News, Insights, and more on Industrial IoT
Note: To produce this article, dozens of oilfield services stakeholders were interviewed. Due to the highly competitive nature of the oilfield services market, all were interviewed under the condition of anonymity. As such, all names have been fictionalized to preserve that anonymity.
The demand for digital is reaching a crescendo in the industry, and most leaders now appreciate the value that it can bring.
“The battle for remote automation has been won, as far as people accepting it,” proposed Peter, an industry consultant. “The people [who don’t believe in automation] have moved out.”
While there certainly are a handful of holdouts, Peter’s claim appears to be true. Oilfield chemical services executives have no choice but to automate using digital technology. “The reality is that when you can’t get the people, that really hurts. So there has to be business change.”
Many oilfield chemical companies are discovering that it’s possible to both improve efficiency and increase field and technical service quality simultaneously. To do so, many are turning to technology.
“We have an entire division focused on digital,“ mentioned Colton, an area manager focused on implementing digital tools. “It’s just going to grow as everything continues to move towards using technology more.”
Indeed, digital technology will be on the forefront of those attempting to solve for labor shortages, supply chain disruptions, sustainability initiatives, and data sharing requirements. Automation will be key to responding to the “Do More With Less” imperative, as Logan, an oilfield services executive understands.
“The only way to do more with less is to automate more and more of your processes,” he insisted. “We’re asking, ‘How much can we automate? How much can we reduce actual boots on the ground? How can we keep trucks off the road?’”
These critical questions require answers from every oilfield chemical services company seeking to capture market share in 2022. Not only because labor and supply costs are rising, but also because, as mentioned in our previous blog, operators demand better, faster solutions to their problems.
According to data captured by WellAware, the average continuous chemical injection pump misses dosing targets by 25% to 35%, with over half of chemical pump downtime lasting 24 hours or more.5
“Most operators and service companies don’t realize the dire state of their chemical injection programs, because they don’t have the data to see the problems in real-time,” said WellAware Operations Director John Morgan. According to WellAware, adding remote monitoring and automation has the ability to reduce that number to 15% or less, while freeing service managers’ time to focus on answering their customers’ most pressing demands.
A solar-powered chemical injection assembly in southwest Texas. Solar pumps are especially prone to failure and downtime as days get shorter.
But, as many have discovered, adding automation is about more than just buying technology and distributing it out to field offices. Automation is as much about adopting a particular mindset about how to work, a mindset which can be difficult to establish within an industry that employs many long-tenured workers who may perceive automation as a threat to their jobs.
Nathan, an automation champion at his company, says the issue is often not an issue of tools or skills, but of attitude. “People are quick to just say the automation is bad, but you have to get into a digital mindset.” He adds that digital tools do require some management and maintenance, and many people don’t see enough benefit to overcome the initial burdens of adoption.
“When I first started in oilfield chemicals 10 years ago, just getting email on my phone was something new,” reminisced Curt, a District Manager. “But one of the biggest changes I’ve seen in the past decade is just that digital piece. Going from a steno pad and paper to Excel to now there are apps and things like that.”
The transition is a lot to handle for those who’ve spent decades-long careers in oilfield services, but leaders bent on adopting technology must assure them that they won’t be replaced.
“We’re not trying to automate a workforce out of a job,” insisted Kevin, another OFS executive. His team is moreso looking to digital tools to create additional leverage for his team. “Employee retention has been a huge focus for us, and to this point we’ve been fortunate to have a stable workforce. How can we set them up for success?”
This is the mindset we’re hearing from nearly every District Manager, Vice President, and Executive at Oilfield Chemical Services companies: We’re not turning to automation to replace people, but to help them.
“Our intent has never been to say, for example, that 250 units of automation equals one guy. But some of our people are driving thousands of miles just to take inventory,” offered Colton, an area manager at a large chemical company. “That task is pretty easy, and it is not bringing any value to the customer. We want to free up time for our account managers and field techs so they can focus on the customer.”
For many, digital technology can offer the efficiency, safety, and sustainability benefits they require while also creating new value streams for their customers. To get there, though, they’ll need to convince field staff that automation helps, not harms.
“Our company has really made it a priority for us to go digital, providing capital funds and investing in the technology so we can work towards those improvements,” said Curt.
It takes time to build trust in new tools, and many in the industry have been through their fair share of booms and busts. Curt understands that until his team trusts the data created by automation systems, adoption will lag.
“It’s nowhere near perfect where we are now,” he said. “Adopting the technology and getting consistent results is a major hurdle for us.” He is continuing to focus on training and incentivization that will help his team, wanting them to utilize the new tools in a way that actually leverages the value they can provide.
An oilfield services worker checking wellheads in Wyoming. Employees who have decades of experience are less prone to adopt new technologies and processes.
