CREATING VALUE WITH

DIGITAL TWINS IN OIL

AND GAS
By Håvard Holmås, Odd Arne Sjåtil, Sylvain Santamarta, Sverre Lindseth, Peter Forbes, and
Pietro Romanin

D igital technologies that trans-

form the way upstream oil and gas
companies solve key business problems can
and better decisions. As a company’s
portfolio of digital twin use cases grows,
each digital twin of an asset or plant
unlock an enormous amount of value. becomes more impactful.
Pockets of digital excellence already exist
in the industry within disciplines such as Although oil and gas companies are in-
reservoir and flow assurance modeling. But creasingly creating digital twins, many or-
there are still significant opportunities to ganizations are failing to capture the po-
use digital technologies to create value by tential value, typically for three reasons:
enabling better integration across disci-
plines, asset organizations, and players in •• They prioritize use cases for digital
the value chain. twins on the basis of what the technolo-
gy can do, rather than what generates
We’ve found that disruptive value creation the most value.
from digital is being driven by two key
factors. First, companies are creating in- •• They do not secure proper buy-in and
novative business models to become more commitment from the end users in the
competitive. Examples include operators business.
establishing remote or integrated oper-
ations centers and suppliers providing a •• They underestimate the extent of the
greater share of production optimization changes to the ways people work that
or maintenance as an outsourced service. are necessary to realize value.
Second, companies are benefiting from
digital twin technology. By replicating No one approach to implementing digital
physical equipment or real-world processes twin technology is right for all companies,
in a virtual environment using digital but our experience shows that successful
twins, companies are able to make faster companies avoid these pitfalls by following
 several essential steps and maintaining a mization at a system or plant level. Rather
strong focus on value. than using a one-size-fits-all approach, the
most successful companies adapt the data
requirements and accuracy of their digital
How Digital Twins Create Value twins in order to chart a unique course to
Digital twin use cases can help companies value creation. These operators also use dig-
optimize the following value drivers: capi- ital twins to seamlessly navigate from broad-
tal expenditure reduction, time-to-first-oil er to more detailed use cases to easily derive
acceleration, recovery rate increase, pro- information and insights.
duction acceleration, operating expense re-
duction, and health, safety, and environ- Digital twin use cases typically rely on a com-
mental improvement. (See Exhibit 1.) In bination of engineering data, sensors, life cy-
general, digital twin technology enables cle information, and digital models to repli-
companies to optimize operating processes cate the real world and serve different needs.
and improve capital investments in a virtual For example, a company can use a digital twin
world before applying them in the real one. to see how a process or machine is working,
create an analytical what-if model, or build a
Some digital twin use cases require precision predictive what-will model. In addition, digi-
and the capability to leverage very-high- tal twins can enable automatic improve-
frequency data. For example, optimizing ments and decision making—for example,
valve controls often involves sampling data by using an algorithm to alter valve settings.
at frequencies below one second. Other use
cases are broader in scope and need less A leading supplier decided to use digital
precision; these are typically used for opti- twin technology to transform its offering.

Exhibit 1 | Use Cases for Digital Twin Technology Vary During the Project Life Cycle and Along the
Hydrocarbon Chain
ASSESS AND SELECT DEFINE AND EXECUTE OPERATE

• Reduce the time needed to estimate • Improve engineering decisions with • Increase maintenance efficiency by
project parameters by using digital real-time transparency on the material planning and preparing campaigns that
Facilities simulators and cost impact of changes are linked to the asset-integrity
management system
• Improve concept selection decisions • Prevent and resolve scheduling
by using holistic well-to-export conflicts by integrating planning, • Optimize production through constraint
visualizations budget, and sensor data management and the elimination of
bottlenecks

• Speed up the testing of alternative • Improve collaboration through real- • Reduce the risk of failure and propose a
Gathering concepts by using parametric time project life-cycle management review for life cycle adjustment by using
net-present-value models that links the owner, contractor, and predictive models
systems suppliers
• Conduct asset-simulation dry runs • Increase the effectiveness of turnarounds
to optimize asset value (such as by simulating the interventions in
better tradeoffs between operating advance
expenses and capital expenditures)

