The 3.6 million miles of pipelines that support the flow of oil and gas throughout upstream, midstream and downstream operations are among the most vital systems underpinning the entire industry. Yet surprisingly, the components of these pipelines are an area where engineering innovation has remained largely unchanged for decades. And while a three-year downturn has rightly triggered a cautious and conservative approach, the nascent recovery is sharpening the focus on the small details that could cumulatively make a big impact on efficiency, productivity and the bottom line.
It has been well-documented that for oil and gas companies to survive, maintaining day-to-day operations has had to be priority, while research and development (R&D) has taken somewhat of a backseat. PwC notes an average 18 per cent year-on-year decline in R&D spend when the downturn hit in 2015, and this has only continued. Unsurprisingly, this has had a direct result on the speed at which new technologies are coming to market.
It’s in the details
This pace of change has been particularly pronounced at a component level, where the value of investing in the smaller parts that support bigger systems has been lost in the scramble to simply maintain operations. Upgrades to these components in oil and gas pipelines could have a game-changing impact on their overall functionality, in terms of efficiency and reliability. What’s more, the cumulative effect of these upgrades could be huge for the bottom line. Yet they have been somewhat overlooked as victims of their own inconspicuousness.
One of the key reasons is a disconnect between the budgets allocated to technical teams and those allocated to operations teams. Technical departments are responsible for driving R&D, while the operations teams have the power to implement new technology. This often means that there is limited scope for new solutions to be integrated. On top of this, in an understandably risk adverse sector, executives tend be rewarded more for short-term successes than long-term ones, which further discourages them from making the sort of investments that yield returns down the line.
But opportunities beckon, with pipeline components now ripe for a revamp. And to achieve this there is no better place to look than an industry that has been forced to constantly reinvent technology from top to bottom: aviation.
Lessons from aviation
As one of the most global industries in the world, the aviation sector faces challenges from geopolitics and demographic shifts to environmental concerns, yet along the way engineering innovation has become key both to survival and growth. Susceptible to volatile commodities prices and pressured by swathes of competition, aviation companies are constantly developing pioneering and elegant upgrades to every part of their systems. These investments in R&D reap big rewards, delivering safer, more efficient and more profitable operations.
Furthermore, they have developed processes that allow them to adopt innovations at incredible pace. A golden balance has been struck, where companies are neither too risk adverse nor gung-ho, enabling them to implement solutions that don’t just improve performance but provide a platform for long-term sustainability.
The 2017 EU Industrial R&D Scoreboard ranked global aerospace R&D intensity (the metric used to gauge the level of an industry’s investment to spur innovation through research) as ‘high’ at above 5 per cent of net sales along with, among other sectors, computer services, defence and pharmaceuticals. R&D intensity for oil and gas producers by contrast was ranked as ‘low’, at below 1 per cent, along with electricity, forestry and paper, and water and multiutilities.
Airliners are made up of complex parts and systems, many of which have benefited from constant reinvention and redesign during the industry’s rapid evolution. Switches, tubes, adapters and avionic controls in everything from hydraulic systems, cockpit controls, landing gears and wings have placed component-level innovations at the heart of the aviation engineering agenda.
In a bid to cut costs, engineers have found ever-more creative ways to reduce aircraft weight, in turn cutting fuel consumption during flight.
For example, engine manufacturers have found ways to reduce fuel usage by lightening their turbines using composite materials for fan blades and fan cases. New manufacturing methods such as 3D printing have also offered radical ways to design aircraft components, while electrical systems are being introduced in some aircraft to replace their heavy, mechanically-controlled counterparts.
This engineering culture, which includes the adaptation and application of already-existing technologies, could provide big benefits to players in oil and gas sector. And it seems this cultural shift is already underway.
Oil and gas engineers are developing new technologies that radically improve the performance of some vital components that have remained unchanged for decades. For example, pressure reducing valves (PRVs) – which play a crucial role in keeping flow systems safe and operational – have seen precious little innovation in more than 100 years. But, by applying engineering processes and tools that have their roots in aviation engineers have made drastic progress in this area.
PRVs that are significantly lighter, smaller and more reliable are now being engineered and installed in oil and gas process and pipelines. This is presenting operators with significant opportunities to improve safety, integrity and reliability and cut costs.
Traditional valves are prone to failure, require ongoing maintenance and have a high lifecycle cost of ownership. The use of rubber diaphragms to control the valves adds complexity – which makes them less reliable – and heavy – which ramps up installation costs. These valves weigh more than one tonne for a 12-inch system, meaning that installation requires a crane, civil works and specialists, incurring substantial costs.
Newly-engineered PRVs by contrast are very simple, smaller, lighter, have one moving part, lower head loss and better stability. The valves are diaphragm-free, and have seals made from durable polymers, meaning they can operate maintenance free for 15 years or more. Additionally, there are just five major components in PRVs, compared with 100 in traditional valves, making them up to 90 per cent smaller and lighter. A switch to these valves could lead to savings greater than 80 per cent in the cost of ownership over 10 years, when installation costs, benefits to the system and OPEX are considered. Advantages such as the substantially lighter weight and size mean that the reduced installation costs pay for the initial cost of the valve, in most cases.
And this is just the tip of the iceberg – the great thing about simple, component part innovations is that they can be scaled up. Swapping a 10tn valve for a 500kg one in a new gas pipeline, for example, could lead to drastic CAPEX and OPEX reductions. The innovation behind the PRVs is also configured for other flow control valves such as pressure relief, pressure safety, back pressure control (pressure sustaining), etc.
These exciting advancements have been made possible by adopting an approach that prioritises the finer details.
Reaching for the sky
The oil and gas industry has started to make some positive moves with component innovation, but it can be a slow-moving beast. The upturn has presented a gilt-edged opportunity for operators to reconsider their R&D investment, and capitalise on the huge cost savings and improved reliability offered by exciting new technologies.
Ultimately, the aviation industry has trailblazed in component-level engineering innovation because it has had to. Companies have managed to survive even under the toughest conditions by quickly and constantly evolving. The oil and gas industry has progressed steadily in the past with comparatively low R&D spend, but with oil now stabilising in the $60-70/bbl range, companies have a chance to make the crucial investments in the small parts that will ultimately make the big difference.