Need for Digitally Transformed EPC Projects in Oil & Gas Industry
Pramod Mirji
Senior Consultant - Energy & Resources Industry
Tata Consultancy Services

Dr Biswajit Chakraborty
Principal Consultant - Energy & Resources Industry
Tata Consultancy Services

EPC (Engineering, Procurement and Construction) in O & G (Oil & Gas) is trying to accelerate maturity in digital technology adoption. Digital & Innovation initiatives in EPC face sector specific challenges due to complexities in business requirements, pressure on return of investment, technology debt, change management, and ability to attract and retain the talent needed. Moreover, macroeconomics, geopolitics, energy transition and climate change impact the objectives of digital transformation journey. This paper aims to discuss few specific challenges across the lifecycle of the EPC projects, and suggests some innovative choices for project management and HSSE (Health, Safety, Security and Environment).

The catastrophic fall in oil prices from a peak above USD 100 per barrel in June 2014 to under USD 30 in Februar y 2016, is often termed as one of the most important global macroeconomic changes in recent times. Fast forward to 2018-19, and there has been a recovery with the price of crude oil staying in a range of USD 50-USD 70 per barrel most of the time. The Energy Transition and the new normal in Oil & Gas prices have driven global transformations in the O & G sector such as large mergers and acquisitions, changes in work policies, business process simplification, new priority in return on CAPEX and technology adoption, reliability and operational efficiency. Capital projects in the O & G sector (and hence, the EPC providers) have witnessed the highest impact. EPC is characterized large outsourcing contracts where investments are very high, and the asset performance parameters primarily define the owner/operator's overall success and financial health. The sector also operates under stringent compliance requirements by the regulators.

Business Challenges in the EPC Segment
In the current business scenario, O & G companies are challenged to grow the production levels profitably and sustain the asset performance. New capital project funding has slowed down due to demands for stronger return of investment at lower prices and the need to move to low carbon forms of Energy. As a result, higher expec tations are mounting on existing capital projects and their success at a lesser investment. To meet this expectation, organizations are relooking their business objectives, operational processes , outsourced contracts and technological aids so that predictable results, greater efficiencies and lower carbon footprint can be achieved at a lesser cost.

Some of the key EPC business challenges that can be managed effectively by deploying suitable digital technologies are discussed below.

1. Mobilization of Resources in Projects
In an EPC project, right staffing is always a challenge. From start of the bidding process till the contract is awarded, it may not be possible to keep the identified resources idle by the EPC vendor. Availability of skilled resources and need to make staff and assets productive from the beginning of a project is a constraint. Additionally, de-mobilizing a resource without a proper replacement plan during the critical phase of an ongoing project is also a challenge. Digital tools can be proved very useful in such resource planning and deployment activities, especially if combined with predictive analytics.

2. Real-time Project Management Tool for Monitoring of Cost, Schedule, Sites, Procurement, Logistics and Quality
In an EPC project, visual illustrations presented on the plan and the actual progress are more effective than a large descriptive document. For project planning and minimizing of errors, it is really helpful if the activities can be simulated before the actual construction starts. Hence, an effective project management tool integrated with simulation, analytics and visual displays help immensely to plan and manage activities in an EPC project.

3. HSSE Management - Proactively Rather than Reactively
It is often obser ved that in an EPC project, HSSE driven decisions are reactive. However, it is very impor tant to identify the causes leading to the incident and take corrective action even before it occurs. Digital solutions today can be used to foresee and manage the HSSE needs very efficiently in an EPC project so that undesirable incidents and risks to the project can be restricted.

4. Managing Productivity of Workers
Construction in the O & G sector has a poor track record of workers' productivity management. Modular construction has helped the industry to overcome the problem, to some extent. Contract management is an important lever to optimize utilization of resources. Apart from deploying skilled workers, efficiency in managing the supply chain processes also helps in productivity gain. A strategically implemented digital framework that uses analytical and knowledge management tools can be very useful to train the workers and improve the productivity.

5. Integrated Engineering Support for Complete Asset Lifecycle
In a traditional EPC project, the scope of engineering is to construct the asset only and not to support the life of the asset. However, for better management and productivity, engineering should be planned to be integrated with the entire lifecycle including dismantling after the operational life of the asset. It has been also noticed that during the construction phase of the asset, often design changes are required to comply with changing regulations (e.g. BS IV to BS VI - a jump in step to meet the emission standards that needs upgradation of refineries). Strategically planned digital solutions are capable of managing such engineering needs very effectively. Further, a lifecycle view of assets helps EPC firms create new service lines for predictable revenue growth.

Let us discuss two areas where innovative digital technology can be effectively used in managing EPC projects and HSSE requirements in the O & G industry.

