How Systems Engineering Can Help The Oil and Gas Sector Pivot Toward Renewable Energy
The oil and gas industry faces growing challenges regarding resource availability and environmental sustainability. As the push for clean, renewable energy continues, companies in the oil and gas space will need to adapt to thrive in the coming years.
Systems engineering, which involves leveraging the skill of system thinking to develop and manage complex systems, can give these companies a tremendous advantage as they develop and implement energy transition plans.
Following the oil crash of 2014, Shell enrolled a cohort of engineers in MIT xPRO’s four-course program, Architecture and Systems Engineering: Models and Methods to Manage Complex Systems, as part of the company’s plan to shift their thinking about the development approach for new capital projects and technology. The goal was to use systems engineering to not only survive in a low oil price environment but also support their vision of providing more and cleaner energy to the world.
Shell isn’t the only oil and gas company that can benefit from systems engineering training. In fact, companies like Chevron, BP, Schlumberger, TechnipFMC, Bechtel, and Baker Hughes have also undergone this same program of training.
Let’s take a closer look at what systems engineering is, how it helps drive smart decision-making regarding renewable energy, and the practical skills learners gain from MIT xPRO’s Systems Engineering program.
System Thinking vs. Thinking Systematically
Dr. Bruce Cameron, the lead instructor for MIT xPRO’s systems engineering program, stresses that system thinking is not thinking systematically.
“If I have a fire safety checklist and I’m going to every house in a neighborhood one at a time to figure out a fire safety plan for each one, that’s thinking systematically. But it’s not system thinking because it doesn’t take into account the risk House #1 poses for House #2, like a tree from House #1, which might not be a risk to House #1, falling on the power line for House #2,” he explains.
In the context of this example, system thinking is explicitly understanding the potential interconnections between the houses in the neighborhood rather than assessing them individually.
A simple approach to system thinking
The process for system thinking looks something like this:
- Considering what the system does overall (or what you want it to do). What is the purpose of the system?
- Breaking the system down into pieces and thinking about the interactions between the pieces.
- Examining those interactions to identify positive and negative feedback loops.
Ideally, performance is a key benefit that emerges from system thinking, but Dr. Cameron emphasizes that it’s just as important to consider negative feedback. “A classic example is the levees in New Orleans. Building the levees higher solves a problem in the short-term, but when they overflow, you have a much bigger problem,” he says.
Using System Thinking to Make Critical Business Decisions about Renewable Energy
System thinking is valuable for the companies designing renewable energy solutions as well as the oil and gas companies that could eventually implement those solutions. In his Systems Engineering program, Dr. Cameron instructs learners from both sides of the table and has examples of how system thinking can help drive critical business decisions.
On a consumer products level, a battery-powered drill today could offer up to 40% better performance than a corded drill. But whether it’s a renewable energy company building a new wind turbine or an oil and gas company looking to improve efficiency, margins of performance can be much smaller—sometimes only 1-2%.
In both cases, system thinking can empower companies to find that 1-2% gain in performance once the easy gains have been exhausted—which brings us to the next point.
Optimizing performance in one area often means reducing performance in another. If the company building the wind turbine seeks to make a gearbox more efficient, they can use system thinking to determine the trade-offs necessary to achieve this goal.
Similarly, oil and gas companies could leverage system thinking to anticipate the trade-offs they’ll face as oil fields require more input energy to extract reserves.
“Another line of inquiry is paying closer attention to which oil consumers are responsible for the most emissions,” explains Dr. Cameron. “Cement and steel production, for example, produces tremendous amounts of carbon dioxide. Oil and gas companies are beginning to ask questions like, ‘Are there biofuels that could be used to power those facilities, and if so, what trade-offs would that entail?’ and ‘Are there side products that could be made in addition to steel or cement that would net reduce energy consumption?’”
Avoiding rework (i.e., getting it right the first time)
Because system thinking involves planning for the interconnectedness of subsystems, it enables companies to see cause-and-effect relationships that, if left unconsidered, could result in costly rework.
With system engineering training, an engineer designing the bearings for the wind turbine’s gearbox would know that if there is a problem with the gearbox, it’s likely coupled with the generator design and the main bearing supporting the blades of the wind turbine, potentially resulting in rework across various areas. System thinking can help them understand the connections within the wind turbine and get the design right the first time.
Overcoming Barriers to Renewable Energy Adoption
Like most industries, the oil and gas sector faces barriers to decarbonization. Dr. Cameron explains that when the price of oil is high, there is a tremendous incentive for companies to extract every last bit of oil they can. When prices are low, the primary concern is keeping the lights on while revenue is down. It’s in the space between those two extremes where companies have the opportunity to think about energy transition.
Still, uncertainty about which renewable energy initiatives will provide the most value is a significant (and reasonable) roadblock to adoption. Many large oil and gas companies are unwilling to operate unprofitably for long durations as they await the widespread adoption of a particular market. What if they choose the wrong path forward?
Dr. Cameron’s advice is to begin implementing systems engineering training now to develop the framework for making important decisions about energy. He uses a historical example to illustrate his point.
In the early days of the automotive industry, companies considered three separate architectures for powering automobiles: battery, steam, and gasoline. These different technologies competed until gasoline emerged as the frontrunner.
The moral of the story? “You’d hate to bet your company on steam-powered cars,” says Dr. Cameron. System thinking can help oil and gas companies avoid the equivalent of this outcome in the context of renewable energy.
“The future is going to look much different from the past,” says Dr. Cameron. “Training your employees to evaluate the business and technical case for renewable energy is an important source of corporate renewal.” (Pun intended.)
Practical Skills Gained from MIT xPRO Courses
Dr. Cameron explains that the program courses taught by a team of seven MIT faculty members are skills-based and aim to give learners practical skills they can put into practice immediately. These skills include:
Framing architectural decisions at the beginning of a project
“One method we teach is to frame the architectural decisions at the beginning of a project rather than picking one concept and running with it,” says Dr. Cameron. “Because if you hit a brick wall with that concept, you’re back at square one.”
A common outcome of this approach is that projects go much more smoothly.
Creating modularity for the product
“The idea is to determine which elements should be tightly coupled together and which shouldn’t. Often, the more we can couple elements together, the easier it is for a system to run,” explains Dr. Cameron.
He shares an oil and gas example. “When we run out of capacity on Processing Tank #1, instead of doing a new sizing and coming up with a specific tank just to manage the additional capacity needed, we duplicate the first tank and double the capacity. This approach simplifies maintenance because now we’re dealing with two tanks with the same design.”
Model-based systems engineering
“Model-based systems engineering (MBSE) describes the ability to simulate the design before you actually do the design,” says Dr. Cameron. The intention is to get leaders thinking about how to digitize product development. “We spend a whole course on MBSE in the program,” Dr. Cameron adds.
Enroll in Architecture and Systems Engineering: Models and Methods to Manage Complex Systems
Learners from the oil and gas industry, the renewable energy industry, or any other sector can gain significant value from MIT xPRO’s Architecture and Systems Engineering: Models and Methods to Manage Complex Systems program.
The program was thoughtfully designed to fit into learners’ busy schedules, maintain engagement with short videos and helpful questions, and facilitate collaboration.
The feedback from past participants speaks for itself:
- 92% of participants felt this course was a significant milestone in their career
- 68% saw an impact on their career within six months of completing the course.
- Of those that saw a salary increase, 65% saw an increase in pay of 10% or more.
“Once you begin seeing things as systems, you can’t unsee it,” says Dr. Cameron. For Shell, this way of thinking has been transformative. Imagine what it could do for your company.