Salym Petroleum Development N.V. (SPD) develops projects for digital field, operating data collection and digital modelling, servicing automation. Year 2018 saw the start of a project for local ERP system deployment. However, a large part of the data analysis and production optimization work on this basis is yet to be done. This is what Evgeny Korneev, IM&T Manager at SPD, spoke about to Olga MELNIK, a Standard magazine correspondent.

- Digital transformation – is it a marketing slogan or a concept that provides keys to solving pressing issues of petroleum industry ventures?

- In business, no one likes abstract science; however, no applied science can exist without it. Without apprehension of digital transformation philosophy, execution of actual projects is nowhere near. Few people understand what digital transformation is in general, and even fewer why. Representatives of major integrators including international ones approached me on several occasions and offered “services for acceleration of the company’s digital transformation”; however, not one of them managed to explain what it meant exactly. However, there occurred to be those who helped me make sense of the essence, and it is all about the fact that technologies give business completely new opportunities. Approaches to business process organization and achievement of goals are changing. One can mention transition to another environment as an equivalent: a person walked, and then got an opportunity to fly. Now, in the new environment, absolutely different factors must be taken into account: landscape details matter no longer, it is much more important to evaluate wind power and speed which don’t affect overland movement much. The main issue that must be resolved within the scope of digital transformation is altering the consciousness, the mindset. First and foremost, digital transformation take place in the head.

- What should a company take into account first and foremost in the course of developing a digital transformation concept?

 - The “Let’s digitize everything” impulse per se, without understanding why, makes no sense. For instance, finance specialists have been using digital data formats for a long time now. If we complement this with digitized process of production (not just produced oil volume accounting) as well as power consumption in the company, then all of these combined will indeed yield a synergetic effect. Should every division keep using its data alone, such an effect will not happen. We can rely on analysis and decision-making that take into account all the factors that affect the company’s business only when all the data is available to all the stakeholders.

- What steps towards digital transformation has SPD made?

 - We try to be adequate and not to enforce radical change. In doing so, we do have achievements in the domain of creating a digital field. Our entire oilfield which currently contains over 1.2 thousand wells is fully automated; you can control the entire producing equipment at the Salym group of oil fields remotely from an office in Moscow. However, we do not have 3D models of all the locations nor a complete digital model of production processes yet. This is still very expensive, and it is easier to find an opportunity to achieve the result by different means, or use partial digitization.

At some operating process sections, we are finalizing automation including information input and primary processing. However, the company as a whole has passed this phase, and we started integrating information from various sources, which makes it possible for us to process comprehensive requests in automatic mode. Thanks to the integration we also proceed to remote control of operating equipment and monitoring of its operation.

Our goal is to carry out the integration as completely as to be able to start artificial intelligence systems for production management fully and comprehensively. We want to optimize operating processes by managing production on the basis of dozens and hundreds of parameters, and not only operating at that.

- How do you automate non-operating disciplines?

 - Up until now, a lot of labour is consumed by staff and contractor representatives for document management, collection and conversion of information to various formats compliant with corporate system requirements, as well as repeated verification thereof. Recently we deployed systems, including journey management, where many pieces of data used concurrently is to be entered manually: vehicle license plates, drivers’ names, driver’s licence numbers, routes, etc. We have also launched an electronic permit to work issuance system, without which it impossible to obtain a permit for performance of any work at the oilfield. Then in the course of using these tools we note people’s consciousness changing. For some, “electronic system” is where documents get scanned and emailed. For others, a system where data is exchanged and information reliability certified by a digital signature. Understanding of the difference does not come at once. The systems that reduce manual input are economically advantageous, and we keep actively moving in this direction.

- How did SPD’s IT unit evolve?

 - Initially we were using global IT service and standard applications by Shell, one of our shareholders. We only were to ensure data transfer locally. We pulled communication lines to fields – in part radio relay but mostly fibre optic – by ourselves. The time has shown that creation of a costly structure like that was the right decision. We still have no communication problems although the volumes of information transferred have multiplied. In fact, we always balance between conservatism and innovations which carry higher risks.

