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Suggested Citation:"2 Industry Overview." National Academies of Sciences, Engineering, and Medicine. 2016. Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations. Washington, DC: The National Academies Press. doi: 10.17226/23499.
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Suggested Citation:"2 Industry Overview." National Academies of Sciences, Engineering, and Medicine. 2016. Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations. Washington, DC: The National Academies Press. doi: 10.17226/23499.
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Suggested Citation:"2 Industry Overview." National Academies of Sciences, Engineering, and Medicine. 2016. Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations. Washington, DC: The National Academies Press. doi: 10.17226/23499.
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Suggested Citation:"2 Industry Overview." National Academies of Sciences, Engineering, and Medicine. 2016. Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations. Washington, DC: The National Academies Press. doi: 10.17226/23499.
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Suggested Citation:"2 Industry Overview." National Academies of Sciences, Engineering, and Medicine. 2016. Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations. Washington, DC: The National Academies Press. doi: 10.17226/23499.
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Suggested Citation:"2 Industry Overview." National Academies of Sciences, Engineering, and Medicine. 2016. Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations. Washington, DC: The National Academies Press. doi: 10.17226/23499.
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Suggested Citation:"2 Industry Overview." National Academies of Sciences, Engineering, and Medicine. 2016. Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations. Washington, DC: The National Academies Press. doi: 10.17226/23499.
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Suggested Citation:"2 Industry Overview." National Academies of Sciences, Engineering, and Medicine. 2016. Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations. Washington, DC: The National Academies Press. doi: 10.17226/23499.
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Suggested Citation:"2 Industry Overview." National Academies of Sciences, Engineering, and Medicine. 2016. Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations. Washington, DC: The National Academies Press. doi: 10.17226/23499.
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Suggested Citation:"2 Industry Overview." National Academies of Sciences, Engineering, and Medicine. 2016. Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations. Washington, DC: The National Academies Press. doi: 10.17226/23499.
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Suggested Citation:"2 Industry Overview." National Academies of Sciences, Engineering, and Medicine. 2016. Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations. Washington, DC: The National Academies Press. doi: 10.17226/23499.
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Suggested Citation:"2 Industry Overview." National Academies of Sciences, Engineering, and Medicine. 2016. Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations. Washington, DC: The National Academies Press. doi: 10.17226/23499.
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Suggested Citation:"2 Industry Overview." National Academies of Sciences, Engineering, and Medicine. 2016. Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations. Washington, DC: The National Academies Press. doi: 10.17226/23499.
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Suggested Citation:"2 Industry Overview." National Academies of Sciences, Engineering, and Medicine. 2016. Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations. Washington, DC: The National Academies Press. doi: 10.17226/23499.
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Suggested Citation:"2 Industry Overview." National Academies of Sciences, Engineering, and Medicine. 2016. Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations. Washington, DC: The National Academies Press. doi: 10.17226/23499.
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Suggested Citation:"2 Industry Overview." National Academies of Sciences, Engineering, and Medicine. 2016. Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations. Washington, DC: The National Academies Press. doi: 10.17226/23499.
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Suggested Citation:"2 Industry Overview." National Academies of Sciences, Engineering, and Medicine. 2016. Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations. Washington, DC: The National Academies Press. doi: 10.17226/23499.
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Suggested Citation:"2 Industry Overview." National Academies of Sciences, Engineering, and Medicine. 2016. Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations. Washington, DC: The National Academies Press. doi: 10.17226/23499.
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Suggested Citation:"2 Industry Overview." National Academies of Sciences, Engineering, and Medicine. 2016. Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations. Washington, DC: The National Academies Press. doi: 10.17226/23499.
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Suggested Citation:"2 Industry Overview." National Academies of Sciences, Engineering, and Medicine. 2016. Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations. Washington, DC: The National Academies Press. doi: 10.17226/23499.
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Suggested Citation:"2 Industry Overview." National Academies of Sciences, Engineering, and Medicine. 2016. Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations. Washington, DC: The National Academies Press. doi: 10.17226/23499.
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Suggested Citation:"2 Industry Overview." National Academies of Sciences, Engineering, and Medicine. 2016. Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations. Washington, DC: The National Academies Press. doi: 10.17226/23499.
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Suggested Citation:"2 Industry Overview." National Academies of Sciences, Engineering, and Medicine. 2016. Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations. Washington, DC: The National Academies Press. doi: 10.17226/23499.
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Suggested Citation:"2 Industry Overview." National Academies of Sciences, Engineering, and Medicine. 2016. Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations. Washington, DC: The National Academies Press. doi: 10.17226/23499.
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Suggested Citation:"2 Industry Overview." National Academies of Sciences, Engineering, and Medicine. 2016. Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations. Washington, DC: The National Academies Press. doi: 10.17226/23499.
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Suggested Citation:"2 Industry Overview." National Academies of Sciences, Engineering, and Medicine. 2016. Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations. Washington, DC: The National Academies Press. doi: 10.17226/23499.
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Suggested Citation:"2 Industry Overview." National Academies of Sciences, Engineering, and Medicine. 2016. Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations. Washington, DC: The National Academies Press. doi: 10.17226/23499.
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Suggested Citation:"2 Industry Overview." National Academies of Sciences, Engineering, and Medicine. 2016. Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations. Washington, DC: The National Academies Press. doi: 10.17226/23499.
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Suggested Citation:"2 Industry Overview." National Academies of Sciences, Engineering, and Medicine. 2016. Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations. Washington, DC: The National Academies Press. doi: 10.17226/23499.
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Suggested Citation:"2 Industry Overview." National Academies of Sciences, Engineering, and Medicine. 2016. Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations. Washington, DC: The National Academies Press. doi: 10.17226/23499.
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Suggested Citation:"2 Industry Overview." National Academies of Sciences, Engineering, and Medicine. 2016. Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations. Washington, DC: The National Academies Press. doi: 10.17226/23499.
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Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

18 The organization and operation of the oil and gas industry are complex. Chapter 2 provides context for this study and for its findings and rec- ommendations but not an all-encompassing review of the industry. It includes a brief overview of industry operations and background infor- mation explaining aspects of the offshore operational environment rel- evant to the application of remote real-time monitoring (RRTM). The chapter describes some of the basic processes that occur offshore and the interactions between operating companies and oil field service com- panies and contractors, as well as the interactions between this industry and the Bureau of Safety and Environmental Enforcement (BSEE). The basic RRTM environment and the flow of data between operators and contractors are explained, and the communications environment and relevant telecommunication technologies are illustrated. Finally, the chapter summarizes three recent studies on the topic of real-time moni- toring (RTM) that are the focus of the committee’s statement of task: the BSEE internal RTM report (BSEE 2014); the 838, Inc. report (838, Inc. 2014); and the committee’s workshop summary (TRB 2015). INDUSTRY PROCESSES AND INTERACTIONS The federal government awards leases to oil and gas operating companies for extraction of resources from the subsurface under a sealed-bid auc- tion process. The operating companies are responsible for the activities on their leases but do not carry out all of the activities by themselves. Drill- ing and oil and gas production operations involve complex processes, many companies, and highly trained and specialist staff from a wide array of technical and service disciplines. A multifaceted and dynamic 2 Industry Overview

Industry Overview 19 industry supplies everything from specialist drilling and evaluation ser- vices to transportation and catering services, all of which are necessary throughout the exploration–production life cycle. That life cycle covers exploration for new oil and gas resources, the development of discover- ies, the subsequent production of oil and gas and other resources, and the decommissioning and abandonment of depleted fields. In the United States, BSEE is one of the federal agencies responsible for regulating the activities of this life cycle on the outer continental shelf (OCS). Its purposes are to promote safety and protect the environ- ment. BSEE reviews required documents such as a company’s applica- tion for a permit to drill new wells (APD), exploration plan (EP), and development plans for discoveries, and it performs on-site inspections of equipment, facilities, and processes. These actions allow the agency to oversee compliance with regulations and approved plans on a wide range of facilities and activities that include operations such as drilling, completion, workover, and production. In this section, the committee outlines these processes and interactions. The discussion is limited to the elements of the overall process that are relevant to this study on the application of RTM in offshore oil and gas operations.1 Drilling Operations The operator generally holds the lease and contracts with other service providers for various aspects of drilling and operations. An overview of the major actors and processes is shown in Figure 2-1. When wells are drilled by using a mobile offshore drilling unit (MODU), the operating company and leaseholder (key processes located in box with solid line) will do the preparatory technical work in support of the APD and EP. That work will include a complete assessment of the subsurface features to be drilled and a plan for drilling the proposed well safely. The assessment will include a number of uncertainties with significant effects on the design of the well and the planned operations. Through its representatives on the MODU and through the use of links to the operator’s offices onshore, the operating company communicates 1 For background information on and a more detailed description of offshore drilling operations, see Chief Counsel 2011 and NAE and NRC 2012.

