The biggest questions need the boldest answers. That’s why we’re using our global scale, technology expertise and collaborative spirit to move towards a better today and a brighter tomorrow...together
Saptarshi Dasgupta, Head of Energy and Resources at Tata Consultancy Services Australia and New Zealand answers key questions senior leaders are asking about the decisions the mining, oil and gas industry are facing on autonomous operations as companies explore new ways of working.
The answer will ultimately be supported by a company’s individual business case.
Autonomous operations is a big focus area for the oil, gas and mining industry because there are a few very important aspects to consider, which include safety, attracting top talent and commercial aspects. The obvious one is commercial.
Companies know that if they simply keep doing the same thing in the same way, then all they can get at best is an increase in human productivity. But companies also know that they pay for productivity through inflation; if the industry is doing well, the economy is doing well, which means there is inflation and as a result wages go up – and energy and other costs go up - that’s usually how it works.
But if you are an industry dealing with commodities, where you have little influence on the price, your competitive advantage lies in keeping operating cost lower, where operating in a safe and sustainable manner and keep finding high value assets.
And how do you do that if you keep doing things the same way?
Safety is another important factor to consider in answering this question. Safety in areas like mining and O&G, with heavy machinery, corrosive and highly flammable materials, is paramount as it protects people, communities, and environment and provides license to operate.
Another interesting aspect to consider is the ability to attract top talent to the industry. This is a cyclical industry and when the industry is not experiencing good times, then one of the impacts for companies is whether the right talent pool of people is coming through the pipeline of schools, colleges and universities.
The oil and gas industry used to be a highly chosen profession – and the same applied for mining – but as next generations of workforces come through it might not appear as attractive to work in the distant Pilbara in 49-degree heat or on an FPSO, hundreds of kilometers offshore, as it is to sit inside an air-conditioned office in one of the capital cities, with all of life’s comfort at their fingertips.
All companies need to be sensitive to social impacts, so this is an important question.
If you look at mining or oil and gas companies, they are operating in remote regions and communities. Organisations have a responsibility towards serving that community, and traditionally the most common way to do this is by creating jobs, infrastructure and boosting the local economy.
When a company explores autonomous operations there can be a view that this has the potential to be the opposite of creating jobs. So companies have to work hard to demonstrate that an autonomous operations path is not going to cost jobs in the local economy and that the community will see their local economy being boosted by outcomes that come from this decision.
Another important question is: “Are regulators and insurance companies ready to support such operations?” - For an example how regulators would handle abnormal operation delivered through malfunction of autonomous algorithm and how insurance will cover these scenarios. If remit of automation is bounded by a fence property/plant it is different story but by nature our customers runs pipeline running thousands of kilometres, operate tailing dams near natural habitats (e.g. lake, ocean etc.) and framework to operate autonomously is not agreed with all stakeholders yet. There are miners in regional Western Australia or regional Queensland who have been doing the jobs for two or three generations and the knowledge is staying with them.
Dealing with a skill and talent gap is another important dimension to understand why autonomous operation is important because it is essentially about capturing knowledge in a structured way to run a safe and efficient operation.
It’s a case of “horses for courses” and the right solution can range from “operator assistance” to “selective autonomy” right through to “full autonomy”. Items below must be considered while answering the question – “what is the right level of autonomy for my operation”:
In the case of the mining industry, the important aspect to determine an answer will be: “How much mine life do I have left?”
As a real example, we are currently talking to a miner who has three operations, two in Australia and one outside of Australia. Of the two mines in Australia, one has about four years of mine life remaining and one has about 20 years of mine life left, while the operation abroad is a recent acquisition, which is still being assessed, but it has anywhere between 15 to 25 years of mine life left.
Having staff with the skills required – people readiness - is a challenge for companies.
One example in the Australian market is finding people with the level of skills required in Artificial Intelligence (AI). We have seen that AI skills in Australia are limited because the adoption of AI has been lower than compared with, for instance, the United States.
Companies pursuing a semi-autonomous or a fully autonomous solution require AI as a foundational component, and when Australian companies look inwards and ask if the capabilities exist to drive full autonomy, then in most of the cases the answer will be “no”. If the skill doesn't exist, a company needs to partner with someone who does have them, which is a company like TCS or someone else who can provide what they need.
The next consideration is upskilling people within the company (and the country) because while you can always augment it by partnering with someone, it is fundamental and core to a company’s operation that they do not completely outsource that responsibility.
Any question of “technology readiness” is interesting for a company because if it is posed internally there is not a mature industry framework that can help assess the question for the right answer.
Sometimes it is simply a personal evaluation, or individual preference, and sometimes it is just an opinion. As an example, it would be common sense that in order for everything to work in an autonomous way you would need a reliable network because you are feeding everything back to the network and then the network is performing a critical function.
So the question is: “Do we have a reliable and high performing network at the site”? But how do you assess that to provide an answer?
If you ask the question to a CIO or a Chief Digital Officer, the answer might be: “Yes, I do because the network and operations have never gone down.” But this type of answer might not factor in the future needs of a company that would put more stress on the network, platforms and operations.
Essentially, the assessment is based on the past and not whether the network is ready for the future. The assessment framework needs to be matured because it shouldn’t be based on individual's opinion or preferences, and it needs to help provide answers to questions such as: “Am I able to set up autonomous operations with our network, with the IoT devices, with the data platform and with the edge computing infrastructure that I have?”.
In establishing a path for autonomous operations companies will ask which technology they should buy from OEMs viz-a-viz technology. It’s one of the toughest questions because the whole ecosystem in this industry has realised there is an opportunity – and everybody is either trying to go sideways or vertically upwards to position for the opportunity.
If we look at Komatsu and Caterpillar, they have been providing heavy earthmoving machinery to the mining industry for a long time, and what they have done is automated or completely upgraded autonomous vehicles, such as haul trucks or excavators.
Now they are looking at what else they need to do in order for their upstream and downstream operations to be autonomous because the data needs to go somewhere, otherwise they are only the middle piece that is running autonomously, and they don't get efficiencies.
This means what some of the big OEM players are doing is creating their own framework to integrate and go sideways. This creates integration issues as individual pieces of the technology stand on its own. Then there are companies like Schneider Electric who are trying to look at it more vertically.
The questions are: “What are the different technologies, what is the interplay?” and “Can I create a framework for us to run it remotely?”.
Everybody is trying to find out how they will solve the problem right now, therefore the buy versus build decision becomes difficult to answer because it has three important dimensions.
The first one is: Do you make a decision based on where technology is today, or do you make that decision based on where technology is going? It will take one to five years to implement a solution, so a company does not want to be left with technology that will eventually become legacy by the time it is implemented. This evaluation requires a thorough scan of the market and is where expert management consulting firms are playing a big role in terms of advising the customers based on information they hold.
The second dimension is around the fact that the current landscape is very heterogeneous in that companies are working with a wide variety of control systems and PLCs and OEMs. So if the option is to only spend money on integrating technology rather than buying it, then it's a lower cost to pay, so it becomes a pure commercial decision.
Whether the skill set is available within a company to drive that kind of transformation program is the other part of the question. A lot of miners and oil and gas companies have outsourced a large part of their operations to be done by vendors, and if that is the case then they might not have the knowledge to integrate.
The final dimension is about competitive advantage. For companies that compete within the industry it's a race. For example, if one company gets there first and brings down the cost of production, they would be able to get better market share and attract more investment for future growth. So for the miners and O&G companies it is not a question of whether they want to get there or not, it's a question of how fast they can get there.