21st century innovation and Oil and Gas Digitalization

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Leading digital transformations by embracing a wide range of partnerships.

By Kishore Sundararajan, CTO, GE Oil & Gas

The world has never been more prosperous or connected.  We nonetheless live in challenging times, facing a huge range of societal challenges that demand solutions. And most of these challenges have answers in engineering and science.

In the oil and gas industry we have been talking about the power of digital for a long time, particularly under the rubric of what we call the Digital Oil Field.  This concept is rooted in the geology and engineering of production, with an understanding that more data and better analytics can powerfully improve productivity and deliver tangible results. Perhaps ten years ago, when we began discussing the possibilities, we shared a vision of the future, but our reach exceeded our grasp.  It is only in recent years, with the growing influence of the industrial internet and the availability of more powerful processing and analytics, that digitalization across the oil and gas value chain became a true reality.

The trends driving the emergence of digitalization  

There are three specific technology trends that are driving the realization of the vision for digitizing the oil and gas industry. First, the cost of communications has gone down significantly around the world and on average is an order of magnitude lower. Cell phones and even smart phones have become ubiquitous, not only in the developed world but even in emerging markets such as Africa. As a result, people are consuming more data and the infrastructure is becoming more available therefore, the cost of acquiring data has dropped significantly. What was prohibitive 10 years ago has become trivial today.

Second, the arrival of the cloud, once a vague concept and now a pillar of business and industry, has also dramatically transformed innovation and the consumption of information technology.  Now you can buy capacity à la carte, which is to say you don’t need captive investments for storage and computing to do your number crunching.  What you need is delivered on demand and doesn’t sit around unused, tying up capital.

In particular, cloud has changed the way we use supercomputers.  Now, if you want to run a computer-intensive task such as sophisticated weather modeling on a pipeline or demand simulation on an electrical grid, you won’t run into problems with CPU capacity. You can develop and run any analytics models and the required computer capacity spins up on the cloud. And now, the cloud is going industrial strength. In order to process the extreme quantities of data from industry, we need a heavy-duty cloud to safely and securely house data, enabling unlimited analytics.

The third enabler is that in some sense almost all machines are getting more intelligent and more software defined. Whether you are looking at a “big iron” product like a consumer Christmas tree, a blowout preventer stack used to seal, control and monitor billion-dollar oil or gas wells, or a new car, there is intelligence everywhere.  With all its built-in technology, a Tesla automobile is almost like an iPad with wheels!

The fruits of these enablers are everywhere. In the case of a digitized and connected oil field, we can now create Web-based visualization environments that can help lower IT costs while providing widely dispersed teams anywhere in the world with a shared vision of models and data. The ability to scale performance and add functionality is available at almost any location.

A formula for applying technology

While technology is an ever potent enabler and the key to solving our challenges, it is a double-edged sword. Technology comes with costs, risks and uncertainty. Going it alone is still expensive, potentially risky and increasingly unnecessary.

One of the most powerful options is partnering.  Most organizations have acquired at least some elements of the NIH, or “not-invented-here,” syndrome.  It is an attitude that proclaims pride of authorship over quality of result and it is at the root of much of the resistance to partnering.

At GE, we have come to embrace partnerships, which we also describe as alliances and ecosystems. We pursue these relationships with both customers and suppliers and we use the same thinking internally.  Partnerships are very important to where we are going and we suspect they will be increasingly important to most organizations.  Indeed, I can foresee a time in the future when organizations that cannot learn how to partner will probably be left out of markets and shut off from opportunities.

Partnering is a compelling choice because the world as a whole has become more commercialized and faster paced. In order to deal with that complexity and that velocity partnering is an ideal choice.  The open source movement that has become so important in fields such as software and 3D printing is an illustration of why partnering has become such a compelling approach to solving problems.

The open source idea emerged in the software industry in the 1990s amidst rapidly rising costs and market pressures for more speed.  In the open source model a particular kind of software would be created by an individual, group, or entity and then licensed in a way that permitted and even encouraged modification and addition by others. Instead of inventing an entirely new edifice, it is possible to reuse the efforts of others.  Some estimate that this approach may have saved tens of billions of dollars in costs.

That same open source approach has been applied to create design libraries for 3D printers. Rather than having to design all the elements of a mechanical pump, for example, one might find available configurations for producing solids or subassemblies that can be combined and adjusted to a specific need, dramatically reducing design costs.

At GE we look for opportunities to partner widely, for instance with our customers in oil and gas, aviation, and healthcare in ways we hadn’t thought possible before.

Partnering with customers and competitors

What does it mean to partner with a customer? It means we are open to them and they are open to us. We try to gain insights into our customers, their pain points, and what keeps them awake at night. And then we address those issues as rapidly as we can. In software development, this approach is called Agile. In GE, we call this FastWorks – which means that you move quickly, validate assumptions as you move, and you aren’t afraid to fail.

The question is no longer can we do this; it is should we do this. If you are exploring a concept or seeking a solution to a problem and some organization has already done something similar, it is probably better to partner with them. Partnering can provide an opportunity to get far ahead of the competition in terms of developing a more advanced solution and getting faster to market.

As engineers immersed in technology, most of us are enamored with what we do; we would love to solve the problems all on our own.  It’s that old NIH attitude. The question is not can we solve the problem on our own but should we solve the problem on our own.  Increasingly, the answer will be that working with partners is the better choice. Get partners on board and find ways to collaborate broadly. If customers want a more flexible user interface that is more dynamic, maybe you will find that someone has already invented a solution and that maybe you don’t need to spend 100 man years solving that problem.

We have now seen that you may not even need to be the middle man in that system. Think of the example of the Apple iPhone. Apps are provided to the user to solve problems through a corporate partnership ecosystem. All the needed commercial transactions are addressed simply and elegantly.

Partnering can be further extended. There are many examples in business today of organizations partnering with both customers and competitors. By leveraging our unique strengths  we are able to solve together some of the toughest industry challenges.  I believe these kinds of arrangements will happen more and more in the future as all of us learn to live in those three dimensions as customer, supplier, and competitor.