Aker BP’s Tommy Sigmundstad: Aker BP working to create full loop for autonomous drilling and new business models with alliance partners as it prepares for a lower-margin future
By Linda Hsieh, Editor & Publisher
Tommy Sigmundstad is Senior VP Drilling and Wells for Aker BP.
What do you see as the biggest challenges for the global drilling industry?
Ever since the market crashed back in 2014, the service sector in particular has been surviving, more or less, on fumes. That is going to impact us today as activity picks up significantly because, as an operator, we rely on the service sector to deliver on the projects. But with the pace of the increase we’ve seen, and the experience from before 2014, there is great potential for quality problems due to a lack of resources and competent people. That would drive cost and delivery times up, and might end up driving safety in the wrong direction.
One competent person cannot be replaced by several less competent individuals. That will only drive up cost, and the quality of the projects will suffer. I think that’s the biggest challenge.
What about all the work the industry has done on automation? Is that not helping with this challenge?
We’re not far along enough though. Neither digital planning nor automation has allowed us to cut back on resources yet. We still sit on the same crews and same number of drilling engineers.
So what value are you able to see now with automation and digital?
We’re focusing now on what I call flow efficiency, which means we can do things faster. Digital, in particular, is helping us because we now have better access to the data we need. Our engineers don’t have to go searching for the data in different databases or Excel spreadsheets. This means they can spend more time building robustness and quality into our well plans. Overall, yes, automation and digital will help with reducing our resource needs for planning and executing projects, but there is still a lot of work to do.
Automation has hardly started. Some of the service companies are offering sequences for things like tripping and connections, but you still need a driller to sit there and watch it.
What are the remaining barriers to getting to that point where resource needs can be reduced?
I think the challenge is that we need an ecosystem. When we have a digital twin, it’s static. It’s the plan. The minute we start drilling and getting real-time data, that static twin becomes a dynamic twin. But just updating the drilling data piece doesn’t help. We also need the formation data, the pressures – everything we need to update the subsurface model, which again needs to inform the drilling plan. We need a digital ecosystem where all the various types of data can talk to each other through APIs (application programming interfaces). We will need to have that ecosystem in place before we can really do autonomous drilling.
That is not solved yet, and it’s a big challenge. At Aker BP, we are getting to that stage now. Like everybody else, we have digital twins and automatic drilling controls, but to actually get an entire loop, we still have some more work that we need to do.
Any timeline in mind?
I think we can be there within five to 10 years, but we need to have the full loop where we can break down the drilling plan into commands and have it interact with the rig-floor machinery. When we can have a digital twin programming machines, that’s when we can have real autonomy.
With the APIs you mentioned, do you see those being standardized for the whole industry?
We want open architecture and open source. Yes, we want APIs that are common for the industry. One of my biggest fears is that bigger companies will use this for their competitive advantage, and they will either make silos or vertically integrate. I don’t think that’s the solution.
The pockets of oil and gas that we’re drilling for are going to become smaller, so we need to focus more on cost. This means we need to work together and lift this challenge as an industry. If every company just goes about their own way of doing it, it will just drive cost up, and it will take more time.
Can you give us a couple of examples of digital projects where Aker BP has seen value?
We put a strategy in place around digital back in 2017-2018. It was a very simple plan revolving around the ecosystem I mentioned earlier — planning a well in a day and automation. So far, we have developed the planning piece – we have what we call collaborative well planning (CWP), which digitizes the interface between the subsurface and our Drilling & Wells group, along with the digital well program. This gives us a digital twin.
We’re using that in two instances. First, we take a tactical approach. For example, in one well we were drilling, we didn’t manage to follow the planned trajectory, and the team believed they needed to go back and sidetrack. But then they put together a CWP session, where they worked closely with the subsurface team to visualize all the various options. They were able to come up with an alternative plan that saved around 70 million NOK, which is roughly $8 to $9 million.
Secondly, we now use the CWP software on all the PDOs we submit, which allows us to deliver the well plans within a much shorter time frame. Moreover, the plans are much more robust than before – I believe the improved quality of our plans will result in large savings without me knowing any specific number. But it is a large number.
I will add that we jointly developed both of these pieces of software with our alliance partner Halliburton. We work very closely with them to develop new software that we can put into our operations at Aker BP. This type of collaboration streamlines the process for beta testing new technology, and they can quickly scale it and make it available to other operators.
So you’re open to sharing technologies with other operators?
