Gazpromneft is pioneering the use of digital technology and artificial intelligence in crude and gas production. In the second part of his interview with Argus, the head of the company’s production division, Sergei Doktor, describes the evolution of its upstream business model through the Future Asset programme.
— What is the Future Asset programme?
— It is a complex transformation of Gazpromneft’s exploration and production division’s operational model, developed and implemented with our partner, the Boston Consulting Group. We are completely changing the business model through three main elements — processes, technologies and people.
Future Asset includes six business “products”, three service “products” and an integrated operations centre — all ensuring maximum efficiency of the value creation chain. Another important aspect of the transformation is a switch to planning based on potential. Today, hydrocarbon production volume and overall asset efficiency goals are based on technological, operational and strategic potential, rather than on last year’s results. To support the new operating model, we [have developed an understanding] of which technologies we need right now and which will be needed in the future. And we plan to adapt them for the specific features of our assets faster than anyone else.
— Do you see any results yet?
— Of course. We have launched pilots [at production subsidiaries], the first being Gazpromneft-Khantos, which uses “digital twin” technology with built-in artificial intelligence. Gazpromneft-Yamal and Gazpromneft-Noyabrskneftegaz are also among the first pilots. In 2019, the Future Asset programme delivered immediate economic benefits of Rbs1.2bn and it has already exceeded Rbs4bn this year. By 2030, we expect the impact to reach Rbs100bn. We have now fully recovered investment in automation, tool development and business model changes. We now have positive cash flow and we forecast that it will keep growing.
— How many assets are actually involved in the programme?
— The transformation was launched in 10 subsidiaries and covers 27 assets, more than 130 technological solutions and supporting tools, and more than 200 business processes. More than 600 company staff are involved in the transformation.
— Where do digital technologies fit in?
— As an example, two years ago we initiated a Digital Drilling project with one of the oil service companies. We did a pilot and reduced well construction costs by 15pc, and now we are entering the next, more global phase of the pilot. We are creating an ecosystem with all participants — the drilling companies and supporting service companies. And we have demonstrated that we can exchange information within this global ecosystem.
We already have drilling control centres at all our assets, where dedicated teams continuously optimise current processes, using the latest digital breakthroughs. We are pledging 5-10pc efficiency growth every year, and we are meeting the targets. We have a lot do to, but we are no longer decades behind our western partners, as before. And it is important that they understand this and no longer offer us their five-year old technologies but rather show us their latest developments and integrated approaches. In this way, we get to use this potential to localise high technologies in Russia.
We are still the only Russian oil company that became a member of the Open Subsurface Data Universe (OSDU), which is an open hub offering the opportunity to take advantage of the whole potential of available technologies and developments in the sector, at the same time as having the opportunity to monetise and capitalise on our own technologies. We are now actively sharing information with companies like IBM and Halliburton.
— What is the ultimate goal? Unmanned fields and improved efficiency?
— Our drilling control centres are not meant to take people away from the wells. They help people find the best cross-functional, effective and quick solutions. This is an opportunity to consolidate different specialists in the same place and to let them influence the well targeting process, using the latest technological advances. To achieve that, we retrofit our rigs with additional equipment and it is true that those require fewer people to operate. But this is mainly about safety rather than efficiency.
Efficiency is ensured when incoming data are analysed by digital systems in order to predict possible scenarios in real time and recommend optimal parameters for further actions. A human being is not capable of this physically — only artificial intelligence can process big data at such speeds, but only humans can set the machine correctly.
This is what digitalisation consists of, rather than technology gradually becoming unmanned. For us, digitalisation is just a tool that helps unlock potential — one of many that helps us meet our targets.
— Are any other companies doing similar things?
— Not as actively or on such a large scale. We presented our project at the oil forum in Tyumen and couldn’t find an auditorium big enough to hold everyone interested in it. Next year, the pandemic situation permitting, we want to unveil it internationally, maybe at CERAWeek, which we traditionally participate in. We have a lot to show — it is already more than just a concept.
— Is it entirely your own programme?
— We cannot claim to have invented it from scratch. For example, we borrowed a lot from Equinor’s experience. And using opportunities from our partnership with Mubadala Petroleum, we borrowed a lot from Adnoc, which used the best western companies to develop its tools. And we went to Australia to study the expertise of Woodside, one of the world’s most innovative oil and gas companies.
So, I am not claiming that we are totally unique in all our solutions, but we have used global experience to create a truly unique approach of our own. No-one has tried to apply the entire range of solutions to the whole portfolio of a large oil company. And the bigger the scale, the better the potential effect.
The first optimisation level is the well, the next levels are the licence area, the asset and the region. So, by progressively extending the range and making up a portfolio, we end up with wide coverage, integrity and a high degree of optionality, resulting in a completely different scale of effects.
Each “product” is fully finished, with its own profit and loss statement and its own team, and this is the key difference. In the previous model, people going about their business — whether it be a business case development or a process tool development — would not realise what contribution they actually make to the overall value chain. We have divided the whole chain, and each product — from the initial phase of exploration and evaluation of business opportunities to operation and gas monetisation — now has its own profit and loss statement. This is a very clear responsibility with clear key performance indicators.