How the cloud revolutionized the oil and gas upstream industry
March 7, 2023 by Sergey Goncharuk
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Cloud technology is essential for most areas of people's lives. We might use the word "cloud" in our daily lives more often to mean ‘information’ than related to the sky and weather. Our emails are in the cloud. Our photos are in the cloud. Even our favorite songs and movies are in the cloud, and these are just visible examples of a transformation that has been happening in recent decades. New approaches to data storage and processing introduced by cloud technologies have dramatically changed entire industries. Let's go over some of the most interesting causes, ways of implementation and consequences of this IT trend in the oil and gas (O&G) upstream industry.
The O&G upstream segment covers the exploration, development and production of crude oil and natural gas. These natural resources are hidden under the earth's surface, so to find them, people need to gather information about them indirectly. Science has developed numerous methods for exploring hydrocarbons:
Each of these methods tries to measure or calculate the value of the physical property in specific spatial points under the ground. The bigger the density and resolution of measurement/calculation points, the more data must be gathered and processed.
Technological advancement in electronics allows O&G companies to collect more data with higher precision. The gathering and calculation of data doesn’t stop after the initial exploration, either. Instead, it is only the beginning for prospective oilfields. Each new operation leads to gathering new amounts of data: Drilling, constructing wells and producing oil or gas. This leads to huge amounts of data, all different in source, nature and structure.
The data is valuable because it helps to make decisions. Each subsequent step in the exploration and production lifecycle is taken based on the data collected, processed and interpreted in the previous steps. So, growing amounts of data help us to make proper decisions and avoid wasting time and resources. Each wrong decision leads to an increased cost in the produced oil and gas, so the industry players will continue to increase precision, density and volumes of the data to remain competitive.
All these growing amounts of data need to be stored somewhere and processed by powerful computational means. It is hard to imagine the progress of the oil and gas industry without the advancement of IT. In the twentieth century, computers replaced paper as the preferred media to record and interpret geoscientific data.
However, it was a story of mostly locally stored and processed data for a long time. Even a decade ago, it was typical practice to build on-premises IT infrastructure based on a corporate network and local data servers for geoscientific data processing. And even 5 years ago, with the constantly increasing data volumes, many oil and gas companies preferred to build private data centers to preserve valuable data about their findings because security also played, and continues to play, an important role.
Another implication of the increasing data volume and complexity is that more people are involved in its processing and interpretation. So, the availability of data for different groups of specialists, in many cases located in different parts of the globe, started playing an essential role in business success. Companies must ensure access to it from different applications.
More advanced approaches utilizing web services and other APIs allowed applications to interact with each other and introduce custom end-to-end workflows. Some very successful geoscientific software tools from the 1990s and early 2000s are still utilized as they implement canonic algorithms that continue to be helpful today.
All experiments of O&G software vendors with emerging cloud technologies in the mid-2010s were usually accepted with interest. However, some skeptics remained with regards to widespread implementation. But that all changed once humanity faced the COVID-19 pandemic at the beginning of 2020.
The cloud enabled employees in oil and gas to continue working from home during lockdown because:
The pandemic impacted the oil and gas industry, but the IT side of the industry appeared to be stable and flexible enough to adjust to the new reality. And the most significant contribution to this result was the timely adaptation of cloud technologies.
Cloud technologies help companies respond to new challenges of growing data volumes, computational limits, the need for interoperability, collaboration, and complex/custom workflows. In fact, the industry is expected to increase cloud spending to over $12 billion per year by 2030. Interest in cloud software-as-a-Service is also on the rise, which will open companies up to new possibilities.
Zoreza Global, a DXC Technology Company, developed a good example of a modern cloud solution for the upstream industry in the hydraulic fracturing (fracking) process. This global platform:
From a business perspective, Zoreza Global’s solution reduced costly downtime related to avoidable, predictable failures. It also leveraged the efficiencies inherent in cloud-oriented architecture and design in both capital and operational costs.
We've already mentioned that all the tools processing vast amounts of data help us make proper decisions. But so far, humans have made these decisions alone. In other industries, we can observe essential progress in automated decision-making.
For example, autonomous driving technology demonstrates the ability to drive a car as a human beginner driver would. For now, this is done with mandatory oversight from a real driver ready to take control in a difficult situation. As for upstream, existing AI solutions facilitate the decision-making of a human expert or give some hints, like a blind zone indicator in the car.
The application of machine learning and artificial intelligence has enormous potential in the O&G upstream industry to make more decisions automatically. Such decisions may become more global, leaving an expert in a supervisory role. We're still very far from where it could be, but the future is being created today, and cloud technologies are key for these R&D activities.
The history of geoscientific software is like evolution. Transformational technologies require time to become commonly used. Over the last five years, cloud technologies have made a journey from prototypes to production solutions of oil and gas industrial software, promising us new levels of productivity in the upstream sector.