O pe ra  ng C om pa ny O pe ra  ng c om pa ny c on tr ac ts d ri lli ng r ig fo r a si ng le w el l o r fo r se ve ra l y ea rs o r m ul  pl e w el ls D ri lli ng C on tr ac to r, O th er C on tr ac to rs a nd S ub co nt ra ct or s D ri lli ng r ig o w ne d by d ri lli ng co nt ra ct or O ff sh or e in st al la  on m an ag er , d ri lle r, m ar in e sy st em an d ke y cr ew m em be rs Ri g- ow ne d eq ui pm en t: B O P, m ar in e sy st em s, m ud s ys te m , ge ne ra to rs , e ng in es , c ra ne s, d ra w w or ks , p ro pu ls io n, e tc . Co nt ra ct or s an d su bc on tr ac to rs w or ki ng fo r dr ill in g co nt ra ct or : w ir el in e, c on st ru c on , m ec ha ni cs , e le ct ro ni c te ch ni ci an s, IT , c ra ne op er at or s, c at er er s, e tc . D ri lli ng c on tr ac to r on sh or e RR TM (w he n av ai la bl e) — ke y dr ill in g pa ra m et er s an d ke y eq ui pm en t d ia gn os  cs (g en er at or s, m ar in e sy st em s, e tc .) O EM a nd o th er o ns ho re R RT M — m on it or in g of k ey e qu ip m en t: ge ne ra to rs , I T, s at el lit e co nn ec  on s, e tc . Po ss ib le d at a po rt al (n ot n ec es sa ri ly in re al  m e) O pe ra to r re pr es en ta  ve (s ta ff o r co nt ra ct or ), H SE te ch ni ci an s, a ud it or s, e tc . O pe ra  ng c om pa ny s up pl ie d or le as ed se rv ic es a nd e qu ip m en t o n M O D U : l og gi ng to ol s an d pe rs on ne l, ce m en  ng u ni ts , m ud lo gg er s, g eo lo gi ca l t es  ng , e tc . O pe ra to r on sh or e RR TM , w he n av ai la bl e— ke y dr ill in g pa ra m et er s as s ee n on r ig , m on it or ed b y a co m bi na  on o f o pe ra to r st aff an d co nt ra ct ed p er so nn el Su pp or t se rv ic es (l ea se d) : m os t o ff sh or e su pp ly v es se ls , a nc ho r ha nd le rs , h el ic op te rs , et c. FI G U RE 2 -1 M ob ile o ff sh or e dr ill in g u n it ( M O D U ): k ey a ct or s an d pr oc es se s. T h e pr oc es se s sh ow n a re th os e oc cu rr in g du ri n g th e dr ill in g of a w el l t h at a re p ar ti cu la rl y re le va n t t o th e di sc u ss io n o f R R T M ( H SE = h ea lt h , s af et y, a n d en vi ro n m en ta l; B O P = bl ow ou t p re ve n te r; I T = in fo rm at io n te ch n ol og y; O E M = o ri gi n al e qu ip m en t m an u fa ct u re r; b ox es w it h s ol id li n es = o pe ra ti n g co m pa n y; b ox es w it h d ot te d lin es = c on tr ac to rs ). ( So u r c e : G en er at ed b y th e co m m it te e. )

Industry Overview 21 with and directs the activities of many of the contractors during the drill- ing of a well. However, some specialized contractors and supporting- service companies will work directly for the drilling contractor, without the direct involvement of the operator. Key processes performed by the various contractors are shown within the dashed outline in Figure 2-1. A MODU is owned by a drilling contractor, who leases the rig (includ- ing personnel) to an operator. The term of the lease can be as short as 1 to 3 months to drill one well, or it can be for a period of several years to drill multiple wells. Figure 2-1 also shows the involvement of other con- tractors (within dotted lines) during offshore operations, including spe- cialist and technical services such as mud logging and wireline services; various services to operate and maintain mechanical systems on the MODU, such as cranes, pumps, electronic equipment, and generators; and transportation services and other support services such as catering. Depending on the nature of these contracted services, contracts will be in place with either the operating company or the drilling contractor. During drilling operations, critical data are monitored on the rig by personnel charged with maintaining well control and making opera- tional decisions in real time. In some circumstances, onshore special- ists will be engaged to assist in the operational decision making, but the responsibility for those decisions ultimately rests with the staff on the MODU. Some MODUs have instrumentation and communication links to onshore offices of the operator and service company that allow for RRTM of the drilling operations. BSEE, as well as the operator and the contractors, is involved during the planning and drilling process. The agency must approve required documents—for example, the APD and EP—and conduct regular inspec- tions. Independent of joint ownership and contractual relationships, BSEE approvals and inspections will cover processes, such as the opera- tor’s safety and environmental management system (SEMS), and critical equipment involved in the drilling process. BSEE’s general involvement with inspections is shown in Figure 2-2.2 2 While other agencies such as the U.S. Coast Guard may have responsibility for inspecting some systems on board offshore facilities, BSEE is responsible for the inspection of the processes and equipment directly related to either drilling operations (on the MODU) or production operations (on the platform or facility).

In sp ec  on o f P ro ce ss es (e .g ., SE M S) O pe ra  ng c om pa ny c on tr ac ts d ri lli ng r ig fo r a si ng le w el l o r fo r se ve ra l y ea rs o r m ul  pl e w el ls In sp ec  on o f E qu ip m en t D ri lli ng r ig o w ne d by d ri lli ng co nt ra ct or O ff sh or e in st al la  on m an ag er , d ri lle r, m ar in e sy st em an d ke y cr ew m em be rs Ri g- ow ne d eq ui pm en t: B O P, m ar in e sy st em s, m ud s ys te m , g en er at or s, en gi ne s, c ra ne s, d ra w w or ks , p ro pu ls io n, e tc . Co nt ra ct or s an d su bc on tr ac to rs w or ki ng fo r dr ill in g co nt ra ct or : w ir el in e, c on st ru c on , m ec ha ni cs , e le ct ro ni c te ch ni ci an s, IT , c ra ne op er at or s, c at er er s, e tc . D ri lli ng c on tr ac to r on sh or e RR TM (w he n av ai la bl e) — ke y dr ill in g pa ra m et er s an d ke y eq ui pm en t d ia gn os  cs (g en er at or s, m ar in e sy st em s, e tc .) O EM a nd o th er o ns ho re R RT M — m on it or in g of k ey e qu ip m en t: ge ne ra to rs , I T, s at el lit e co nn ec  on s, e tc . Po ss ib le d at a po rt al (n ot n ec es sa ri ly in r ea l  m e) O pe ra to r re pr es en ta  ve (s ta ff o r co nt ra ct or ), H SE te ch ni ci an s, a ud it or s, e tc . O pe ra  ng c om pa ny s up pl ie d or le as ed se rv ic es a nd e qu ip m en t o n M O D U : l og gi ng to ol s an d pe rs on ne l, ce m en  ng u ni ts , m ud lo gg er s, g eo lo gi ca l t es  ng , e tc . O pe ra to r on sh or e RR TM , w he n av ai la bl e— ke y dr ill in g pa ra m et er s as s ee n on r ig , m on it or ed b y a co m bi na  on o f o pe ra to r s ta ff an d co nt ra ct ed p er so nn el Su pp or t se rv ic es (l ea se d) : m os t o ff sh or e su pp ly v es se ls , a nc ho r ha nd le rs , h el ic op te rs , et c. FI G U RE 2 -2 M O D U : B SE E in sp ec ti on s du ri n g dr ill in g pr oc es s. T h e pr oc es se s sh ow n a re th os e oc cu rr in g du ri n g th e dr ill in g of a w el l t h at a re p ar ti cu la rl y re le va n t t o th e di sc u ss io n o f R R T M ( bo xe s w it h s ol id li n es = o pe ra ti n g co m pa n y; b ox es w it h d ot te d lin es = c on tr ac to rs ). ( So u r c e : G en er at ed b y th e co m m it te e. )