The 'BIM' Tool for Efficient Management of EPC Projects
Today, EPC Industry is focused on how the full lifecycle of a project can be managed in an integrated manner. This objective is driving the attention of the EPC community from tools to the data generated from past and ongoing projects. These data are not only used during construction but also for operations and maintenance phase. The tools that use these datasets are also going through major transformations to provide best-in-class analytical abilities. Analytics capability is vital to efficiently execute full project lifecycle including maintenance of the assets.

Figure 1: High-level business process-flow for the procurement function in an EPC project

The Building Information Modelling system (BIM) has evolved from a 3D modelling tool to an integrated multi-dimensional tool to manage the entire lifecycle of the asset. BIM holds near real-time data and project information. The tool can create future-ready models from planning to monitoring stage of the project. Financial, Operations and maintenance data can be integrated with these models as well. Such models can be leveraged for the future design, cost estimation and training that can save time and effort during the project execution phase. BIM also helps to reduce inefficiencies associated with decision-making process of the management. Global EPC companies serving the O & G sector are adopting BIM to leverage datasets from their por tfolio of projects to optimize operations, execute analytics, to reduce cost and achieve improved customer satisfaction.

EPCs are impacted by the lack of digital maturity of their sub-contractor ecosystem as well. Figure 1 represents a conceptual high-level business process- flow for the procurement function in an EPC project. The process -flow, if executed via online digital tools, can ensure seamless communication across the owner/operators/par tners/subcontractors, transfer of data across various systems /decision frameworks and maintains transparency to the entire stakeholder community. BIM tool can help effective execution of such a business function. Digital enablers such as embedded sensors, drones, AI, automation tools, robotics, cloud infrastructure and datalakes fur ther assist to ensure productivity, profitability, precision and safety in the entire EPC lifecycle.

Digital HSSE & Productivity for EPC - The 'Connected Worker' Platform
The Health, Safety, Security and Environment (HSSE) function in the EPC industry has three vital per formance objectives - to ensure safety of the workers, to minimize negative impact on the environment and safe running of operations. Achieving these performance objectives need strict adherence to compliance requirements and operational excellence with decreased HSSE incident rates.

Traditionally HSSE units suffered from lack of cross-functional collaboration while executing the EPC projects in the O & G sector. Siloes in operations and lack of data driven decisions fur ther restricted HSSE processes to deliver desired outcomes. The field workers of operations and maintenance units often encounter host of unexpected real-life scenarios that may also expose them to safety risks. To provide safer working environment to the field workers for suppor ting the operations, organizations are increasingly investing on new-age digital solutions. Digital transformations in the HSSE units primarily require use of cyberphysical systems that may connect their people, equipment, data and processes seamlessly during the project lifecycle . Revamping the asset reliability can also drastically reduce equipment- caused injuries and greenhouse gas emissions. For example, equipment health checks can be per formed by analyzing the real-time sensor data acquired during the operations.

To ensure field workers' safety, eliminating accidents, reducing risk of errors, managing per formance gaps and having real-time visibility into process flow; EPC industry globally is considering deployment of 'Connected Worker' platforms. Connected Worker is basically a field worker equipped with real-time, context-specific and actionable information which allows him /her to take better decisions while performing his/her job safely and efficiently.

The adoption of the solutions based on the Connected Worker concept has been slower in the past as the suppor ting technology either didn't exist, was not engineered for industrial use or was difficult to scale at the industrial level. With the advent of emerging technologies such as Industrial IoT (Internet of Things), wearables, Ex tended Reality (XR) along with communication protocols have made this transformational solution available to the field workers. Industrial IoT has facilitated the connected ecosystem for near real-time data capture about the equipment, assets and the field worker. This critical data is also used by business groups to per form analytics for decisions. The maturing wearable devices along with the XR ecosystem offers industrial grade safety compliant hand-held or head-mounted devices to seamlessly connect a field worker with the digitized enterprise.

The research conducted by World Economic Forum estimates that during 2016-2025, the Connected Worker is pegged to add value of USD 100 Billion while bringing down the safety incidents by 13 per cent in the O & G industry. By 2025, the Connected Worker is expected drive 15 percent productivity gains in both upstream and downstream operations.

The fourth Industrial revolution is driving adoption of some state-ofthe-art digital solutions to reimagine the current way of operations in the EPC segment. These transformational solutions can not only drive huge business benefits but also, capable of changing the age-old way of performing the tasks. This paper presented a brief review of the current business challenges faced by EPCs and the need of implementing transformational digital Solutions to meet these challenges. In this context, two important solutions viz. 'BIM' tool for Capital project management and 'Connected Worker' for safe operations are discussed.