• Increase the accuracy of cost-weight • Reduce construction errors by using • Optimize over- and underwater
estimations by using integrated RFID and drones for automatic model systems
Wells error-proof solutions compliance validation
• Lower risk with virtual commissioning,
training, and startup prior to launch

Reduce the time required to Deal with reservoir uncertainty by Predict impact of changing injection
Reservoirs interpret data and generate prospects simulating potential scenarios to targets using a dynamic simulator
using AI-assisted image recognition create a playbook of responses

Top three • Time-to-first-oil acceleration • Time-to-first-oil acceleration • Production acceleration

value drivers • Recovery rate increase • Capital expenditure reduction • Operating expense reduction
• Capital expenditure reduction • Health, safety, and environmental • Health, safety, and environmental
improvement improvement

Source: BCG analysis.

Note: Gathering systems are equivalent to subsea production systems and subsea umbilicals, risers, and flowlines for offshore assets.
Decommissioning involves use cases that are similar to those in the second stage. AI = artificial intelligence. RFID = radio-frequency
identification.

Boston Consulting Group | Creating Value with Digital Twins in Oil and Gas 2
 The company wanted to move from selling case could optimize value drivers such as
equipment and time to a more service- higher throughput, lower operating expens-
oriented business model based on equip- es, and reduced safety risks. The implemen-
ment uptime and performance. Customer tation requiring the least effort would be a
value would be created through quicker re- digital twin that visually represents pres-
sponse times, deeper insights into how to sure and temperature measurements so
optimize production and maintenance, that an operator could monitor them more
and a more integrated service. To enable easily. The next level of sophistication
the transition, the supplier created a com- could involve adding data about the di-
prehensive asset-level digital twin by using mensions and layouts of pipelines as well
engineering data, sensor data, 3D models, as the properties of hydrocarbon fluids.
and simulation tools. The digital twin facil- Such data would enable the company to
itated end-to-end operational processes, create smart alerts that issue warnings if
from diagnostics and problem solving to there is a danger of unstable flows.
planning and execution, and reduced the
supplier’s operating expenses and mainte- At its most advanced, a fully integrated dig-
nance costs. ital twin would simulate hydrocarbon flows
from the reservoir to the receiving facility
using real-time data. This would provide
The Essential Steps to Success the operator with a bird’s-eye view of flows
Companies that successfully develop high- throughout the pipeline at any time and
value digital twins follow several essential enable the company to analyze the possi-
steps. (See Exhibit 2.) ble impact of changing conditions. A com-
pany should choose the option that creates
Identify a handful of high-value use cases. the most value given the implementation
It may be tempting to immediately build effort, which is likely to vary from one as-
very faithful digital representations of an set to another.
entire asset base, but companies should
concentrate their efforts on first developing At this early stage, companies should create
a small number of high-value use cases. a list of flagship use cases that will help
When prioritizing, take a top-down ap- achieve the business’s priorities and have
proach to identify areas where the most the support of senior management. Each
value can be generated, and then figure out will need to be sufficiently advanced, in
how digital can help capture it most terms of value creation potential, scope, and
efficiently. necessary resources, so that the company
has enough information to decide whether
Consider flow assurance. A company may to proceed to a proof of concept (PoC) phase.
want to develop a digital twin use case to
improve the regularity of the flow of hydro- Although some longer-term planning is
carbons in upstream operations. This use necessary, take a flexible approach since

Exhibit 2 | The Essential Steps to Succeeding with Digital Twins

Identify a handful of Develop a proof Build a minimum Monitor and
Scale up
high-value use cases of concept viable product capture value

