Ecopetrol Group’s commitment to face the world’s great environmental challenges, with science, technology, and innovation as catalysts

Tuesday, December 14, 2021

Authors: Ernesto Gutierrez De Piñeres; Alexis Eduardo Ocampo; Andrea Del Pilar Tapias; Alicia Morales Rivadeneira; Maria Clara Otálvaro Rendón1

 

Abstract

 

As the energy transition accelerates worldwide, Colombia has increased its efforts to advance on the path to decarbonization. The country's ambition is to achieve a 51% reduction of CO2 equivalent emissions by 2030 as compared to a business-as-usual scenario and achieve netzero emissions by 2050 (Ecopetrol, 2021). Colombia emits around 290 MTnCO2e per year, and the energy and industrial sectors account for 34% of this amount. However, about 60% of emissions come from deforestation and other land-use changes (Climate Transparency, 2020).

 

Comprehensive solutions are thus required to mitigate this impact. The energy sector is key to achieve such goals and the most important companies hold the responsibility for making this happen. This is how Ecopetrol, the largest company in Colombia and one of the most important energy companies in America, has defined its goals and plans with the firm conviction of moving towards net zero emissions and becoming an example to be followed by similar organizations. The first firm step made by the company has been to publish its energy transition strategy, where technology, science and innovation are key drivers of this transformation. The current results are more than promising. Ecopetrol is now a referent in digital transformation and has engaged and ignited an energy innovation platform as part of its Colombian and international partners ecosystem.

 

Ecopetrol Group’s commitment to face the world’s great environmental challenges, and to an orderly and disciplined energy transition with Knowledge, Technology, and Innovation as catalysts

 

1.0 Introduction

 

Ecopetrol is one of the leading integrated oil and gas conglomerates in Latin America, responsible for around 70% of Colombian hydrocarbons production, participating in the upstream, midstream, downstream, power trading, and gas distribution business. In Ecopetrol we have an electric self-generation capacity of over 1,300 MW that became the largest selfgenerator with renewable energy in the country. Ecopetrol focuses on strategic basins in the American continent at the international level, with exploration and production activities in the U.S., Brazil, and Mexico.

 

As Colombia's largest company, we are committed to decarbonize our operations and hence contribute to the country's environmental goals. Also, we aspire to lead efforts for decarbonization and energy transition in Latin America. We firmly believe in innovation and its power to strengthen the path towards decarbonization and digitization of our operation with the prospect of improving our results.

 

Throughout the article, we will highlight how the goals we have set, demonstrate Ecopetrol Group's commitment to face the world's most significant environmental challenges and an orderly and disciplined energy transition using innovation and technology.

 

2.0 Facing the energy transition landscape with an innovation mindset

 

Knowledge, technology, and innovation have always played a preponderant role in achieving the strategic goals of the Ecopetrol Group, being levers, enablers, and catalysts of its objectives. At present day, science, technology, and innovation are key components to generate and capture value and at the center of the energy transition equation, enabling key pillars:

 

Increasing competitiveness to avoid stranded assets

 

To strengthen our resilience, we reduce costs, optimize core processes, and accelerate timeto-market of new opportunities. Since 2015, after the oil price crisis, we have saved 5.6 billion dollars through optimization of our revenues and operational and investment costs. In 2020, our total unitary cost decreased by 23% as compared to 2019.

 

Diversifying our portfolio without losing focus on oil and gas

 

Even though hydrocarbons will continue to be a reliable and affordable energy source for some time, Ecopetrol is committed to exploring low-emissions opportunities. In 2019, we inaugurated our first solar farm, Castilla, with a capacity of 21 MW. To date, it has allowed us to save 1.6 MUSD in energy costs and avoid 15.000 tonCO2e of emissions, generating sustainable and business impact.

 

The goal is to convert into a unique regional energy platform to strengthen our business, become more resilient to oil price fluctuations while generating sustainable value.

 

Accelerating decarbonization

 

According to the Paris Agreement, we have defined a clear path to contribute to the Sustainable Development Goals and the purpose of limiting global warming. Since 2010, we have reduced greenhouse gas emissions by 8.4 MtonCO2e. This is equivalent to the annual emissions of 1.7 million Colombians, in a country with a population close to 50 million.

