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Digital transformation in the offshore E&P supply chain operations

Alternative title: Blockchain Teknologi Anvendt til Maritim Offshore Logistikk - Norsk Olje og Gass Forsyningskjede og Logistikk Digitalisering.

Awarded: NOK 1.6 mill.

Project Number:


Project Period:

2018 - 2021

Funding received from:



The Norwegian E&P industry requires a digital transformation of its operations and has been adopting technology and digital solutions to tackle these challenges. However, the recommended and adopted technology has mostly focused on the heavy-engineering part of the industry (such as drilling and other offshore operations). Paradoxically, the support offered to heavy-engineering by supply chain and logistics operations have remained unchanged, with limited software and tool upgrades focused on replacing the 'pen and paper' practises of everyday operations without the benefit of streamlining or integrating the functions. This research addresses these challenges by investigating the digital transformation started in the offshore E&P supply chain operations support underway in an established Norwegian operator and aims to contribute to the success of this transformation through (1) an analysis of how the operational functions can be made more efficient, (2) a presentation of potential alternatives based on empirical evidence, and (3) a strategic roadmap as a guide for their implementation. Even though the discussion in this research addresses E&P in its entirety, the proposed alternatives and the roadmap are presented with a focus on drilling operations support, due to the sheer size of the industry. To reach the research objective, a thorough investigation of the operator?s operational structure, its goals, and the potential alternatives to reach these goals was conducted. The research was designed as a longitudinal action research study conducted in three cycles over three years, resulting in three articles that present the research outcomes and contributions. The body of knowledge of this research lies mostly within supply chain management and system theory, while systems engineering and systems thinking have greatly influenced this research. Systems engineering and systems thinking provided the foundation to design and execute this research. The results from this research are presented in relation to the supply chain operations? ?AS-IS? and desired ?TO-BE? states. The current 'AS-IS' supply chain operations are fragmented into silos within and across the organisation, lack software and data interoperability, and have a high dependency on manual inputs to collect the information that is required to execute the operational tasks. Three root causes were identified: (1) a traditional organisational culture that dictates how operations are conducted, (2) a traditional lack of urgency in improving supply chain operations due to high profit margins, and (3) failure to invest in technology that focuses on supply chain operations. The desired 'TO-BE' vision presented by the stakeholders involved in this research shows an end-state for supply chain that addresses different organisation levels, with focus spread into cultural, organisational, operational, and technological elements. The results indicate that technology and organisational change are at the centre of the desired transformation for supply chain operations. With technology at the centre of supply chain activities, the focus shifts to automation, software, and data interoperability, and the use of data as triggers to operations to decrease the dependency on manual intervention. The results show that such an infrastructure could be expected to lead to more autonomy, that is, less reliance on human decisions, and potential changes to many other aspects of current operations. The results also indicate that this transformation and vision can only be reached through organisational and cultural changes that embrace new approaches to how operations are to be conducted. Therefore, to progress to a successful digital transformation, a more holistic approach is necessary to evaluate the implications and consequences of the implementation of digital solutions and to create a common understanding among all stakeholders. The main contributions from this research are threefold: (1) for the industry, (2) for academia, and (3) for policymaking. Contributions include the description and visualisation of current and desired states through rich-picture techniques that provide the convergence of goals and ideas from multiple stakeholders into one common image that can serve both the operator and as a benchmark for other operators in the industry. Still, this research contributes to the body of knowledge by suggesting methods and techniques that the Operator and others in the industry can adopt to innovate their business models as a precursor to help them in this transition from current ways of working to newer, more digital, ones. Finally, this research presents a strategic roadmap that shows the steps to be taken to conduct this transformation based on the identified 'AS-IS', 'TO-BE' and proposed alternatives, thus helping to achieve a successful digital transformation journey.

The deliverables changed when the project changed in 2020 (approved by RCN). The new deliverables are: Article 1: Czachorowski, K.V., Haskins, C., Mansouri, M. (2021). Minding the gap between the front and back offices: A systemic analysis of the offshore oil and gas upstream supply chain for framing digital transformation (in review in Sys. Engineering). Article 2: Cleaning Up Our Act: Systems Engineering to Promote Business Model Innovation for the Offshore Exploration and Production Supply Chain Operations. Sustainability 13, no. 4: 2113. Article 3: Czachorowski, K.V., Haskins, C. (2021). Applying systems engineering to roadmapping for digital transformation in the offshore exploration and production supply chain operations (second round of review in Sys. Engineering). PhD Thesis (to be made public once defended): Digital transformation in the offshore E&P supply chain operations

The Norwegian oil and gas industry has an engineering-oriented culture with high levels of technological innovation, mostly pursued towards subsea systems, exploration, and drilling efficiency in operations subjected to very complicated conditions. At the same time, the operation’s supply chain support kept adapting to what was needed from it without a stronger focus on how its own operations are conducted, resulting in several manual and over-engineered processes executed through legacy software and divided into silos with inefficient communication and collaboration (KonKraft, 2018, 2020; Norsk Olje og Gass, 2016). To this objective, one Exploration & Production (E&P) Norwegian oil and gas operator on the Norwegian Continental Shelf (NCS) has a goal to create a better way of handling operations through forward thinking design of a system that will handle their current needs and remain flexible enough to cope with future needs while innovating its business models. The goal is to integrate the operational silos and improve supply chain handling to deliver more efficient and environmentally friendly operations. As a contributing member of the project, this PhD research project investigates the digital transformation of the upstream oil and gas supply chain operational support together with this operator, focusing on the intersection between the offshore activities (e.g. drilling) and their supply chain (SC) support. The project objectives are to: investigate and frame the problem; identify the desired “to-be” system (state) for SC operations; and identify and propose proposes alternatives and technology that can be applied to solve the problem and reach the desired state.

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