• Prioritize according to value • Prove the value potential • Create an end-to-end solution • Roll out a digital twin on the • Track and monitor value
and feasibility using real-world data basis of value and asset creation closely
• Build a simple mockup in a
• Focus efforts on the strongest sandbox testing environment • Verify value for end users at similarities
• Install mechanisms that
use cases all steps • Build out the digital twin by provide feedback to the
• Don’t solve the technical
• Redirect resources from issues without a clear plan to • Don’t underestimate the effort adding functionality development team
initiatives that are failing to capture value involved in managing change • Collaborate with asset • Promote successes and
those that are more likely to organizations to ensure fast terminate initiatives that fail
succeed adoption to deliver value

GRADUALLY BUILD A FLEXIBLE IT AND DATA INFRASTRUCTURE

Source: BCG analysis.

Boston Consulting Group | Creating Value with Digital Twins in Oil and Gas 3
 technology and operating limits are rapidly product. After prioritizing the digital twin
evolving and new opportunities will emerge use cases that have the most value, the
as you mature these initial use cases. By next step is to develop a PoC that demon-
ensuring that the focus is on demonstrat- strates the value and viability of each one.
ing value as quickly as possible, you can The PoC should be developed quickly over
avoid getting bogged down in protracted IT a few weeks or months, typically in a
projects, build support within the organiza- sandbox testing environment that is not
tion around a few early success stories, re- linked to real-life production systems and
solve problems quickly, and leverage les- data. Developing a PoC typically involves
sons for future use case developments. many different disciplines and actors, and
it requires iterating frequently with end
Digital twins are relevant to both legacy users to confirm that the PoC solves the
and new upstream developments. For lega- intended business challenge and creates
cy assets, companies typically use digital value. Companies will therefore need
twins to enhance their understanding of multidisciplinary development teams that
value drivers and obstacles and improve use agile ways of working. These teams
visualization of real-time operations infor- should be autonomous, properly resourced,
mation. For new developments, companies and have strong governance mechanisms
can use digital twins to make better use of to remove obstacles.
capital and accelerate the time to first oil.
If the PoC is successful, the next step is
We often find that companies decide to to develop a minimum viable product
mature most of their flagship applications (MVP)—a working solution that taps data
on a single asset, rather than spread them and creates value for end users in a real-
over several assets. Equinor has taken this world environment. A leading internation-
approach in the Johan Sverdrup oil field. al oil company wanted to reduce instances
The benefits include being able to use the of gas compressor failures. It formed a
same data, IT infrastructure, and develop- multidisciplinary team to develop an MVP
ment teams, as well as having fewer stake- that collected data from 1,500 sensors.
holders. Then, using advanced analytics, the team
established the health of 12 key systems
An international oil company wanted to affecting compressor performance. The
screen its asset portfolio to find use cases solution was deployed in the company’s
for digital twin technology that would onshore and offshore operations, with
generate significant value. The operator extensive personnel training. The digital
used a three-pronged approach. First, it twin is now on track to reduce compressor
identified its main value drivers by assess- failures by more than 40%.
ing the reserves, production, uptime, and
health and safety performance of each Operating processes and decision-making
asset. The company then established each procedures—internal ones as well as those
asset’s digital maturity by examining the that guide relationships with suppliers and
availability of data, the IT infrastructure, partners—will need to be adjusted at this
and the current use of digital twins. Finally, stage. We find that changing the way
the operator combined the findings with people work is typically more than 50%
information about production volumes, of the overall effort of developing a high-
capital expenditures, and operating expenses value digital twin. Also in this phase, com-
to identify value creation opportunities and panies should actively involve end users,
create a priority list of use cases. This ap- including decision makers, to ensure that
proach enabled the company to deploy re- the digital twin solution is effective and to
sources more effectively and speed up value create buy-in.
creation from its digital twin use cases.
Scale up the digital twin, and monitor and
Continue to focus on value while develop- capture value. Scaling up a digital twin
ing a PoC and building a minimum viable brings its own challenges. Companies must