Industry Overview 23 As the name suggests, a MODU is mobile. MODUs perform drilling (and sometimes completion) services on a well and then move to the next location. In the case of a single well contract, the MODU’s next well will be under a new contract with a different operating company and could involve a move to a different basin or area. Even in the case of a MODU under a long-term multiwell contract, a rig may move to a new location outside of the U.S. OCS to drill wells in the offshore waters of another country. Over their life span, most deepwater MODUs work internationally and make many moves between countries. A number of factors can affect the ability of an operator or contrac- tor to move MODUs globally in an efficient manner. One such factor is the changing communication environments between countries. Com- munications systems and capabilities differ between regions; in addition, countries have nonuniform laws concerning the sharing and transmis- sion of data that could affect real-time data communications to and from remote locations. For example, requirements for data to be shared with a foreign government could result in a loss of confidentiality of technical information. In many jurisdictions, the transfer of data out of the country is illegal, which can severely limit the use of RRTM. Export control requirements on installed equipment could also complicate a MODU’s move between countries. Furthermore, a MODU’s owner may have installed equipment required in one jurisdiction or requested by one operator. If the MODU moved to a jurisdiction where this equipment was not required under a new con- tract with a different operator, the new operator likely would not accept any increase in the day rate of the MODU associated with this equipment. Many of the electronic and control systems are not standardized across the industry’s MODU fleet. The fleet incorporates several generations of technical development over the past few decades. Furthermore, MODUs are custom-built, and operators coordinate with the contractor during the design and construction stages. The more modern MODUs are typi- cally larger and have greater capabilities3 for working in deeper water or in more complex subsurface environments, such as those with higher 3 More detail about the various generations of MODUs and their individual capabilities can be found at http://petrowiki.org/PEH%3AOffshore_Drilling_Units#Rig_Types.2C_Designs_and _Capabilities.

24 Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations temperatures and pressures. Even in MODUs specifically used for deep- water drilling, significant variations in design, instrumentation, and capabilities can exist between different units and operators that make prescription of operational or communications protocols across a fleet difficult (TRB 2015). Production Operations Once a discovery has been appraised and determined to be commercial, a development plan is prepared by the operating company. This results in the installation of offshore production facilities to bring oil and gas to the surface. These facilities are referred to as platforms and typically are located above or near the producing field. The platform will be the host facility for producing wells, separation and initial processing of the oil and gas, treatment and injection or disposal of water, and export of the hydrocarbons. Export might be through pipeline; if the platform includes storage, export would be by tanker. Increasingly, the offshore industry uses subsea development systems that allow the host platform to be dozens of miles from the producing wellheads on the seafloor, and a single platform can act as the host for a number of distinct fields spread over a large geographic area. Currently on the OCS, all subsea developments flow to a host platform located offshore. In this report, the offshore platform specifically refers to the host facility for a producing field, whether dedicated to a single field and located near it or located some distance away. In both cases, that platform exercises operational control over the field. Figure 2-3 shows the key actors and processes on a producing platform and the companies involved. Production platforms are usually owned by the operator (outlined with the solid box in Figure 2-3). In most cases, the operator also owns the majority of the equipment installed on the platform, although some equipment such as compressors can be leased on a long-term basis. As in the case of a MODU, operating companies contract for the delivery of technical and support services. The contracted activities and processes (outlined with dashed lines in Figure 2-3) are necessary technical and support services for the operation of the platform. In some cases, float- ing production, storage, and offloading vessels are owned by a contrac- tor and operated under a long-term lease to the operating company. In

Co nt ra ct or s an d su bc on tr ac to rs w or ki ng fo r op er at or : w ir el in e, co ns tr uc on , m ec ha ni cs , e le ct ro ni c te ch ni ci an s, IT , c ra ne o pe ra to rs , ca te re rs , e tc . Co nt ra ct or a nd s ub co nt ra ct or o ffi ce s an d on sh or e m on it or in g O EM a nd o th er o ns ho re R RT M — m on it or in g of k ey e qu ip m en t: ge ne ra to rs , c om pr es so r tu rb in es , s at el lit e co nn ec on s, IT , e tc . Su pp or t s er vi ce s (le as ed ): m os t o ff sh or e su pp ly v es se ls , h el ic op te rs , et c. Po ss ib le d at a po rt al (n ot n ec es sa ri ly in r ea l m e) O pe ra to r on sh or e RR TM , w he n av ai la bl e— ke y pr od uc on c on tr ol c en te r pa ra m et er s as se en o n pl a„ or m , m on it or ed b y a co m bi na on o f o pe ra to r st aff a nd co nt ra ct ed p er so nn el Pr od uc on p la „ or m o w ne d by o pe ra to r (e xc ep on m ay in cl ud e FP SO ) O pe ra to r o ff sh or e in st al la on m an ag er or p er so n in c ha rg e: o pe ra to r st aff o r c on tr ac to r, H SE te ch ni ci an s, a ud it or s, et c. O pe ra to r- ow ne d eq ui pm en t: w el ls , w el lh ea ds , g en er at or s, c om pr es so rs , c ra ne s, et c. Pi pe lin e co m pa ny o ns ho re R RT M (w he n av ai la bl e) — pi pe lin e m on it or in g ce nt er fo r pr es su re s, fl ow ra te s, e tc . Po ss ib le d at a pa th fo r ot he r re m ot e m on it or in g (p ar tn er s, e tc .) O pe ra ng C om pa ny Co nt ra ct or s an d Su bc on tr ac to rs FI G U RE 2 -3 P ro du ct io n p la tf or m : k ey a ct or s an d pr oc es se s. T h e pr oc es se s sh ow n a re th os e oc cu rr in g du ri n g pr od u ct io n op er at io n s th at a re p ar ti cu la rl y re le va n t t o th e di sc u ss io n o f R R T M ( FP SO = fl oa ti n g pr od u ct io n , s to ra ge , a n d of fl oa di n g; bo xe s w it h s ol id li n es = o pe ra ti n g co m pa n y; b ox es w it h d ot te d lin es = c on tr ac to rs ). ( So u r c e : G en er at ed b y th e co m m it te e. )

26 Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations such cases, the process owners might be different from those shown in Figure 2-3; however, the operating company retains the responsibility for all activities on the lease. The operator is usually responsible for the com- munication and information technology, connectivity, and monitoring systems on the platform, although a high degree of integration with sys- tems utilized by contractors or service companies for monitoring their equipment or processes may be required. As the regulator, BSEE is involved in the production process through the approval of various documents such as the development plan and through required regular inspections of the production platform. As in the case of MODUs, BSEE inspections (see Figure 2-4) cover processes (shown in the solid-lined box) such as the operator’s SEMS and include equipment that may be owned and operated by the operator or various contractors, as indicated by the boxes with dashed lines in Figure 2-4.4 Drilling rigs are installed on some production platforms for purposes of development drilling and redevelopment. An installed drilling rig will be physically placed on the deck of the production facility. In these cases, the processes and relationships shown and described above for MODUs are largely embedded with those on the production platform. The opera- tor contracts with a drilling contractor and other service providers, usu- ally on a long-term basis, for the necessary services for drilling wells. Contracts will be in place to support this work, and BSEE will inspect equipment and processes. As in the case of MODUs, many electronic and control systems on platforms are not standardized across the industry’s production opera- tions. Platforms producing in the OCS represent many generations of oil and gas development as well as generations of development of embed- ded systems such as controls, electronics, and communications. Over the years, facility design, the design of subsystems, and levels of instru- mentation and automation are often upgraded to varying extents among operators and contractors. The first fixed production platforms were installed in deep water in the 1970s and the first floating platforms in the 4 While other agencies such as the U.S. Coast Guard may have responsibility for inspecting some systems on board offshore facilities, BSEE is responsible for the inspection of the processes and equipment directly related to either drilling operations (on the MODU) or production operations (on the platform or facility).

