Reynaldo Yruegas
Energy Lead, Public Sector
View from the Top

Technology Leader Offers a Lesson in Efficiency

Wed, 02/24/2016 - 16:44

Q: As a market leader in software solutions, what are the global trends that are influencing Microsoft’s position within the energy industry?

A: As we are all well aware, there is a range of shifts and forces that are driving the transformation of the oil and gas industry worldwide. There are several players competing in the emerging markets, such as China and India, countries that have increasing energy demands that must be fulfilled. Furthermore, there is an interesting shale gas development occurring in the US that is expected to reach US$52 billion by 2016, and given that the pricing in natural gas is at an all-time low, this is bound to drive efficiency and cost considerations across the industry. Another important factor to consider is the dynamism of the workforce in the energy industry, as we see workers moving from country to country and gaining expertise.

According to research, the average age of employees working in top energy companies is 46-49 years-old, and they have a high level of experience across the upstream, downstream, and midstream segments of the industry. It is a known fact that 40% of current workers will retire in the coming six years, and this will demand a major shift within the markets. In turn, millennials will constitute 75% of the American workforce by 2025. There is also an increasing awareness surrounding environmental responsibility, and the penalties in the US for oil spills can reach US$8,000 per barrel. Companies at the helm of the oil and gas industry are seeking intelligent systems, and this is partly due to the fact that the amount of connected devices is expected to grow to 26 billion by 2020. The forecast for smartphones, tablets, and PCs will reach US$7.3 billion during the same time period. There are mega trends that are bound to dominate in the coming decades across several markets and industries. It is well documented that by 2016, smartphones and tablets will be within the reach of a billion consumers worldwide, and the working population that is connected to the aforementioned devices will reach 1.3 billion. These figures reflect the significant opportunities that are present in connected devices and this is a market on which we plan to capitalize fully.

Q: What are the local drivers that are influencing the position of technology companies such as Microsoft within the energy industry, particularly after the enactment of the Energy Reform? A: The drop in oil prices has impacted Mexico’s economy in a significant way due to the fact that the country is very much dependent on its oil revenues. Microsoft aims to support PEMEX across all its divisions. Efficiency and competitiveness are crucial terms in the business lines of exploration, drilling, and production, so PEMEX must arm itself with new tools and strategies in order to achieve optimization. The Energy Reform mandates that PEMEX must always uphold international standards of efficiency, quality, and reliability. There is a series of virtues that PEMEX must bring to its core in its endeavor to become a productive enterprise of the State: agility, collaboration, productivity, and transparency. Microsoft will support PEMEX in several areas. Firstly, it will focus on operative efficiency and will help the parastatal improve all its operations, including HR, in order to increase productivity. We also support PEMEX in its process management and corporate responsibility strategies.

Q: PEMEX is shaping itself into a productive enterprise of the State. In turn, how are its investment decisions evolving to consider new technologies and software solutions?

A: Operational efficiency ranks highly on the list of priorities for PEMEX across its business divisions. Energy companies that wish to stand out in this competitive environment will take advantage of the synergies created by Big Data, Business Intelligence, and other trends such as cloud, social networks, and mobile technologies. We offer PEMEX predictive analytics that help it determine when to carry out preventive maintenance on specific machinery, and this enables the parastatal to continue operations and increase competitiveness. We can monitor all variables in real time, and this enables the utility to reduce costs of energy and resources in production sites. Microsoft offers solutions that promote interdisciplinary collaboration, such as Share Point and Office 365. This means that workers across PEMEX’s areas, such as corporate offices, oil platforms, and pipelines, can communicate in real time. Collaboration with our partners is crucial. Indeed, Microsoft can work with iPhone and Android, and it develops the necessary data transfer channels. Microsoft provides the infrastructure and helps its partners develop the solutions. We have worked with companies like Schlumberger, Honeywell, and Rockwell in developing the solutions and tailoring them to their needs.

Q: Could you describe the advantages of your Azure cloud service, and how similar technologies and services will improve the performance of energy players in Mexico?

A: The cloud encapsulates three main concepts: software as a service, infrastructure as a service, and lastly, platform as a service. There are three main players in the realm of the cloud –Microsoft, Amazon, and Google– and they have over 800,000 servers scattered across different points in the world. The cloud has been transformed from a mythical concept to one of the strongest trends present in all industries. The strategic focus of the cloud is to move to applications platforms, and in fact 80% of new apps in the coming five years will be distributed and deployed by the cloud. Companies are seeking efficiency and are downsizing in cost, and the cloud offers an ideal alternative where everything will be available, meaning thatno on-site servers will be required. Microsoft holds uncontested technology leadership in the energy industry, which is divided into four major areas: stakeholder management, connected operations, operations excellence, and modernization.

The cloud is one of the megatrends that can drastically reduce costs. If a company uses the cloud, it will cease to require a server, a room to maintain it, energy to run it, and people to operate it. All of this represents huge savings, and all the data and applications can be made available in the cloud. PEMEX has roughly 25 data centers scattered across Mexico, which implies a lot of servers and investment in their maintenance and operations. All the applications of these centers can be transferred to the cloud and this may represent a saving of 25-40%. Some information remains on the premises of PEMEX, since it is considered sensitive, and there are cybersecurity concerns. The cloud offers unparalleled efficiency; for instance, if PEMEX uses SCADA in a refinery and has a set of parameters that are sent to the cloud, the cloud, after months of data analysis, can identify and predict the behavior of the systems in the refinery. When something begins to malfunction in the refinery, it can be swiftly identified and treated.

Q: What services do you provide to CFE at the moment, and what new products are you open to offer in order to help it succeed in the new sectors it enters?

A: CFE is beginning to change its model and adopt new technologies and tools. Microsoft has begun taking small steps in pushing this parastatal in the right direction. CFE is a little behind PEMEX, and the workers union complicates matters even further when trying to offer aggressive solutions. At the moment, we are working with CFE’s online framework and we are unifying its communication channels. Once this is completed, we will be able to venture into SCADA and evaluate the way energy is being distributed and consumed in a given area. We have a pilot project with CFE where the information gathered by the metering systems in a given street can be pooled into a single device. This means CFE’s workers do not have to go from house to house checking the information manually. It is important for CFE to invest in technologies that optimize its processes, especially in the critical areas of commercialization and administration. It is important to note that we also work with a series of governmental entities such as CRE, CNH, and SEMARNAT. The latter is incredibly important, since the government wants to stay informed about the companies entering the market and ensure that they uphold environmental standards.

Q: How is cybersecurity taken into account by companies in Mexico, especially in the energy sector, and how are attitudes changing toward this concern?

A: The most experienced hackers in the world come from Asia, and they follow particular cyberattack models. For instance, if a user downloads a certain app or information to the PC, the device installs an agent that begins to analyze all the information and sends it to a cloud. This intelligent device can monitor 100 million computers and carry out analytics. This acquired knowledge enables the hackers to carry out fraud, from financial felonies to provoking the collapse of refineries, banks, or a series of industries. Microsoft provides defined and clear solutions. For example, Bit Locker encrypts information on the computer, and the well-known firewall monitors and detects external agents. The issue lies in the fact that no proper follow-up is carried out either by the companies or by the public sector.

Q: How would you describe the contribution Microsoft has made to the successful development of Mexico’s energy sector?

A: Our clear objective is to help all these companies achieve their business goals and become more efficient and transparent in the information they provide. With the market opening its doors, it is important for companies to be transparent when faced with all the regulatory entities in the industry. Another important aspect is for Microsoft to uphold green practices across its processes. Microsoft ultimately offers efficiency through technological solutions that make companies more competitive within the highly competitive energy industry.