Boston Consulting Group | Creating Value with Digital Twins in Oil and Gas 4
 consider not only how to best roll out a Gradually build a flexible IT and data
proven technology solution across an asset infrastructure. As companies go through
portfolio but also how to free up resources the steps outlined above, they will also
to develop the next wave of projects. These need to think about their evolving IT
projects may involve adding functionality requirements. Combining engineering and
to existing use cases or starting new ones. production data in new ways is critical to
creating high-value digital twins. However,
When scaling across an asset portfolio, pre- ingesting, contextualizing, and making data
pare early and determine the implementa- available for use is often difficult, because
tion sequence by considering how to deliv- different asset organizations or suppliers in
er the most value and which assets have a company’s ecosystem have different
similar work processes, stakeholders, and legacy systems and ways of categorizing
technology requirements. Ensure continui- data. Several platforms are available to
ty between development and scaling teams help companies deal with these challenges.
by identifying the human resources needed (To learn how Cognite’s platform fit the
for each asset and onboarding them early needs of Aker BP, see the sidebar “How
so that they can learn from MVP develop- Platforms Can Help Oil and Gas Compa-
ment and hit the ground running in the nies Solve Digital Twin Data Challenges.”)
scaling phase.
To succeed, companies should build a flexi-
As the organization moves from scaling to ble IT and data infrastructure, looking at the
daily operations, ensure that the operating process as a journey, rather than as a one-off
model and capabilities are in place to event. Players should adopt a modular ap-
maintain the digital twin as real-world con- proach, establish the overarching architectur-
ditions change. al principles, and build the infrastructure
step-by-step while tackling the challenges
To monitor value creation, companies created by concrete digital twin use cases.
should establish and track simple KPIs.
Furthermore, proper governance mecha- Data ingestion and governance can pose
nisms should be put in place to ensure fur- particular issues. With legacy assets, engi-
ther development of successful digital neering and 3D data often need to be
twins and termination of poorly perform- recreated from scratch. To minimize the ef-
ing ones. Communicating success stories fort involved, it’s important to prioritize
broadly throughout the organization will must-have data over that which is nice to
build momentum and justify funding fu- have. By using new technologies such as la-
ture digital twins. ser scanning, drones, and point cloud solu-
tions in georeferencing, companies can
An upstream operator wanted to develop save time and cut data ingestion costs. In
several digital twin use cases to increase the case of greenfield assets, the main chal-
throughput and cut maintenance costs. lenge is to embed digital requirements in
Scaling up involved using the MVP with the engineering, procurement, and con-
three assets and then rolling it out across struction processes and move toward the
some 30 assets over one to two years. Ex- exchange of information using structured
tensive work was done to optimize the roll- data and metadata, rather than unstruc-
out sequence and engage with the respec- tured data. With both types of assets, it is
tive asset organizations to ensure that they essential to have well-defined governance
were ready to adopt the changes to their and ownership regimes to ensure that data
operating models that were necessary to is properly maintained and updated.
capture value from the digital twin. The op-
erator’s goal was to increase throughput by For digital twin solutions to be effective,
2% to 4%. KPIs were implemented to moni- upstream oil and gas companies will need
tor value creation. Current progress indi- to develop or acquire new capabilities.
cates that the organization is ahead of its Faced with building digital twins, tradition-
target. al IT departments typically find that they

Boston Consulting Group | Creating Value with Digital Twins in Oil and Gas 5
 HOW PLATFORMS CAN HELP OIL AND GAS
COMPANIES SOLVE DIGITAL TWIN DATA CHALLENGES
When exploration and production resource management system, allows it
company Aker BP needed an open to predict pump performance and guar-
technology platform for digital twin data antee equipment uptime, enabling the
orchestration, it turned to Cognite. The company to shift to a novel performance-
company’s solution offers not only a based contract. A feedback loop covering
decoupled architecture that separates Aker BP’s design, engineering, and
data management from applications but maintenance functions also helps the
also secure data sharing as a service. supplier strengthen its products and
offering.
The platform enabled Aker BP to se-
curely share asset- and process-specific Cognite helped transform the traditional
information with a global provider of transactional supplier relationship into
pumping equipment. Using Cognite’s one that is more open, effective, and
application programming interface, the service oriented. The supplier’s use of
supplier integrated its systems with a Aker BP’s digital twin platform has
digital twin platform operated by Aker already led to a significant reduction in
BP. The supplier was then able to use manhours and maintenance. Longer-
real-time contextualized data derived term projections show a 30% reduction
from Aker BP’s operations and IT in maintenance work, a 70% reduction in
systems to improve its service delivery. shutdowns, and a 40% increase in pump
Specifically, the supplier’s access to Aker availability.
BP’s streaming information, and its
integration with the operator’s enterprise