Co nt ra ct or s an d su bc on tr ac to rs w or ki ng fo r op er at or : w ir el in e, co ns tr uc on , m ec ha ni cs , e le ct ro ni c te ch ni ci an s, IT , c ra ne o pe ra to rs , ca te re rs , e tc . Co nt ra ct or a nd s ub co nt ra ct or o ffi ce s an d on sh or e m on it or in g O EM a nd o th er o ns ho re R RT M — m on it or in g of k ey e qu ip m en t: ge ne ra to rs , c om pr es so r tu rb in es , s at el lit e co nn ec on s, IT , e tc . Su pp or t se rv ic es (l ea se d) : m os t o ff sh or e su pp ly v es se ls , h el ic op te rs , et c. Po ss ib le d at a po rt al (n ot n ec es sa ri ly in re al m e) O pe ra to r on sh or e RR TM , w he n av ai la bl e— ke y pr od uc on c on tr ol c en te r pa ra m et er s as se en o n pl a„ or m , m on it or ed b y a co m bi na on o f o pe ra to r st aff a nd co nt ra ct ed p er so nn el Pr od uc on p la „ or m o w ne d by o pe ra to r (e xc ep on m ay in cl ud e FP SO ) O pe ra to r o ff sh or e in st al la on m an ag er or p er so n in c ha rg e: o pe ra to r st aff o r co nt ra ct or , H SE te ch ni ci an s, a ud it or s, et c. In sp ec on o f Eq ui pm en t In sp ec on o f E qu ip m en t In sp ec on o f Pr oc es se s (e .g ., SE M S) O pe ra to r- ow ne d eq ui pm en t: w el ls , w el lh ea ds , g en er at or s, c om pr es so rs , c ra ne s, et c. Pi pe lin e co m pa ny o ns ho re R RT M (w he n av ai la bl e) — pi pe lin e m on it or in g ce nt er fo r pr es su re s, fl ow ra te s, e tc . Po ss ib le d at a pa th fo r ot he r re m ot e m on it or in g (p ar tn er s, e tc .) In sp ec on o f E qu ip m en t FI G U RE 2 -4 P ro du ct io n p la tf or m : B SE E in sp ec ti on s du ri n g pr od u ct io n o pe ra ti on s. T h e pr oc es se s sh ow n a re th os e oc cu rr in g du ri n g pr od u ct io n o pe ra ti on s th at a re p ar ti cu la rl y re le va n t t o th e di sc u ss io n o f R R T M ( bo xe s w it h s ol id li n es = o pe ra ti n g co m pa n y; b ox es w it h d ot te d lin es = c on tr ac to rs ). ( So u r c e : G en er at ed b y th e co m m it te e. )

28 Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations 1980s. Some upgrades have taken place, but as the committee heard at its workshop, many offshore facilities and legacy systems have not been or cannot be upgraded (TRB 2015). RRTM in Drilling Operations The use of RRTM is highly variable across the industry. As mentioned in Chapter 1, regardless of the method of implementation, the indus- try’s business case for establishing RRTM centers to monitor drilling operations has been focused on improving efficiencies and enhancing risk management through better operational planning and execution (Laurens and Kales 2014). Some companies have been using the tech- nology continuously for many years; others have not adopted it at all. Over the past few years, more offshore operators have implemented RRTM systems on MODUs, and industry experience is growing rapidly. Service companies can provide links to data from their systems so that operators can access those data from remote (onshore) locations, and in some cases these data are integrated with other operational data that the operator monitors. The operators and service companies use different models for remote onshore monitoring centers. Some companies, such as BP, Chevron, and Shell, have centers that function 24 hours a day, 7 days a week (24/7) and are staffed by technicians with offshore experience who each monitor two or three active wells. Other operators may only staff their RRTM center during weekday business hours, with each technician monitoring one to four wells. In these cases, the center is available 24/7, if necessary, during critical operations or at decision points. Onshore personnel also can access data from other locations (such as their desktops or homes) via laptop computer (TRB 2015). Service companies, such as Halliburton and Schlumberger, maintain 24/7 RRTM centers to provide specialized services to operators as well as to monitor the efficiency of their own equipment installed on the MODU. The operating company’s drilling engineer or superintendent typically has software access to the service company’s data and can access data by computer from outside the RRTM center. During drilling operations, the wellsite personnel have full responsibil- ity and accountability for decision making. The remote monitoring centers

Industry Overview 29 focus on abnormal trends or well events; provide additional support for the MODU; and offer advice, support, and improved access to onshore technical expertise. RRTM enables collaboration with engineers, geolo- gists, technical specialists, and other onshore staff without their having to fly to the offshore facility, which would be time-consuming, would cause delays in decision making, and would increase the overall risk in offshore operations. In addition, remote centers can check incoming information streams for valid and reliable data, which allows for devel- opment of a knowledge base and for data analysis. In general, panelists at the committee’s first meeting indicated that RRTM can reduce non- productive time and improve safety on the MODU and that RRTM is a support tool allowing an operator to manage its operations efficiently and effectively.5 The situational awareness gained from being on the offshore facility is critical. The belief that operational decision making belongs offshore is based on decades of direct experience and is broadly held within the U.S. oil and gas industry. Even when a remote center is available, there is no expectation that the offshore staff will check with the remote center or ask permission before making decisions. Thus, explicit protocols must govern any interactions between offshore operating staff and the remote center. Across the industry, operators use different protocols. Because operating systems, contractual arrangements, rig instrumentation, and communication technologies differ so widely, standardization between companies does not exist, and establishing one consistent protocol would be difficult. The design of communication protocols in the operation of RRTM centers has been carefully thought out by the operating compa- nies, and each company documents its protocols and follows them when issues arise. Figure 2-5 shows data flows that are typical during drilling on a MODU and shows how data move between contractors and operator to a remote real-time center. While the data flows are independent of the contrac- tual relationships, the contracts must recognize the presence of a remote monitoring center, if one exists, and the capabilities of the critical MODU 5 See presentations from B. Gaston, Shell; C. Harder, BP; and G. Buck, Chevron, at the committee’s December 5, 2014, meeting (http://www.trb.org/PolicyStudies/CommitteeMeetings1.aspx).

Ri g- ow ne d eq ui pm en t: B O P, m ar in e sy st em s, m ud s ys te m , ge ne ra to rs , e ng in es , c ra ne s, d ra w w or ks , p ro pu ls io n, e tc . Co nt ra ct or s an d su bc on tr ac to rs w or ki ng fo r dr ill in g co nt ra ct or : w ir el in e, c on st ru c on , m ec ha ni cs , e le ct ro ni c te ch ni ci an s, IT , c ra ne op er at or s, c at er er s, e tc . D ri lli ng c on tr ac to r on sh or e RR TM (w he n av ai la bl e) — ke y dr ill in g pa ra m et er s an d ke y eq ui pm en t di ag no s cs (g en er at or s, m ar in e sy st em s, e tc .) O EM a nd o th er o ns ho re R RT M — m on it or in g of k ey e qu ip m en t: ge ne ra to rs , I T, s at el lit e co nn ec  on s, e tc . Po ss ib le d at a po rt al (n ot n ec es sa ri ly in re al  m e) D ri lli ng r ig o w ne d by d ri lli ng co nt ra ct or O ff sh or e in st al la  on m an ag er , d ri lle r, m ar in e sy st em an d ke y cr ew m em be rs O pe ra  ng c om pa ny c on tr ac ts d ri lli ng r ig fo r a si ng le w el l o r fo r se ve ra l y ea rs o r m ul  pl e w el ls O pe ra to r re pr es en ta  ve (s ta ff o r co nt ra ct or ), H SE te ch ni ci an s, a ud it or s, e tc . O pe ra  ng c om pa ny s up pl ie d or le as ed se rv ic es a nd e qu ip m en t o n M O D U : l og gi ng to ol s an d pe rs on ne l, ce m en  ng u ni ts , m ud lo gg er s, g eo lo gi ca l t es  ng , e tc . O pe ra to r on sh or e RR TM , w he n av ai la bl e— ke y dr ill in g pa ra m et er s as s ee n on r ig , m on it or ed b y a co m bi na  on o f o pe ra to r st aff an d co nt ra ct ed p er so nn el Su pp or t se rv ic es (l ea se d) : m os t o ff sh or e su pp ly v es se ls , a nc ho r ha nd le rs , h el ic op te rs , et c. FI G U RE 2 -5 M O D U : S am pl e da ta fl ow s be tw ee n o pe ra to r an d co n tr ac to rs . T h e pr oc es se s sh ow n a re th os e oc cu rr in g du ri n g th e dr ill in g of a w el l t h at a re p ar ti cu la rl y re le va n t t o th e di sc u ss io n o f R R T M ( bo xe s w it h s ol id li n es = o pe ra ti n g co m pa n y; b ox es w it h d ot te d lin es = c on tr ac to rs ). ( So u r c e : G en er at ed b y th e co m m it te e. )

