Equinor hopes to extract millions of barrels of oil from the depths of the Flemish Pass while keeping as many jobs as possible onshore, instead of 500 kilometres out in the North Atlantic. Here’s what they have planned.
The 2018 announcement of an oil project in a new part of the Atlantic Ocean was big news, both in Newfoundland and Labrador and across the region. It’s still early in the timeframe for Bay du Nord, says Equinor operations manager David Ralph (who is based in St. John’s), but broader changes in the resource industry are already influencing how the deepwater project could unfold.
Worldwide, the oil and gas sector is changing thanks to its increasing digitization—a shift that is bringing artificial intelligence (AI), via machine learning and data analysis, into the industry. Equinor’s hope is that emerging technology will be part of an eventual facility at Bay du Nord, where AI could contribute to making a deepwater operation safer, more economically efficient and more sustainable.
“As we move forward in the industry, we recognize that technology and digitalization is a very key element to how our industry will operate in the future,” Ralph says of Equinor, a Norwegian energy company operating oil, gas, and solar facilities in more than 30 countries including Canada, where it has oil interests in the Jeanne d’Arc Basin in Newfoundland and Labrador’s offshore.
There is a lot that will be new about the Bay du Nord development if Equinor’s current work leads to the hoped-for project. It would be, by far, the deepest ever for this province, as well as the furthest from land. It would also be the first project negotiated under the province’s generic oil royalty regulations, according to the Newfoundland and Labrador government.
On top of that, with all of Newfoundland and Labrador’s existing oil projects located in the Jeanne d’Arc Basin, Bay du Nord would open up a new area for the province’s offshore oil industry: the Flemish Pass Basin, a stretch of ocean with up to 600 million barrels of oil sitting below the ocean floor. Bay du Nord would be the first project in that area but several other potential sites are also located in the basin.
Achieving an operational offshore facility at Bay du Nord will require a lot of things to go right. Cost is one consideration, given the distance from shore and the harsh weather conditions of the North Atlantic. Safety is another, with icebergs passing by and the site taking about twice as long to get to by helicopter as Hibernia. Sustainability is also a factor to consider, Ralph says.
“For Bay du Nord, we look into the things that we’re involved in on a higher corporate level, from an Equinor point of view,” Ralph says. “And we’ll look through those and make the decisions as we progress as to what technologies and what technological implementation works the best for Bay du Nord.”
As it turns out, all of those considerations may be met in part by an ever-shifting segment of tech development that is quickly changing the oil and gas industry: artificial intelligence.
For many, mention of artificial intelligence or AI brings to mind science fiction films with sentient cyborgs and computers that can outthink their human masters. While increasingly powerful, current AI is driven by two key approaches: machine learning and data analysis. Both those approaches benefit greatly from the enormous amounts of data generated by modern-day offshore facilities.
In using that data, Equinor can learn more about building a facility for Bay du Nord while ensuring the safety of workers and increasing the sustainability of the operation—as well as revenues for the company.
Global business spending on AI reached $219 billion USD in 2018 and continues to increase, according to research from OC&C Strategy Consultants. That annual spending is predicted by OC&C to reach $400 billion USD a year by just 2025. In the oil and gas industry specifically, the annual value of AI is estimated to hit $2.85 billion USD by 2022, according to a Markets and Markets report, with a compound annual growth rate of 12.66 per cent.
“Oil and gas is one of the largest industrial segments and is a natural fit for AI,” says AJ Abdallat, the CEO of Beyond Limits, which provides AI-driven analytical software to the energy sector, among others. “The modernization of the oil and gas industry is a global landscape rich in opportunities for protection of the environment, more efficient discovery of energy sources, workplace safety, plus diagnostics for more informed decision-making,” Abdallat says.
The agreement to develop Bay du Nord was announced in July 2018, with the Government of Newfoundland and Labrador purchasing 10 per cent of the $6.8-billion project, which is expected to create hundreds of jobs during its operations phase.
Bay du Nord is expected to bring in $3.5 billion in total provincial revenues over its lifetime, according to information released when the project was first announced. The estimated break-even point for the project, based on government figures, is $49 USD per barrel.
The Bay du Nord site is located 500 km off the coast of the island’s capital at an approximate depth of 1,200 metres. That’s about 10 times deeper than the SeaRose platform, which is currently the province’s deepest producing oil field.
Equinor, which has partnered with Husky Energy, is the operator of Bay du Nord, with a 65 per cent working interest. The company is actively working toward sanctioning Bay du Nord, they said in October 2019 while indicating that a contract for engineering and design could be awarded by spring 2020. The project could be sanctioned by April 2021, with first oil in late 2025.