have gaps in software development, cyber- zation and asset management activities. In
security, data science, user interface design, any case, it’s likely that having digital twin
and test management. A key consideration technology will soon be table stakes to bid
is whether to develop these capabilities in- on the majority of contracts.
house or to rely on external suppliers or
off-the-shelf solutions. The decision should Savvy suppliers can gain a competitive
be guided by the strategic importance of advantage from how they handle data
controlling such capabilities. orchestration—the process of pulling data
from different channels and devices, mix-
ing it, and adding previously collected data.
Suppliers Must Redefine Their Suppliers can create value for operators by
Roles developing digital twins for specific tasks
Suppliers are a vital part of the upstream and doing so in a way that anticipates
ecosystem, and they can use digital twins to future integration. For example, suppliers
both broaden and deepen their offerings. might create a digital twin of a piece of
To be successful, though, suppliers need to equipment so that it can easily be inte-
focus on how use cases add value for oper- grated in the future with an operator’s
ators and remain flexible so that they can systems-level digital twin. Robust data
tailor their offerings to operators. For ex- controls and the ability to share the right
ample, larger operators are more likely level of information with the right individ-
than smaller ones to build more digital uals at the right time will be important for
twin capabilities in-house and outsource this kind of application.
less work to suppliers; smaller operators
are more likely than larger ones to out- Suppliers also need to think ahead. Long
source a bigger share of production optimi- industry lead times mean that they must

Boston Consulting Group | Creating Value with Digital Twins in Oil and Gas 6
 define value propositions now to support
exploration, development, and production
activities that will be deployed years into
D igital twin technology has the po-
tential to create significant value for
oil and gas companies. But they need to be
the future. In addition, suppliers will have ready to use the technology to disrupt and
to introduce new commercial models that fundamentally change the way their com-
support investment in digital products and panies operate. We believe that digital
services, moving from remuneration mod- twins will increasingly play a pivotal role in
els that are based on time and the cost of reshaping the industry’s operating and
materials to performance-based ones. At business models. Companies need to act
the same time, suppliers will need to nego- boldly and embrace the disruptive poten-
tiate contracts smartly to avoid giving away tial of digital twins, or they risk losing out
their intellectual property, differentiate to competitors and new players.
their offerings to avoid commoditization,
and innovate to stay ahead of new players,
such as pure analytics providers.

About the Authors

Håvard Holmås is a partner and associate director, upstream oil and gas, in the Oslo office of Boston
Consulting Group. You may contact him by email at holmas.havard@bcg.com.

Odd Arne Sjåtil is a managing director and partner in the firm’s Oslo office. You may contact him by
email at sjatil.oddarne@bcg.com.

Sylvain Santamarta is a managing director and partner in BCG’s Amsterdam office. You may contact
him by email at santamarta.sylvain@bcg.com.

Sverre Lindseth is a project leader in the firm’s Oslo office. You may contact him by email at
lindseth.sverre@bcg.com.

Peter Forbes is an associate director, digital energy, in BCG’s London office. You may contact him by
email at forbes.peter@bcg.com.

Pietro Romanin is a partner in the firm’s Milan office. You may contact him by email at
romanin.pietro@bcg.com.

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Boston Consulting Group | Creating Value with Digital Twins in Oil and Gas 7