The cloud is gaining traction in accelerating the upstream oil and gas sector’s digital transformation, with oil majors and independents alike looking to leverage its disruptive effects to increasingly strong effect.

Cloud-based solutions in the oil and gas space are getting heavyweight support from industry behemoths. New announcements from IT giant Microsoft and Norway’s Equinor in recent months underscore the growing interest in  tapping into a network of remote servers hosted on the internet, and being able to store, manage and process far more data than oil and gas companies were able to previously – and at a much-reduced cost.

US shale players were in the advanced guard in taking up the cloud, but now companies of all stripes and sizes are testing the water. Equinor’s move with Microsoft, announced on 20th June, is a case in point. This is partnerships with the Microsoft Cloud in Norway, which the company – renamed from Statoil earlier this year – sees as crucial to enabling its digital transformation and driving cloud-enabled innovation.

The strategic partnership will support Equinor through a seven-year consumption and development agreement valued in the hundreds of millions of dollars. It will capitalise on Microsoft’s increased focus on the Nordic economies. The software giant’s intelligent Microsoft Cloud will be based out of two new data center regions in Norway: one in the greater Stavanger region and the other in Oslo. It will roll out support for Azure, before moving on to Office 365 and Dynamics 365, with expectations that Microsoft's cloud services will be in full operation by the end of 2019.

Equinor’s view of the main benefit of the tie-up with Microsoft is that it stands accelerate the development of fit for purpose IT services. “Leveraging the cloud is a prerequisite for the energy industry’s transformation towards a digital future,” the company said in a statement.  Having a cloud data center in Norway will simplify and accelerate Equinor’s adoption of the cloud, said Equinor’s chief information officer Ashild Hanne Larsen.

This is firm evidence that large European IOCs see the cloud as delivering a stronger bang for the buck – something that a survey from consultancy Accenture picked up in December 2017, noting the cloud’s capacity to increase the lifespan, uptime and reliability of plant and infrastructure, which ultimately increased returns. Forward-looking oil company CIOs saw the cloud not only as a catalyst for stronger computing power and higher performance, but also as the path to faster application deployment, lower cost of service and fuel for their digital transformation.

Missing the bigger picture?

The danger is that too many oil and gas companies have failed to realise  the potential the benefits of cloud – a few honourable exceptions aside. According to Accenture, Hess Corporation is expecting to optimize costs by roughly 40% by transferring workloads to a Business Process as a Service (BPaaS) solution. Hess also is set to save between 10% and 20% in labor costs through automation on a cloud management platform.

Much of the innovatory drive behind the cloud comes at the smaller end of the oil and gas company spectrum. These companies have emerged as some of the pioneers. For example, US shale players were among the first to adopt cloud computing in coordinating well data, and cloud-based solutions are now visible in enabling unconventional oil and gas developers to leverage  a richer seam of geological information.

California-based DeepData, a provider of cloud-based solutions that provides tools for completions, announced in June an exclusive partnership with LMKR, a petroleum technology company that provides tools for evaluating rock data and generating data-rich curves describing the rock along laterals.   

The new partnership aims to boost well production and reduce costs with a cloud-based solution for engineered completions. DeepData and LMKR are enabling LMKR curves to be imported and leveraged by DeepData's completion design tool that enables engineers to rapidly and easily generate completion designs. Once this is completed, it outputs stage-by-stage perforation plans and pump schedules.

A DeepData demo well with design being driven by rock properties 

LMKR is offering a co-branded version of DeepData's cloud-based completion solution that integrates with its GVERSE and GeoGraphix solutions.

DeepData CEO Mike Hogan explained that this represents a big change for the technology. Until now geologists and completions engineers had no completion design tools specifically calibrated to leverage the rich collections of geology and petrology data. “Up to now, 99.9% of all wells’ completion designs was geometric, meaning everything is a one-size fits all.  But what we are doing is providing the tools to do an engineered design. With LMKR tools you can also create custom curves where you start to blend things – a little gamma, a little neutron – to create what gives you the best characterisation of rock quality.”

Where the cloud comes in is as an enabler of collaboration, helping geologists to work closely with well completions engineers. “Put simply, that is much easier when it is a cloud environment because you basically log in and have all the sharing at an instant,” said Hogan. “The other thing is that we have better inter-company communications as well because you want to share that information with your wireline crew, with your frac crew and then capture their information as they do it. That’s all much easier with the cloud.”

Another big benefit of using a cloud platform, explained Hogan, is that it make it easier for companies like DeepData to figure out what their clients use. “We can see what they like and don’t like, so it's not like you are just throwing it over the wall and see what happens. Based on this information, we can rapidly improve the software tailored for our customers’ needs.”

The cloud also provides benefits in enabling consistent incremental development, as opposed to typical six-12 month product cycles. “At DeepData we’re releasing enhancements once or twice a week, so we are constantly improving it and monitoring how those enhancements are used, and how well they are liked. Let’s face it; In the future, pretty much all software will run in the cloud, as it has unfair advantages over installed software.”

Source: Upstream Intelligence     l     KeyFacts Energy Industry Directory: Upstream Intelligence