Yes, the software is open architecture. So, when those other companies start developing their apps and digital solutions, we can use them, as well. Like I said, we need to lift this challenge together as an industry because it’s going to be expensive to develop these types of software and put them in use.
We have actually met with several other operators already, like Hess, Shell and ConocoPhillips. We are sharing because we don’t see this as a competitive advantage. How we use the tools and interpret the data — that’s the competitive advantage, not having the tools at hand.
Do you see the industry embracing the digital mindset as much as we need to?
I think we are at Aker BP, but I’m not sure about the rest of the industry. In many instances, I see the mindset of people is still a barrier. Especially when it comes to things that will impact business cases, there’s a lack of willingness to change.
Do you think that’s because of how volatile our industry is?
There’s a lot of conservatism in our industry, and there can be very high consequences of something going bad in terms of well control. But automation and digital will require significant investment, and I don’t think any single company can do it alone. So change is necessary.
If you take Norway as an example, we will see smaller and smaller pockets of oil, so we need to do more with what we already have. That means more exploration around existing infrastructure. That means infill drilling. That means more intervention. For that to be economic, you need to lower your cost or you won’t be competitive. And I can’t think of any improvement better than digital that can actually help us to transform and lower our costs.
What are your key considerations when deciding whether to invest in a digital technology?
Everything we invest in needs a business case. One challenge with digital is how do you actually link it to what’s creating value for the company? We’ve been working a lot on this and finding ways to convert it to value for the company and show why we’re investing in it.
But we’re also investing in what I call leap of faith, where we invest in something because we believe it is the right thing to do. It’s not straightforward, but as we mature on our digital journey, we are proving why we invested in a technology.
Another important thing when investing in digitalization is to define what we call end-to-end solutions. I have spent a lot of time putting Drilling & Wells into the value creation of our company – what kind of value do we actually bring to the table? As long as we can say, this is the part that we are going to digitize now when we create that kind of value, we can build a business case. But still there is a leap of faith when you initially invest in it.
Do you find that it’s hard to integrate new digital technologies into existing workflows?
Yes, but we have been in a much better place since we started focusing on these end-to-end solutions. This means our front-line workers are always part of the development process. And every time we put together a use case, we pick where we’re going to use it upfront. We know which team is going to get the technology, so they are a part of developing the solution. We don’t want to end up with a solution and then you run around looking for a problem. We have to know, what will you use it for?
It’s been a few years since Aker BP entered into alliance agreements with Halliburton, Odfjell Drilling and what was then Maersk and now Noble. Can you talk about your considerations when you were selecting alliance partners and share any lessons learned over the last few years?
We spent a lot of time in the beginning making sure we picked the right alliance partners. We were not necessarily focused on the technical stuff but more on the mindset and behavior of the organization and the leadership. I wanted to see that we can work together to create more value for each company by establishing a deeper and longer relationship. This was important because more than 90% of the work within Drilling & Wells is done by the suppliers. My thinking is: They need to win if we’re going to win.
What we’ve seen with the alliances is they give each company more predictability. For example, we give our alliance partners full insights into our five-year plans. For the drilling contractors, that gives them much more predictability on their rig schedules.
But alliances also require everyone to do things very differently than what you normally do when you go to the market and act in a more transactional way. Because you have long-term contracts, you will shave off the peaks, but you will also remove some of the depths of the dips. You also have much more continuous operations, so you eliminate costs associated with learning curves, start-stops and the frequent equipment mobilization.
By working together to reduce cost, we have also opened up opportunities for new work. As an example, we contracted the Maersk Integrator back in 2018 for just nine months, but we ended up having it for five years because we were continuously pushing cost down, so new opportunities came up.
Aside from the drilling alliances, we also have an intervention alliance with SLB and Stimwell. In the Valhall area, we have a lot of work on normally unmanned installations, and we found that we were spending a lot of time rigging up and rigging down equipment for well interventions. So we started running coiled tubing from a jackup from Maersk. That was an inter-alliance setup between Maersk and SLB/Stimwell, and it was a great success creating value for everybody and creating new opportunities that we never thought of a couple of years back.
Does something like that come as a result of having an open mindset?
You have to listen, and you have to create trust. Our contractors need to make money. If you’re a contractor that is losing money, there will be no trust and they’re going to move out as soon as you can.
We’ve learned a lot from our alliances over the past five years, and we’ve recently renewed both drilling alliances. We have updated our contractual framework and the commercial mechanisms for achieving mutual benefit. I think that will help to drive cost even further down, because we have insights to the risks that our suppliers face, which we can help to mitigate. That will help them to reduce their cost, which then benefits us.