Industry Overview 31 systems and how the systems are instrumented. The fact that the drilling contractor does not necessarily own all of the equipment on the MODU is important. Critical systems that typically would provide data to an operator’s remote real-time center, such as the drilling mud system and logging tools, are often owned by subcontractors. The systems are moni- tored on the MODU through custom interfaces and connections, and they must be compatible with any electronics or other systems installed on the MODU to enable remote monitoring. When the operator does not have a remote monitoring center, contractors may need to supply remote data links for geologic or operational data, which complicates the contractual arrangements and data flows. In addition, different activities, such as mud logging, wireline logging, measurement while drilling, and monitoring of rig equipment, are handled by different skilled personnel on the MODU. A remote center could be set up and run by the operat- ing company or could be offered by a contractor as part of its specialized services, which further complicates the planning and implementation of RRTM for drilling. RRTM in Production Operations Several operating and service companies use RRTM for drilling opera- tions, but the use of RRTM to monitor offshore production operations is more limited. The committee is only aware of a few platforms, operated by Shell and Chevron, where RRTM centers have 24/7 monitoring and ongo- ing support and collaboration for production operations. In considering the use of RRTM for production monitoring, the important differences between the production and drilling environments must be recognized. The complex systems and data flows of MODUs differ from those of production platforms. Different parties monitor different parame- ters and systems, and the information flows and communications links vary with the type of data. In addition, MODUs typically have short- to medium-term contractual arrangements (a few months to a few years), while production platforms have longer-term arrangements of many years to decades. Over the life of a production platform, the risk level can change dramatically. Declines in produced volumes of oil and gas, declining pressures, changing fluid composition, the presence of drilling or redevelopment activities, and many other changes will independently

32 Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations increase or decrease the risks associated with operations. In addition, a producing asset may be sold to a different (often smaller) operating company. The design of RRTM for production monitoring must con- sider these factors, which are unique to the producing environment. Figure 2-6 illustrates the data flows typical during production oper- ations. It is similar to Figure 2-3, which shows the key processes and relation ships for production facilities. Across the production process, there are complex systems where operational and data responsibilities are partitioned between the operator and many contractors. Different platform systems are the products of many original equipment manu- facturers and vendors and can operate on software systems that are often not compatible. Data flow between numerous parties for RTM of pro- duction operations. The design and operation of the monitoring center need to manage all of these challenges over the life of the platform. The operation of remote monitoring centers for drilling and produc- tion operations is often undertaken to increase efficiency and enhance operational safety. Different centers serve different purposes, and their operation reflects this. Some operators are committed to RRTM 24/7 for both drilling and some production; others operate remote monitoring centers only for drilling and normally staff them only during weekdays. Some operators do not believe that RRTM provides a significant advan- tage and have not integrated the practice into their offshore operations. The wide variability of implementation is a significant aspect of current industry experience with RRTM. Communications Environment for OCS Oil and Gas Activities Decades ago, communications between offshore production facilities and onshore support centers were often limited to two-way radios and daily reports. The staff on each offshore facility made decisions on the basis of information generated and collected at the rig. The technology of offshore communications has advanced over the years and allows the transfer of real-time data for improved interactions between off- shore and onshore operations. Still, situational awareness on the off- shore facility is important, and the U.S. offshore industry believes that the responsibility for decision making ought to remain offshore, even

Co nt ra ct or s an d su bc on tr ac to rs w or ki ng fo r op er at or : w ir el in e, co ns tr uc on , m ec ha ni cs , e le ct ro ni c te ch ni ci an s, IT , c ra ne o pe ra to rs , ca te re rs , e tc . Co nt ra ct or a nd s ub co nt ra ct or o ffi ce s an d on sh or e m on it or in g O EM a nd o th er o ns ho re R RT M — m on it or in g of k ey e qu ip m en t: ge ne ra to rs , c om pr es so r tu rb in es , s at el lit e co nn ec on s, IT , e tc . Su pp or t se rv ic es (l ea se d) : m os t off sh or e su pp ly v es se ls , h el ic op te rs , et c. Po ss ib le d at a po rt al (n ot n ec es sa ri ly in re al m e) O pe ra to r on sh or e RR TM , w he n av ai la bl e— ke y pr od uc on c on tr ol c en te r pa ra m et er s as se en o n pl a„ or m , m on it or ed b y a co m bi na on o f o pe ra to r s ta ff a nd co nt ra ct ed p er so nn el Pr od uc on p la „ or m o w ne d by o pe ra to r (e xc ep on m ay in cl ud e FP SO ) O pe ra to r o ff sh or e in st al la on m an ag er or p er so n in c ha rg e: o pe ra to r st aff o r co nt ra ct or , H SE te ch ni ci an s, a ud it or s, et c. O pe ra to r- ow ne d eq ui pm en t: w el ls , w el lh ea ds , g en er at or s, c om pr es so rs , c ra ne s, et c. Pi pe lin e co m pa ny o ns ho re R RT M (w he n av ai la bl e) — pi pe lin e m on it or in g ce nt er fo r pr es su re s, fl ow ra te s, e tc . Po ss ib le d at a pa th fo r ot he r re m ot e m on it or in g (p ar tn er s, e tc .) FI G U RE 2 -6 P ro du ct io n p la tf or m : s am pl e da ta fl ow s be tw ee n o pe ra to r an d co n tr ac to rs . T h e pr oc es se s sh ow n a re th os e oc cu rr in g du ri n g pr od u ct io n o pe ra ti on s th at a re p ar ti cu la rl y re le va n t t o th e di sc u ss io n o f R R T M ( bo xe s w it h s ol id lin es = o pe ra ti n g co m pa n y; b ox es w it h d ot te d lin es = c on tr ac to rs ). ( So u r c e : G en er at ed b y th e co m m it te e. )

34 Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations with the real-time transfer of offshore data to onshore offices for decision support and troubleshooting. The determinants of which technologies are used for offshore com- munications include the distance involved, the remoteness of the instal- lation, the amount of data that must be transmitted, the availability of the technology, and the cost of the provided services. Among the commu- nications technologies are satellite, microwave, fiber optics, and cellular services. Implementation barriers among these technological alternatives can include issues such as bandwidth, latency, reliability, performance, and affordability (see Appendix C). Any solution will involve a system engineering approach considering all components of the communications environment. A simple illustration of this offshore oil and gas environ- ment is shown in Figure 2-7. Satellite technology, available in most areas around the world, is a widely chosen solution for offshore communications and includes three main components: a very small aperture terminal at the offshore site, an orbit- ing satellite, and a receiving center located onshore. Microwave technology can offer extra bandwidth for data and is often used for shorter distances, especially for facilities that are near each other. Fiber technology is also a good solution for grouped facilities, but cables must be installed between facilities, which can be expensive. Cellular service can be accessible at some locations offshore. A comparison of the attributes for each common com- munications solution is shown in Appendix D. Integrated solutions for offshore facilities can include satellite communications to a main facility and microwave or fiber between offshore wells or facilities. Communica- tions technologies can be integrated into each offshore facility, allowing the transfer of real-time data from subsea wells to multiple facilities. Automation and Predictive Software Automation, in the context of RTM, is taken to mean computer algorithms that utilize offshore data to provide displayable alerts or other computa- tions for human interaction or that are used in a feedback mechanism to control offshore equipment. Automation can occur at an offshore facil- ity or at an onshore remote monitoring center. It can be as simple as displaying an alert status when a data parameter exceeds preset limits or as complex as computing expected pit volume during tripping as an