During the first years of the company’s operations, when the requirement was to start production as soon as capable, standard applications satisfied our needs completely. However, as the business was developing., requests appeared for functions that Shell templates did not have. Therefore, at the 2009/2010 junction we started building a local IT team, which became the starting point of SPD’s digital transformation. We go our own way, at the same time paying attention to the world’s best practices – in particular, to the case of Aera Energy (another Shell subsidiary) in California. Its digital transformation started as early and in 1990’s, and yielded an outstanding business-result: the company went all the way from bankrupt to profit. It was a pilot for Shell. Our management team visited Aera Energy’s office, whilst their specialists came to Russia. The key principle for the Californian company’s digital transformation is efficiency improvement through changing approaches to own data usage, and we started applying it at the Salym oil field.

Gradually, an IT unit was formed in SPD, with employees understanding specific features of the company and make decisions for its benefit. We came up with Infrastructure, Application Support, Data Quality groups. Specialists in the latter help business set up data quality control: this work has been slipping for quite a while, although the recent years saw notable shifts. Following up on last year’s results, we assumed leading positions in production management data quality among all supervised Shell subsidiaries. The case is, in the beginning of 2017 the number of errors in operation of business applications was as high as 15,000, whilst by August of the same year we managed to drive this indicator down to 300. It is maintained at this level now, notwithstanding constant activation of new applications, which means data volume increase.

Starting 2010 we started internal development of applications, in which we involve both our own competence centre specialists and external contractors. Progress of the project is always controlled by our managers. We currently have both global set of applications, still deployed and maintained certainly at Shell, and local developments deployed in our network or our telecommunication partner’s cloud.

- What ERP system does the company use?

 - For many years, the main application for supporting business functions (finance, contracts, procurement, etc.) and Maintenance was SAP R/3. However, as autonomous development of applications got started, we encountered integration difficulties. In order to overcome difficulties, the company decided to implement SAP locally and develop it in our IT landscape. This decision was made in November 2017. The project has already started, and we are to manage many things in 2018.

We will work with the version S/4Hana. The processes will be deployed in the same manner they have been running for us in the course of many years: the company does not aim to change them. In a sense, this will be like migration, not implementation. We want no revolutions – this will rather be evolution. As to development, this is our plan after the transition, with the new version.

Since formerly Shell IT provided all the support centrally, we have almost no in-house SAP expertise. Neither do we want to establish a full in-house SAP competence centre; therefore we will use external contractors subject to full control by SPD managers. SAP support in Russia is a mature and accessible service; not something exotic but an absolutely usual thing. At least this is what we think it is.

- Does SPD apply technologies of Internet of Things? How do you collect and process data from equipment sensors?

 - We are at the threshold of understanding how can one use the accumulated information, including supplied by equipment sensors, in a more efficient manner.

In order to carry out routine repair and accident recovery, the venture has been applying SAP TOPO solution for a long time now. Data from equipment sensors is not in use here. This information is what Operations employees work with, where they process much more indicators than in TOPO. It is in Operations that the system is run in which, as it analyses equipment failures and well status in real time, provides analytics on submersible pumps and warnings as to what can happen to them. This is predictive analytics for transition to status-based repair.

Similar objectives also exist in the domain of power supply; however, it is statutory restrictions that are effective here, inter alia. In power engineering, one cannot repair things “at will”: certain documents approved by surveillance authorities are required. To the best of my knowledge, our power engineers are now ready to switch to status-based repair; however, it hasn’t worked yet to make it technically efficient. One can inspect and repair what is necessary. However, the next step must be made – not only receipt of information about equipment state but also generation of follow-up conclusions is to be automated. Then automation of these actions per se is around the corner.

This is the issue that we have been discussing with power engineers since last year. The required regulatory base has been created. They are able and willing to install sensors, collect and transmit data which makes it possible to monitor equipment status. However, this is where the issue of data transmission safety assurance arises, which is not to be resolved by simply hooking up a GSM sensor and an execution module. We need risk assessment and clear understanding where we can and can’t go. We study these issues carefully.

- How is interaction between IT team and business units organized?

 - As the IT unit, we see the entire business well. When employees from three different departments come to ask us to do something that looks alike, this is a reason for us to think of execution of an integrated project and not three overlapping ones. In such cases we see people at which department simply need some refreshment of base software operation skills, and where the problems are at a completely different level. IT team is like nervous system: can provide a lot of information about what happens in the body, and at the same time affect it as a whole. So far, SPD has not been using this potential to its full; however, we are actively trying to turn this situation around.

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