Do you see the current energy crisis, especially in Europe, leading to any changes in the way countries are approaching the energy transition?
In some ways, yes. Before, the green shift was everything people talked about, and everything with oil and gas was bad. But the situation we now find ourselves in shows us that oil and gas is part of the solution. It’s a part of the energy mix. I now see more discussions around the time needed for the transition, and what is it going to cost? Before, the conversation was always around how they need to shut down all oil and gas tomorrow because they’re making a green shift.
In my view, wind and solar will never ever replace oil and gas because of the differences in energy density. Nuclear power plants may be part of the solution. Molten salt reactors can be an example since they have a much higher energy density than solar and wind. But if you ask me what time frame? I don’t know. I still believe that oil and gas will be the most important ingredients in the energy mix until at least the late 2030s.
How do you view the investments that drilling contractors have made in emissions reduction technologies?
We have worked closely on that with our drilling contractors as part of the alliances, so we actually helped them to invest in this. But I would say that what we’re doing now are just stepping stones. These include hybrid packages, flywheel solutions and urea injection to reduce NOx emissions.
We have also done a lot of work on changing the mindset of people – like making sure the motorman knows he should shut down a generator when it’s not needed. I think we’ve achieved more than a 20% reduction just by working with people and changing behaviors.
But the question that I’m pondering is, when do we bite the bullet and say we need a different fuel than diesel? At Aker BP, we’ve looked at ammonia, and we’re going to try to run bio-methanol on a jackup within the next year.
The biggest problem with alternative fuels is that there’s no infrastructure onshore to support it. That is starting to change in Norway. We’re also working with Odfjell on their offshore windmills and potentially getting electricity down to the subsea templates.
In short, emissions reduction is important, and we are investing, but I think we need another step change. Right now, Aker BP is investing a lot on the production side because it’s the production facilities that are the big emitters. Drilling & Wells is only about 10% of Aker BP’s emissions. But once the production facilities are done, we’ll be in the limelight, too, so we can’t just sit and wait.
We are also working with suppliers on four hotspots to reduce emissions: casing, cement, big-volume chemicals and logistics.
So we are doing what we can, but I believe that within five to 10 years, we will need to find a way to get to zero emissions on drilling rigs. And what might get us get there, particularly in Europe, is higher carbon pricing. Right now the taxes as alternative pricing makes it hard to create a value stream on investing in technology to reduce emissions. Sooner or later, there will be heavier taxes on emissions, at least in Europe. Then you can get enough of a pricing system where you can invest in new technology to reduce your emissions because the alternative cost is high.
How do you view the industry’s challenges around people? A lot of companies find it difficult to recruit young talent.
The worst thing we are doing as an industry is how we promote ourselves. When we talk about drilling, most often you see a photo on a land rig that looks like it’s 1950, with a roughneck covered in mud. How appealing is that to new talent? How about showing a photo of someone sitting in a cyber chair or in a simulator at our onshore collaboration center (OCC)? Show them how we’re investing in ESG. Show them what we’re doing in digital.
We also need to make sure that we are developing engineers who are not working what we call dead-end streets. We have to show them that the technical know-how they develop in our industry can be applicable in other industries. That would help to make us more attractive.
Personally, one of the things I’ve done at Aker BP is to have very young people run my rigs. Why? Because they think differently, and they want to change. But to do this, we need to create a safety net around them so they don’t make the same mistakes that the previous generations have made. That’s why I involve the more experienced people in early-phase planning and have them do risk mitigation long before it hits the rig line. We’ve seen our productivity increase quite a lot since we did this; it’s really paying off.
The other thing is we need to create an environment where people want to work. I’ve been part of building onshore collaboration centers before, but they’ve always ended up being fancy meeting rooms. The newest OCC we built at Aker BP has a much more inviting atmosphere, where people actually want to spend time in the break room, where they can mingle and get to know each other.
What innovations do you hope to see around well completions?
First and foremost, we need to get electricity down to the sandface of the completions. If you think back to what I said earlier about needing to do more with what we already have, that means you need to embrace challenges like water production. Electricity will help, so we can put in valves that can be manipulated.
Overall, cost needs to come down, so you need to simplify where you can. Aker BP has a stake in a company called Fishbones. We invested in the company simply because their technology allows us to reduce our stimulation cost. It lowers our cost of installation and reduces the time to production. That’s the kind of technology we need so we can economically drain smaller pools of oil. DC