O pe ra to r HQ De ci sio n Su pp or t Ce nt er O pe ra o ns Da ta S to re Se rv ic e Co m pa ny Ea rt h St a on O ffs ho re Co nt ro l Ro om Pr oc es s C on tr ol Hi st or ia n IW C W ire d Pi pe or F ib er M W D– LW D Ex pl or a on Dr ill S hi p W ire d Pi pe or M ud Pu lse Te le m et ry W IT S/ W IT SM L Se rv er Da ta B ac kb on e (6 th -g en . r ig s) Da ta L og ge r Dr ill er ’s Ch ai r Se ns or s a nd Ac tu at or s Pr od uc o n Pl a‹ or m Sa te lli te Sh or eb as e Fi be r- O p c Ca bl e M ic ro w av e FI G U RE 2 -7 O ff sh or e R T M e n vi ro n m en t: s im pl e la yo u t o f o ff sh or e in fo rm at io n a n d co m m u n ic at io n te ch n ol og y in fr as tr u ct u re ( W IT S = W el ls it e In fo rm at io n T ra n sf er S pe ci fi ca ti on ; W IT SM L = W el ls it e In fo rm at io n T ra n sf er S ta n da rd M ar ku p La n gu ag e; g en . = g en er at io n ; H Q = h ea dq u ar te rs ; I W C = in te lli ge n t w el l c om pl et io n ; M W D = m ea su re m en t w h ile d ri lli n g; L W D = lo gg in g w h ile d ri lli n g) . (S o u r c e : G en er at ed b y th e co m m it te e. )

36 Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations indication of a well control abnormality. The deployment of automation in offshore drilling and production facilities is limited to a few select pro- cesses, such as handling drill pipe during the drilling process. Automation opportunities exist where processes (or interactions) are known, where constant performance to known standards is desired, and where human decision making or analysis is not required. At the April 2015 workshop, service company representatives indicated that they use automation in some processes such as automating alarms and data gathering to improve data quality—and potentially workflows and decision making—and to set and maintain the desired well path and heading with rotary steerable tools (TRB 2015, 31). In addition, no offshore MODU has any process that is automated and controlled from onshore (TRB 2015, 37). The application of predictive software depends on the degree of uncer- tainty and complexity of a system, as does automation. Predictive software can be based on either fundamental physics-based models or a statistics- based algorithm, where a high degree of correlation between inputs and outputs can be represented by a statistical method, such as neural net- works, machine learning, or artificial intelligence. Research on predictive software has been conducted in many areas of oil and gas exploration and production, but it appears to have met with more success in the area of equipment health and predictive maintenance. As stated during the April 2015 workshop, drilling operations are not like factory operations and are not done in a controlled environment. Instead, they rely on estimated parameters within a range of assumed values. These types of operating conditions highlight the difficulty of building accurate predictive models on which to base automated actions. Some predictive software can be used for processes such as connection-flow monitoring and a heat check calculator for casing wear, but these uses only supplement what is done on the rig; they do not replace it (TRB 2015, 24). SUMMARY POINTS ABOUT RTM FROM PREVIOUS REPORTS The following subsections briefly review the main themes and topics of three reports. The first report, by an internal BSEE workgroup, reviews the potential uses of RTM technologies for both the government and

Industry Overview 37 the oil and gas industry. The second report is by 838, Inc. That report provides background material on RTM and available technologies. The third report is the workshop summary authored by the committee. BSEE Internal Report To learn more about RTM technologies and best practices, BSEE con- ducted site visits to RTM centers during summer 2012 and then estab- lished an internal RTM team in fall 2012 to develop preliminary findings on how the oil and gas industry and BSEE could benefit from the use of RTM technologies. After more than 1 year of work, the BSEE RTM team produced a final summary report detailing its findings and recommen- dations (see BSEE 2014). The BSEE team focused on two areas: • Use of RTM by industry: What minimum requirements should BSEE establish in its regulations for the use of RTM technologies by the offshore oil and gas industry? • Use of RTM by BSEE: How should BSEE use RTM technologies to carry out its safety and environmental protection responsibilities more efficiently and effectively? To structure its investigation, the BSEE team formed three subgroups corresponding to the general categories of offshore activities: drilling operations, completion and workover operations, and production oper- ations. Each subgroup was given the task of identifying critical opera- tions and parameters for its activity that should be monitored by using RTM technologies. The breadth and details of the results of the study vary across the two areas of interest and the three types of operations. For example, for industry use of RRTM, the report recommends capturing and monitor- ing more than 50 data streams for drilling and completion and workover operations (e.g., monitor both primary and secondary BSEE-approved pressure settings, including pump pressure settings and fluid low-level alarms).6 For production operations, only three simple measures are 6 For a complete list of suggested operations and parameters, see BSEE 2014 (Annex 1, p. 14; Annex 2, p. 17; and Annex 3, p. 20).

38 Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations suggested [e.g., the total number of safe chart safety devices currently bypassed (see BSEE 2014, 21)]. According to the report, three attributes are critical for an effective RRTM center: • A center must receive data from offshore sites allowing companies to provide a network of experts and to offer advice and troubleshoot issues from onshore. • Constant communication between offshore sites and the onshore cen- ter is vital if onshore personnel are to maintain awareness of offshore operations. Effective communication between offshore and onshore staff demands clear protocols and procedures on how to identify, ver- ify, and escalate safety concerns, and guidance should be provided on who should talk with whom. • A center must have experienced and highly trained personnel, who must gain the trust of offshore personnel. Many of the recommended data streams are already recognized and regularly captured by industry operations with RRTM capabilities. Since RRTM information is not being used by the agency, the BSEE report takes a different tack in discussing BSEE’s use of RRTM and explores possible opportunities by delineating the following: • The potential of RRTM for BSEE responsibilities through a risk-based inspection strategy that supplements (and fundamentally changes) its current program. • The critical RRTM-relevant operations and data streams from drill- ing, completion, workover, and production activities—the identifica- tion of operations and data streams will need to occur before any role for BSEE or requirements for industry are discussed. • The role for BSEE personnel in overseeing critical drilling, comple- tion, and workover operations with RRTM. To prevent their being a distracting presence, any new or active oversight role by BSEE would require personnel with the proper qualifications, training, and expe- rience. Legal implications and understanding of the safety issues and risk factors for each well operation are additional considerations of such an oversight role. • The importance of direct communication between BSEE and the facility’s offshore control room. The BSEE report acknowledges that

Industry Overview 39 such a communication link could lead to BSEE personnel becoming a distraction during operations. • The unknown technological and legal challenges that obtaining RTM data from multiple operators poses. Industry RRTM operations are not standardized and use various systems and data formats. Resolution of compatibility and technical issues, such as connectivity, bandwidth, and cost, as well as legal issues of collecting, storing, and protecting proprietary information, is important. • The usefulness of existing reports [e.g., daily drilling reports from the International Association of Drilling Contractors (IADC)]. Although BSEE already requires operators to submit Form BSEE-0133, IADC’s daily drilling report would provide more detailed drilling information. The BSEE report discussion gives rise to a range of opportunities and scenarios for incorporating RRTM into BSEE’s safety program. Some options, such as gaining access to existing IADC reports or traveling to an operator’s remote monitoring center, are easier to adopt; others, such as establishing a BSEE RTM center for offshore operations, are more dif- ficult for technical, legal, operational, and cultural reasons. 838, Inc., Report To provide additional background on available technologies, BSEE com- missioned an external report (see 838, Inc. 2014) titled An Assessment of the Various Types of Real-Time Data Monitoring Systems Available for Off- shore Oil and Gas Operations. This subsection briefly summarizes some of the main topics from the more than 200-page report. The authors addressed seven main tasks: 1. Discuss the current state of RTM.7 Within the current state of RTM, the authors found five basic uses for real-time data technologies: • Subsurface and formation analysis and well planning and model- ing tools; • Wellbore stability and drilling integrity (downhole) monitoring and analysis; 7 See 838, Inc. 2014, pp. 21–36, for a list of existing technologies.