LESSONS FROM NORWAY
While Bay du Nord represents a variety of firsts for Newfoundland and Labrador, there is a lot to be learned from Equinor’s operations on the Norweigan continental shelf, says Ralph, who recently spent time working with the company in that country. “Part of my time over in Norway was looking at how we utilize technology and how we will continue to do in the future, and we’ll figure out what’s the best then to bring toward Bay du Nord and hopefully help us move forward with the project,” Ralph says.
Oil production off the province’s coast already makes up a significant part of total Canadian production; offshore production in Newfoundland currently represents about 40 per cent of Canada’s light crude production, according to Equinor. But the environment off Newfoundland’s coast is harsher than many for offshore activity, thanks to waves, wind, and icebergs—all factors that add costs and risks, financial and otherwise, to the operations. Similar conditions are faced off Equinor’s home country, another northern region with considerable offshore development.
This is where AI comes in. Equinor hopes to keep as many jobs as possible onshore for Bay du Nord, and technology can help them do that. The safety benefits of that approach are the company’s main goal for digitization, Ralph says. “If we can move a function onshore or we can move a capability or deliver a capability from onshore as opposed to having to send someone offshore to do that, well that overall is a safer solution.”
Cognitive AI (computing systems that are designed to simulate human thought) is already at use in the oil and gas industry around the world, according to Abdallat. “The value an AI system can bring to the energy market is tremendous,” he says. This can all start at the exploratory drilling stage, with data collected and analyzed to make drilling more accurate, and continue right to the shipping stage, where data about arrival times can be used to better run port operations.
“By analyzing this data, AI software can help geoscientists better assess variables, taking some of the guesswork out of equipment repair and failure, unplanned downtime and even help determine potential locations of new wells,” Abdallat says.
From Equinor’s perspective, says Ralph, the rich data from the subsurface is analyzed to help the company develop reservoirs more efficiently and effectively. Along with analytics, automation can allow the drilling rigs to adjust and make changes autonomously—with human supervision and monitoring—during drilling.
In newer facilities, the use of a digital twin (or interactive 3D representation of the facility and asset) can reduce offshore personnel needs, improving the safety of operations and cutting down on the emissions from travel to and from the site.
“We can actually have people onshore supporting our operations who will have exactly the same situational awareness of the people who are working offshore through the use of virtual reality and augmented reality technology,” Ralph says.
Additionally, new technology can help oil projects be more sustainable, and that is part of the motivation for incorporating it into Equinor’s projects, Ralph says. “A lower carbon footprint is one of the key reasons why we look to this utilization of technology towards the future.”
This digitally-driven approach has been made increasingly feasible by a few factors. The digital sensors required to gather the information used to create machine learning models or for data analysis are becoming increasingly less expensive, with higher capacities, and as connectivity options to get the data off those sensors continue to expand. A single drilling rig or modern offshore drilling platform can have as many as 80,000 sensors onboard that can generate as much as 15 million gigabytes of data over their lifetime, according to a report from the World Economic Forum.
Additionally, the growth of cloud-based computing power means more data than ever before can be collected, stored, and analyzed, with that analysis then used to improve operations both in real-time and for future developments. The data on a developed Bay du Nord facility won’t only be analyzed and used to improve that site’s operations; it could also inform decision making about future Flemish Pass drilling and development.
Equinor is not alone in applying AI to its operations. In Alberta, Imperial Oil has partnered with the Alberta Machine Intelligence Institute for a two-year initiative to boost machine learning at Imperial and develop AI projects. ExxonMobil partnered with the Massachusetts Institute of Technology to design AI robots for ocean exploration. Shell is working with Microsoft to use the tech giant’s Azure C3 Internet of Things software platform for everything from making extraction more efficient to improving employee safety. And Aker Solutions in Norway established a software and digital services company to help oil and gas operators optimize field performance.
In the United Kingdom, the country’s Oil and Gas Authority launched its first National Data Repository, containing 130 terabytes of industry data, in March 2019. The data is interpreted via AI models in hopes of uncovering new resource prospects and increasing production from existing ones.
In a similar way, the hope is that data collected—whether from an eventual Bay du Nord development or at Equinor facilities around the world—can be shared across the company’s corporate data platform and used to improve its analytics and models, and therefore its operations, beyond a single facility.
“All of our data for all of our facilities will rest in this platform and thereby, access to data is a key element for this,” Ralph says. “Any lessons learned that we have from any of our facilities across the world can leverage and access that.” •