How Digitalization of Production Allocation Maximizes Throughput in Oil Fields

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Oil and Gas producers are facing intense challenges in the new normal era of low oil prices – imbalance between supply and demand, combined with slowing demand growth.  In order to continue surviving and thriving in the uncertainty environment, Oil and Gas producers have to transform their operating and business models with urgency to reduce production costs by improving production efficiency in existing and new oil fields. They need to “Produce more with less”.  Maintaining status quo runs the risk of falling behind.

Benefits of Digitalization in Oil and Gas

According to a recent Accenture’s study, 80% of Oil and Gas companies plan to invest in digital technologies, including Big Data-powered analytics and the Internet of Things (IoT), to reduce cost through improved efficiencies in the short term while enabling them to make better decisions faster amid the challenging environment.


Utilizing advanced analytics and simulation tools to optimize assets and operations – from reservoirs to wells to surface facilities to processing plants— have become the only option to succeed in today’s depressing environment. In order to stay relevant for the next few years, companies must continue to improve their operations to reduce production costs, and gain organizational agility to respond to changing product demand without incurring additional CAPEX investment.

Importance of Production Allocation in dis-aggregating crude production data

Optimizing of production begins with production awareness.  As hundreds of oil wells draw crude oil simultaneously from reservoirs in a typical oil field, dis-aggregating production data to wells is often based on non-reliable flow measurements due to insufficient data points, resulting in a producer’s inability to monitor and optimize production. Production Allocation is crucial not only to understand the performance of each well but also to identify choke points and deteriorated wells so that operating conditions can be adjusted to optimize the production, increasing asset production efficiency in existing oilfields as a result.

Optimizing production with advanced simulation and analytics tools

Installing a fiscal metering instrument to record the production at every well is impractical and costly to maintain.  Instead, companies are leveraging advanced simulation and analytics tools to derive their Production Allocation through modelling of well gathering network and process conditions in their surface facility.  The Production Allocation not only allows proper production recording and planning, but also helps uncover production potential in existing assets with improved insight.

Flow Lines from Oil Wells to Separator
Illustration of flow lines from wells to Separator

An effective process simulation platform will have the capability to integrate the well gathering network phase into the Separator process simulation, allowing reading of the fiscal metering on export gas and oil at the Separator to be back-calculated to derive the production level at each well seamlessly, enabling production awareness to help drive efficiency and accelerate decision making.

  1. What was the production level of each well in the past months?
  2. Where are the choke points restricting throughput?
  3. How much production loyalty should I pay to my partners over shared well resources?
  4. Which wells have untapped production potential?
  5. Which wells are depleting fast?

Production optimization doesn’t depend solely on technology

Digital transformation of production is not only about technology.  It requires the workforce to be trained and empowered to leverage technology for greater efficiency.  Traditionally, new simulation models have to be rebuilt for workforce training, increasing the engineering time and cost.  With the single integrated model created for Production Allocation, the same asset model can be extended into an Operator Training System (OTS), enabling field and DCS operators to be trained in a 3D virtual field environment so that they could start operating efficiently and safely immediately after the commissioning of the new oil fields.  This single model approach drives greater consistency and engineering efficiency across different processes from production optimization to workforce enablement.

To learn more about the benefits of leveraging simulation tools for Production Allocation in Oil and Gas, download our White Paper.

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