40 Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations • Instrumentation for drill floor and rig operations; • Bandwidth availability and standardized languages for data collec- tion and transmission; and • Onshore center—data aggregation standardized interfaces, screens, display of relevant data, user interface, predictive capabilities, and monitoring and alarming potential. 2. Perform a cost–benefit analysis of RTM. The authors indicated that the results of any cost–benefit analysis for RTM will depend on the size of the company, but they emphasized that their report’s cost– benefit analysis is only for illustrative purposes. Even on the basis of conservative estimates, the authors conclude that the use of RTM centers is justified and can increase efficiency and elevate safety. 3. Discuss the relevant training needed to conduct RTM. To conduct RTM, relevant training will be needed. However, before any effective training program can be developed, the authors believe that BSEE needs to define the proposed oversight system clearly. After discus- sion of safety oversight and system safety models, the authors propose three training scenarios for incorporating RTM into BSEE processes: (a) BSEE personnel would complete a focused internship with an operator; (b) BSEE, along with industry, would develop curriculum and training courses to improve understanding of RTM technolo- gies; and (c) BSEE would develop a simulation center, modeled after an industry RTM center, to train personnel in best practices through use of actual (deidentified) data; the center would be established and maintained in-house. 4. Identify the critical operations and parameters to be monitored with RTM. Drilling operations produce multiple data flows with large volumes of data, especially on the newer generation of MODUs. The authors discuss collected, monitored, and calculated information for well operating conditions and note that modeling and model- ing technology, along with real-time data, offer great benefits to offshore operations, from planning a well to postdrilling analysis.8 The authors conclude that modeling before starting to drill provides 8 See 838, Inc. 2014, Chapter 4, pp. 110–124, for a list of data collected and monitored; types of calculated data are listed on p. 123.

Industry Overview 41 greater insight into the process and that using simulation programs incorporating real-time data during drilling operations can increase efficiency and promote safety. Furthermore, training simulators that use post processed data can enhance the experience of personnel by improving situational awareness and procedural understanding. 5. Discuss how RTM can be used for condition-based monitoring. The authors survey and describe sensor technologies used by industry to measure and report performance and to predict failure of monitored equipment. The report discusses the digital oil field and the impor- tance of collecting, managing, and analyzing data. Reliable and valid data are the basis for all analysis and decision making. Advances in sensor technology have allowed industry to increase the amount and improve the quality of collected data from critical systems, leading to more efficient and reliable equipment. Only a subset of the total available data are recorded. Industry will need better methods of data storage, transmission, and analysis as more data are collected and managed. 6. Discuss how RTM can be incorporated into BSEE’s regulations. The authors believe that incorporating RTM requirements into the BSEE regulatory regime could have great benefits for industry, including promotion of safe and efficient exploration, extraction, and produc- tion of hydrocarbons. However, BSEE would need to incorporate the principles of system safety. To enhance safe operations, the authors suggest that BSEE implement a voluntary safety reporting system and the sharing of industrywide data among operators. 7. Discuss how automation can enhance RTM. The authors assess the principles of automation and automation currently available in the oil and gas industry. Although automation has human health and safety benefits, such as limiting exposure to dangerous environments, several challenges are associated with its use. Among them are the need for preventive maintenance, reliance on timely and high-quality data, and complacency. Overall, the authors note that automation in the upstream oil and gas industry is in its initial stages. The authors conclude that the use of RTM centers is viable and that new regulations on the use of RTM should include onshore monitor- ing of well parameters by a separate safety center. However, the new

42 Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations regulations should be introduced gradually, starting with the drilling of high-risk wells. Common Themes and Observations from Committee’s Workshop Summary Report As a central part of its remit (see Box 1-1), the committee conducted a workshop on the application and use of RTM systems by industry and government. The workshop focused on the Gulf of Mexico region and addressed the five issues listed in the statement of task. In preparation for the workshop, the committee provided each of the panelists a copy of the two reports (described above) and a standard set of questions to address (see TRB 2015, Appendix B). The presenters were not limited to these questions, but the committee wanted to ensure that, at a minimum, specific issues relevant to the statement of task were addressed. The fol- lowing summary observations and statements are from industry panel- ists who participated in the committee’s April 20–21, 2015, workshop in Houston, Texas. Drilling Operations Drilling operators were represented by the following companies: Total E&P USA, Shell, LLOG Exploration, Noble Energy, BHP Billiton, and Murphy Oil Corporation. RRTM is not currently required on all wells of most of the panelists. Whether a well should be monitored (offshore or onshore) is determined by a business case and based on risk. Many compa- nies can stream data onshore to monitor wells on a continual (as-needed) basis, but they do not necessarily monitor the well data 24/7. The pan- elists emphasized that RRTM is one of several tools supporting opera- tions on the rig and providing another set of eyes, but that it does not take over the operational decision making on the MODU. Furthermore, without full situational awareness of what is occurring on the MODU, real-time data are not entirely useful. The panelists suggested that RTM can be valuable in terms of efficiency and can save money in well plan- ning and well execution, and it can help identify equipment that is out of calibration or can assist in incident investigations. As mentioned above, automation and predictive software are less advanced than other RTM software and applications, but predictive software might be used

Industry Overview 43 to determine baseline trends and to flag any deviations. Some panelists believed that industry as a whole could improve how data are collected, integrated, and stored. Some panelists suggested that blowout preventer (BOP) systems could be monitored remotely—if they are updated properly—since they are mechanical and relatively static and their operation is not reliant on downhole systems. The panelists insisted that remote monitoring of BOP pressure tests should not replace BSEE’s on-site inspection programs but could supplement its on-site compliance enforcement with remote tests once the tests were shown to be reliable. Panelists suggested that BSEE could use archived data to understand issues, verify information on daily drilling reports from IADC, or help in incident investigations. The panelists suggested that any new RTM regulation be performance- based but not require a fixed structure or building. The operator should be allowed to show how the data will be accessed and used on a real-time and postevent basis. While RRTM can lead to better team integration and better data quality, the panelists suggested that the benefits of RRTM to health, safety, and environment are difficult to quantify. Third-Party RTM Providers These panelists included representatives from Baker Hughes, Schlumberger, Halliburton, Weatherford, Petrolink, and Genesis Real- Time Systems. Third-party providers generally use RTM of critical opera- tions to reduce nonproductive downtime and to optimize performance, but RTM can also help manage costs and avoid hazards. The panelists emphasized that data generated from the MODU belong to the operator. They advised that RTM data could supplement decision support for field operations through the use of alarms and alerts, knowledge management, and data interpretation, as well as through predictive and preventive maintenance of safety equipment. Several panelists said that condition- based monitoring is used to track the health and performance of some critical equipment, which helps with preventive maintenance. The panelists emphasized that the responsibility for offshore oper- ations should remain with the MODU and well personnel and that operational decision making and accountability should continue to

44 Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations reside with the operator. Although remote centers can complement operations on the MODU, the panelists reminded the workshop par- ticipants that there is no big red button in the remote center to shut everything down. Industry uses a wide range of RTM technologies, and the panelists believe that a standard approach will not work for everyone—one size does not fit all. Each operator has its own data requirements when it interfaces with contractors, and although standards exist, they are not always followed. Still, if an RRTM center will be asked to provide the same level of insight as on the MODU, the panelists suggest that all MODU data should be transmitted to the remote center. Redundancy is impor- tant for many of the critical sensors on the MODU. As more data are collected and transmitted, panelists noted, cybersecurity issues and the use of mobile devices to display that information will create additional risk to cloud-based services. Schlumberger shared five key lessons that the company has learned from running an RTM center: developing companywide standards, for- malizing workflow, understanding personnel, establishing communica- tion protocols, and using appropriate advanced monitoring tools. Production Operations Chevron, Marathon Oil, Stone Energy, Anadarko, and Shell presented for this panel. Production operations are largely steady state in nature, and RTM for production is driven by business need—primarily for pro- duction optimization, efficiency, and reliability. The panelists agreed that all command and control should occur at the offshore facility. Generally, production facilities are not monitored or staffed 24/7, with maintenance activities often limited to daytime hours. RTM is primarily used for diagnosing and troubleshooting equipment to limit downtime. Accordingly, RRTM for production facilities is not viewed as a safe- guard for personal or process safety. Whereas RTM and condition-based maintenance allow intervention with critical equipment before a failure occurs, this intervention often uses archived rather than real-time data. This process allows the operator to capture and analyze data, produce trends, and make decisions, but not instantaneously.

