Hydrocarbon Processing - May 2021 - 17

Executive
Viewpoint

Andy Howell, Chief Executive Officer, KBC, a Yokogawa Company,
London, UK; and Russell Byfield, Global Simulation Business Leader,
KBC, a Yokogawa Company, Singapore

It was the best of times
" It was the best of times, it was the
worst of times, it was the age of wisdom, it
was the age of foolishness... " . Fortunately,
this opening line from A Tale of Two Cities
does not often present itself as an appropriate analogy to the oil and gas industry.
Yet, here we are.
The industry is experiencing a perfect
storm of events, and they are all moving
in different directions. Within all these
conflicting circumstances, there is both
opportunity and risk-the best of times
for some and the worst of times for others.
Enabled by fracking, horizontal drilling and many other, lesser-known technologies, a shift in global oil and gas
supply chains has taken place in recent,
pre-COVID times in the U.S. It has elevated the country to a world leader in oil and
gas production and has provided sovereign certainty regarding the domestic, hydrocarbon supply chain. However, powerful lobbying groups have vowed to ban
fracking, putting the industry at risk. The
shale boom started the slow but steady
transition of petrochemical industry manufacturing to the U.S.-with its 'lower for
longer' gas prices-and away from manufacturing locations with cheaper labor.
COVID lock downs caused a drastic
decline in global jet fuel consumption,
while travel bans devastated many domestic and global airline companies. Those
have led to refiners fighting for survival,
some unsuccessfully.
Capital for upstream projects will most
likely favor the lower-risk expansion of existing fields over the development of new
exploration plays. Some small- to medium-cap companies focusing purely on new
plays will invariably go out of business.
A combination of COVID and the
U.S.-China trade war is leading many companies to reassess their global supply chain
risks. For bulk-manufactured commodities, this will likely lead to an increased
flight of capital from China to alternative,
low-cost countries such as India and Vietnam. For high-tech manufactured goods,

this flight of capital will likely favor Japan,
Korea and Taiwan.
The re-evaluation of sovereign risk by
all countries will also likely lead to a resurgence in several domestic manufacturing
sectors that globalization had been eroding for some time.
Energy security will continue to be a
focus with an increasing understanding by
the population of the duck curve nature
of renewable energy and that the ultimate
enabler of renewables is natural gas. That
is slowly shifting to hydrogen; however,
while hydrogen is clean, it is expensive.
This global oil and gas realignment
could also result in a global supply chain
shift as petrochemical and polymer
manufacturing migrates. No matter how
much we consume hydrogen, we still
need hydrocarbons to produce the polymers that are used in everything from
clothing and cars to building materials,
not to mention flying planeloads of people around the world.
Add digitalization to the mix. The industry has at its disposal an unprecedented array of disruptive technologies and it
is exploiting their value more quickly than
ever before. The pursuit and adoption of
these technologies exists in the context of
a digitalization journey that is driven by
both internal and external factors. Ultimately, it supports the quest for superior
results in a sustained manner.
The drive toward semi- and fully-autonomous operations in the oil and gas
and petrochemicals industries is forcing
operating companies to seek digital platforms and fully adopt disruptive, digital
technologies as the normal way of doing
business. The technologies allow them to
bring together capabilities in real-time data
capture and processing, information flows
and integrated execution with process simulation capabilities, technical savvy and a
deep knowledge of business value drivers.
Many companies in the oil and gas, petrochemical and associated service industries have been implementing workflow

best practices and slowly progressing towards more flexible operating procedures.
This has been a work in process for years.
Who would have thought we could suddenly all do it in 6 mos? The impossible a
year ago is, today, practically fait accompli.
Of course, this is still a bit of an overstatement. Many wrinkles remain to be ironed
out regarding efficiencies, who best works
remotely and who should work onsite.
Due to the COVID pandemic, the oil
and gas and petrochemicals industries
will digitalize much more quickly. The
path from manual to automatic to autonomous is now the path for all as we aim to
survive and ready ourselves to thrive in a
post-COVID world.
A post-COVID world will consume
fewer hydrocarbons per capita than it did
before. More people will continue working from home or will travel to an office or
site less frequently. Business air travel will
not cease but will surely decrease as we
are now far more tolerant of meeting online. This is not a bad thing. The use of hydrocarbons is here to stay for a long time,
but their consumption has permanently
changed and will continue to change.
How will the oil and gas industry take
advantage of these opportunities and
manage the risks? By now, the industry
should be very good at all this; however,
dealing with the entire perfect storm of
new circumstances, simultaneously, will
test us all.
ANDY HOWELL is the Chief
Executive Officer of KBC, a
Yokogawa Company. He has
held senior positions with bp,
AspenTech and Schlumberger.
Mr. Howell earned an MS degree
in chemical engineering from
the University of Cambridge, UK, and holds several
patents in integrated asset modeling, process
simulation and digitalization.
RUSSELL BYFIELD is the Global
Simulation Business Leader
for KBC, a Yokogawa Company.
He has international experience
in the oil and gas, petroleum
and process industries.
Hydrocarbon Processing | MAY 2021

Hydrocarbon Processing - May 2021

Table of Contents for the Digital Edition of Hydrocarbon Processing - May 2021