide the organization in how certain technologies will advance operational excellence.
  • Identify key success metrics for digital initiatives. Key measures of refining excellence today include feed
    and product flexibility, reliability and uptime, energy use optimization and overall cost leadership. Projects should be measured and conceived with endpoints and success metrics that tie together.
  • Encourage workforce skills development. To take full advantage of digitalization, a range of technical experience, operational experience and competence are required. While many companies choose to outsource technical teams to keep operating functions lean, there is a danger of draining technical resources with expertise in the enterprise’s core assets.

Leading downstream companies have been making progress in achieving significant benefits from applying digital innovation in surgically focused ways. For example, a major North Slope operator increased revenues by more than $1 MM in one week by embedding rigorous digital models online, running concurrently on real-time data, and providing updated and clear operator advice every few minutes. Additionally, a Gulf of Mexico LNG firm employed machine-learning-based prescriptive maintenance to obtain early warning of compressor operating risks. As a result, the organization reduced compressor downtime and maintenance expenses worth several million dollars per year in increased uptime.

The future of digital transformation

Digitalization will continue to gain momentum in upcoming years as technology evolves and new advancements are introduced. To take advantage of digital transformation opportunities and remain competitive, organizations must create a pragmatic roadmap to take them from where they stand today.

The most successful companies will prepare now for the digital transformation initiative of tomorrow, and they will reap the benefits of that work today. HP

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