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Updated: May 14, 2019

Is moving to the cloud a viable solution for Oil and Gas SCADA operations?


An Integrator’s View


We’ve been working on several projects recently for the Oil and Gas industry (and we get more inquiries every day) in which our clients are exploring whether there are advantages to moving their SCADA operations to a cloud-hosted environment.


The drivers behind these investigations are much greater than hype or trying to demonstrate digital transformation adoption. In fact, most organizations wouldn’t think of SCADA ops as the ideal candidate for experimental innovation or proof of concept cloud migrations. More commonly, the organization would be reluctant to modify these operations because they are incredibly complex and require expertise that’s in limited supply.


SCADA operations in the Oil and Gas industry:

  • Rely on hardware and software implementation;

  • Are almost always installed for mission critical operations where success is measured on the ability to keep the processes up and running safely at all times;

  • Are established to comply with regulatory requirements or to prevent HSE incidents;

  • Route the procured data to several other functional departments via systems integrations including accounting and financial forecasting teams; and

  • Are linked to a process or a series of processes that are directly related to revenue generation.


So what’s the driving force behind the influx of cloud-hosted SCADA initiatives?

We’ve witnessed three primary catalysts for the increased activity in the Oil and Gas community.


Cloud technology has matured.

No one likes to be the guinea pig, but least of which is the oil and gas industry. Because the operations involve a high degree of technical skills, are inherently risky in terms of both HSE and cash investments, and require global organizations working on highly sensitive/confidential data and information, cloud solutions in their early years were not considered secure or reliable enough for the industry to adopt. However, as IBM, Amazon, Microsoft, Google, and more have invested heavily in infrastructure, protocols, redundancy, speed and security that have helped to increase their client’s confidence in the architecture, more companies have taken advantage of the opportunity. The oil and gas industry is finally at that critical tipping point where it has completed enough migrations of applications, data lakes, and more that they are realizing tremendous gains in operational efficiency and reduced overhead costs. The natural progression is to begin assessing the viability of porting over data intensive workflows and business operations.


Managing cost and overhead is a continued concern despite the upward trend in oil prices.

Although the industry is on the mend, recent executive advice in most upstream and midstream companies has been to continue operating lean. Managing cash flow has always been a major concern for the commodity price-driven industry, and market volatility is still a very real danger during this slow recovery. Most of the “easy” short term cost-cutting was completed during 2015 and 2016 whereas 2017 and beyond has been a time of evaluating large-scale programs aimed at reducing overhead burden with a substantial long term impact. This means revamping operations to squeeze out efficiencies from every department and all aspects of the business; wellsite and pipeline ops included.


Long term planning to future-proof operations.

When industry downturns necessitate layoffs, companies lose expertise and know-how. And if a natural or man-made disaster occurs, operational redundancy is the only way to mitigate the risk of losing millions of dollars in CapEx and revenue. Many of our clients investigating cloud-hosted SCADA operations are looking for ways to ensure their businesses are protected from these two major disruptions.


What we’ve learned so far...

We’ve been working on two separate projects in which the clients have selected Microsoft Azure as their cloud solution provider. One project is utilizing an ICONICS SCADA System and the other is CygNet. In both cases, our team is managing the configuration and implementation of both the Azure environment and the SCADA system in partnership with our client’s IT personnel. Additionally, we are upgrading the systems to newer versions and managing every aspect of the data and services migration. Although we are also programming and installing additional PLC’s and Instrumentation, for the purpose of this article, I am deliberately focusing only on the SCADA migration.



Conclusion

It is possible to successfully transition some SCADA operations to the cloud, however careful analysis should be completed to determine if it is in fact truly cost effective. You can certainly fast-track SCADA implementations and can more effectively manage and maintain network infrastructure, but you must be diligent in monitoring the utilization rate or it can quickly become astronomical. The optimal strategy is to do a case study or a pilot project for your operations to determine if your long-term cloud cost will increase your current OpEx. This might prove to be unsustainable through an industry downturn.


For now, we see a lot of advantages for companies that are monitoring upstream assets such as wells and wellsite gathering facilities where information is transferred in longer intervals, say every 10-15 minutes. For midstream gathering and compression stations (for natural gas), and for downstream refineries, SCADA in the cloud is perhaps less optimal because of the regulatory requirements which impose strict guidelines on real-time data transfer.

If you are interested in investigating SCADA in the cloud further, below is a list of resources we’ve compiled that might interest you.


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