Fortunately, even the most stubborn anti-technologists are starting to come around.
“When it works, automation is a game changer,” mentioned Johnny, an account manager with over 15 years of oilfield chemicals experience with multiple service companies.
When it works. That’s the operative phrase. And as we’ve learned through our interviews, getting automation to “work” has been a huge challenge.
While oilfield services companies are trying to overcome predeveloped biases against automation as a time-wasting job-killer, failed automation projects reinforce these prejudices, resulting in low adoption rates caused by a lack of trust, plus a hesitancy to take on new digital projects that could prove fruitful.
Ultimately, Nathan believes that end users, not executives, need to champion technology. Regardless of who we interviewed, from executives to service technicians, this sentiment held true. Nobody wants “top down digital transformation” enforced through corporate mandates. Rather, leaders are trying to capitalize on the skill sets their workers have to integrate more digital tools.
“We’re not where we want to be,” noted Kevin. “We’re comfortable with the processes we have in place, but when you’re truly talking about digitizing it, that’s a big focus for our team in 2022.”
For all who champion digital projects, the effort is worth it. Not only are efficiency, sustainability, and safety at stake, but also the opportunity to create stickiness with the most strategic accounts.
In an industry with a high rate of customer turnover, projects that can increase retention often get special attention. Digital tools show that promise, and as we discovered, many are hoping that by shifting to a digital framework, they’ll be able to capture more trust, an elusive quality that allows them to stand out from their peers.
And this is perhaps the most enticing prize that oilfield executives see in adopting automation. Sure, there are internal efficiencies to gain, but the true value will be in using data to measure and demonstrate performance – proof that their service and chemistry works.
“Data is becoming more and more of an asset,” said Justin, a chemical advisory at a large E&P. “Our goal in 2022 is to strengthen our chemical data so we can have a more standardized evaluation across the whole company.” He’s working hard to create digital systems that his service companies can feed, allowing him to monitor and measure performance to find efficiency and sustainability gains for his company. “If we can align into a single, organized, onshore chemical process, that will be a big plus.”
Chemical companies that can use data to measure and communicate their value are exceptionally well positioned headed into 2022.
Curt thinks the value of automation really lies in the ability to communicate better with his customers. “For me, digital and automation is about trying to meet the demands of our customers and meet the instant need for data.” He sees digital tools as a way to differentiate his services, prove their value, and focus his team on critical work.
Kevin also has his team focused on data sharing techniques that will strengthen their customer relationships. “We want systems that pre-populate data, whether it’s failure reports, rate adjustments, lab data, iron analysis, things of that nature. We’re actively working on implementing things like that for our customers, creating those bridges for data sharing.”
Still, service providers will need to tighten their focus on digital adoption so that every investment delivers value to their customers. It can be tempting to pursue dozens of digital projects, but the best service companies will use technology where it can deliver the most value without adding too much of a cost or operational burden.
“Right now, the guys who are doing data management really well are also the most expensive, because that G&A portion of their business is weighing in on the chemical price,” remarked Dillon, a production engineer in the Permian. He’s looking for data, yes, but he needs it cost effectively. What he’s currently getting from his service providers doesn’t quite fit the bill.
Many service providers have spent considerable energy adopting tools such as Power BI, Spotfire, or Tableau that allow them to build custom visualizations for their own internal efficiencies.
But those who think that customers would also benefit from complex visualizations are missing the point, says Dillon, and may be negatively impacting their service and price. According to him, oilfield chemical service companies must focus less on customer-facing dashboards, and more on building connections that enable better real-time data sharing.
“I don’t need the visualizations,” he said. “I just need an API.”
Dillon is a younger engineer with a digital skillset, so he’s content to receive integrated data feeds or database access, saying that “cool visualizations” provided by vendors are more trouble than they’re worth. “You have two silos of data management programs being built up: one at the operator and one at the chemical company. We’ve got all of the data management stuff built already. They’re trying to do ‘Spotfire-as-a-service’ for us, and we’ve just got more experience than them. Just give us the data. Just give us a REST API, and that will be so much easier. That’s where the disconnect is.”
So, 2022 is about becoming more digital, yes, but that doesn’t just mean slapping some tank monitors on a few critical sites to track inventories. To succeed, oilfield services companies must use automation and digital tools that not only capture efficiencies, but also shorten the performance feedback cycles with their customers. Doing so will inevitably create more opportunities to innovate and establish authority and expertise, which should position companies who effectively manage digital as highly differentiated.
“It’s at least a five year endeavor, with every roadblock and obstacle along the way,” noted Tyson, another DM.
It’s worth the effort. Those who can stick it out will be best positioned to meet the shifting needs of the most demanding – and lucrative – accounts.
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