Industry Overview 45 Drilling Contractors and Equipment Manufacturers The companies presenting at the workshop included Diamond Offshore Drilling, Transocean Offshore Deepwater Drilling, Pacific Drilling, CAD Control Systems, and the Athens Group. Drilling contractors are con- tracted by the operators to perform operations and typically collect and provide all data to the operator. The types of data are usually specified in the contract. While contractors remotely monitor equipment to per- form preventive maintenance, those data are not monitored in real time. The collected data are usually archived and analyzed later. In addition, not every MODU can transfer data onshore in real time. The panelists suggest that any attempt to leverage RRTM technologies be prototyped before being fully implemented. Cybersecurity is becoming a larger issue for some critical MODU equip- ment. Industrial control and automation systems are designed to work in harsh environments over long periods. Most of these control systems are thoroughly tested and not touched again. However, remote connectivity and security, which were not part of the original system design, could add risks to the system. According to the panelists, technology allowing RRTM of the BOP control systems is available, but it is not being used fully. The available data include information such as hydraulic pressures, opening and closing pressures, and volumes, but not the actual positions of the BOP rams. BOP health can be monitored with current technology, but mainly to determine the remaining life of the BOP. BOP health is not monitored in real time or 24/7. Drilling contractors mainly want to optimize maintenance practices. The panelists suggest that BSEE inspectors could have access to reports on BOP test results and equipment condition before inspections. Trade Associations This panel consisted of representatives from the American Petroleum Institute, the Offshore Operators Committee, IADC, and the National Ocean Industries Association. The panelists emphasized that shore- based personnel use RRTM as a support tool to improve the efficiency of certain wellsite operations, which may also favorably affect safety and the environment. In addition, RTM is only one of many tools used by indus- try to support safe operations. They indicated that RTM requirements for drilling operations differ from those for production operations.

46 Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations According to the panelists, the proposed BOP rule (mentioned in Chapter 1) could introduce uncertainty into the chain of command, have significant impacts on smaller operators, and change competitiveness in the Gulf of Mexico. The objectives and desired benefits of RTM, in the opinions of the panelists, need better clarification and a defined problem statement from BSEE before consensus-based industry standards can be developed. Clarity of purpose is key for this development. The panelists also suggest that BSEE clarify how the proposed BOP rule would inter- act with existing regulations concerning obligations and liabilities of the contractors performing the activities. Finally, as technology advances, RTM will evolve. If requirements or regulations are to remain relevant, the panelists recommend that BSEE consider performance-based rules. SUMMARY DISCUSSION This chapter describes the processes and relationships in offshore oil and gas exploration and production as they relate to RRTM. The committee has met with a broad cross section of the offshore industry and has seen how RRTM is being applied in drilling and production operations. It appreciates the decade-long journey that several companies have under- taken to advance the technologies and operating practices to where they are today. Previous studies that reviewed the use and application of real-time technologies in the offshore oil and gas industry have identified the breadth of experience across the U.S. industry (see BSEE 2014 and 838, Inc. 2014). Both of these studies outlined potential applications of RRTM, but neither provides a road map for how to realize this potential. Some of the largest operating companies in the Gulf of Mexico use RRTM in their exploration or production activities, but they represent only a fraction of the offshore drilling and production industry. As noted at the committee’s April 2015 workshop, there are no current standards for the application of RRTM, nor is there a fundamental consensus with regard to the business case supporting its use (see TRB 2015). The offshore oil and gas business is not a simple undertaking. The operations are complex, as is the operating environment, where risk can be dominated by subsurface unknowns. The industry solution for

Industry Overview 47 managing this and other risks is a complex array of technologies deployed by a large number of operating, service, and specialist companies. The data flows are also complex, with real-time data flowing to the drilling contractor for decision making and a large portion of those data flowing from the drilling contractor to the operating company. Modern explora- tion and production workflows can require the integration of data from multiple contractors, who often use technical applications from diverse software vendors. Whereas individual companies have developed an independent view concerning the value of RRTM and customized its application to meet an individual business case, some fundamental beliefs about RRTM are consistently held across the industry. First, there is recognition that those closest to the operations, whether personnel on the MODU or the pro- duction platform, are in the best position to make operational decisions and that decision-making authority should remain offshore. The technologies that make RRTM possible—for example, sensor and communications technology—will continue to develop and will create greater possibilities. At its workshop, the committee was told that the col- lection of RRTM data can have additional benefits and uses. For example, it can help in synthesizing incoming data and information from multiple sites, in providing a knowledge base for postmortems after incidents and in tracking lessons learned, and in improving decision-making tools. Industry and previous studies continue to promote RRTM’s future, but there does not appear to be consensus as to what that future looks like. The industry does appear to agree that RRTM is one of many tools that support safe and efficient offshore operations. RRTM and its impact are likely to evolve, but at present the industry does not perceive RRTM as a way to change drastically how work is done in offshore operations. REFERENCES Abbreviations BSEE Bureau of Safety and Environmental Enforcement NAE National Academy of Engineering NRC National Research Council TRB Transportation Research Board

48 Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations BSEE. 2014. Summary of BSEE’s Real-Time Monitoring Study. U.S. Department of the Interior. http://onlinepubs.trb.org/onlinepubs/sp/Cushing_Summary_of_BSEE _RTM_Study_March_2014.pdf. Chief Counsel. 2011. Macondo: The Gulf Oil Disaster. National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling. http://www.eoearth.org /files/164401_164500/164423/full.pdf. 838, Inc. 2014. An Assessment of the Various Types of Real-Time Data Monitoring Systems Available for Offshore Oil and Gas Operations. Bureau of Safety and Environmental Enforcement, U.S. Department of the Interior. http://www.bsee.gov/uploadedFiles /BSEE/Technology_and_Research/Technology_Assessment_Programs/Reports/700-799 /707AA.pdf. Laurens, M., and M. Kales. 2014. Moving Beyond Real-Time Operations Centres. Pre- sented at International Petroleum Technology Conference, Doha, Qatar, Jan. 20–22. NAE and NRC. 2012. Macondo Well Deepwater Horizon Blowout: Lessons for Improving Offshore Drilling Safety. National Academies Press, Washington, D.C. https://www .nae.edu/Publications/Reports/53926.aspx. TRB. 2015. Conference Proceedings on the Web 17: Application of Real-Time Monitoring of Offshore Oil and Gas Operations: Workshop Report. Transportation Research Board, Washington, D.C. http://www.trb.org/main/blurbs/173606.aspx.

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TRB Special Report 322: Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations provides advice to the Bureau of Safety and Environmental Enforcement (BSEE) of the U.S. Department of the Interior on the use of remote real-time monitoring (RRTM) to improve the safety and reduce the environmental risks of offshore oil and gas operations. The report also evaluates the role that RRTM could play in condition-based maintenance (CBM), and how BSEE could leverage RRTM into its safety enforcement program.

The report makes recommendations to BSEE about how RRTM could be incorporated into BSEE's regulatory scheme. The recommendations also suggest that BSEE monitor the development of RRTM technologies in relation to risk-based goals governing offshore oil and gas processes.

As a part of this study, TRB held a workshop and issued TRB's Conference Proceedings on the Web 17: Application of Real-Time Monitoring of Offshore Oil and Gas Operations: Workshop Report, which summarizes presentations made during the committee’s workshop in Houston, Texas, on April 20–21, 2015. A Report in Brief for this publication is also available. Read the media advisory.

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