 

We are part of the World Bank's initiative of Zero Routine Flaring by 2030 and the United Nations-led Climate and Clean Air Coalition. In this field, we have made significant progress, reducing routine flaring by 52% between 2017 and 2020. The definition of a program to reduce methane emissions in our operations is aligned with the Oil and Gas Methane Partnership 2.0 Framework. And most recently, we announced our goal to have net-zero carbon emissions by 2050.

 

TESG: catalyzing sustainability with science, technology and innovation

 

We firmly believe that technology, science, and innovation as a catalyst of sustainability. Therefore, we adopted a strategy that puts technology at the heart of the environmental, social, and governance dimensions by implementing innovative solutions to the challenges associated with our operations: the TESG (Technology, Environment, Social, and Governance) framework.

 

That is why we talk about TESG: Technology, Environment, Social, and Governance.

 

For instance, as part of our Methane Emissions Reduction Program, we are using the best technology and practices available, combining bottom-up and top-down approaches, using satellite and aerial images for a more agile and efficient detection of leaks. We have carried out the measurement on more than 20% of our assets and, last year alone, we closed almost 600 leaks. This year, in collaboration with the Canadian Government, we started an ambitious measurement campaign using infrared cameras.

 

These four pillars -competitiveness, diversification, decarbonization, and TESG- are triggered by fundamental capabilities such as knowledge, technology, and innovation; all of which are based on the further development of human talent at Ecopetrol. For this purpose, we will strengthen and intensify re-skilling and retooling programs, promoting competitiveness for the organization in different fields.

 

On the other hand, the rise of digital capabilities and transformation has also accelerated energy transition. At Ecopetrol we have been successfully implementing digital innovations to optimize operations and reduce our carbon footprint (section 3.0).

 

3.0 Digital transformation strategy

 

Since 2018, our digital transformation strategy has been essential to deploy innovation and technology capabilities at the service of corporate strategy. Agile frameworks and digital thinking have allowed us to build and manage a portfolio that captures value and imprints innovation in each process that we intervene. Therefore, we have developed and implemented digital vehicles for the creation and management of knowledge and innovation: Digital Agenda, Digital Factories, and Digital Innovation Studio.

 

Our Digital Transformation strategy consists of four pillars: Digital Agenda, Camp D, Smart Digital Operations, and the Human Firewall (Cybersecurity). During the implementation of these four pillars, we have developed what we called “the innovative digital DNA”.

 

During its first wave, the Digital Agenda consisted of 10 initial projects that created and consolidated the foundations for the development of digital capabilities throughout the value chain, including the corporate level, ensuring access, trust, and technological base.

 

Wave two, has had a much more strategic approach to generate value by developing proactive, agile, and flexible capabilities to answer to both corporate needs (competitiveness of the core business and the energy transition) and environmental challenges.

 

Innovative digital DNA

 

The commitment to the future invites the organization to reconfigure the present through innovation as one of the main enablers that leverages the sustainability strategy. In this sense, it became relevant to generate spaces for co-creation and the definition of innovation as a lever to strengthen our position as a leading company in the energy sector through a robust innovation management system.

 

Based on the premise of value creation, we have characterized the main innovative milestones achieved to date to illustrate what we mean by referring to Ecopetrol’s Innovative Digital DNA, using Jim Kalbach's “Four Zones of Innovation” definition.

 

The elastic supply chain: example of radical and disruptive innovation

 

These innovations have a radical impact on business, on how human beings act, think and feel. Additionally, they bring the company a different value proposition than what had previously been available.

 

1. Name of the implemented product: TRUE

 

Impact on business: This product changes drastically the visualization, management, and persistency of the volumetric information by enabling stakeholders to understand the current state of the supply chain of oil inventories and movements at any point in time. This also allows the Supply Chain Planning and Scheduling processes´ stakeholders to estimate daily and monthly balance of quantity and quality of crude oil and products. The commercial and financial stakeholders have access to timely, traceable, and reliable delivery of volumetric information from Ecopetrol incorporating the official information provided by transporters and third parties such as the National Hydrocarbon Agency or buyers.

 

Impact on technology: This product integrates the elastic computing capabilities of the cloud with the distribution and immutability of the information offered by Blockchain, allowing to know the status of inventories and movements of the supply chain at any time. It is disruptive because the supply chain has been modeled as a state machine that can expand or collapse easily and business rules associated to it are modeled and processed by machine learning algorithms. Additionally, it provides the basis for further developments that are in line with energy transition goals, for example, defining the shortest and most effective routes for transporting products or spotting nodes that generate low quality products or finding better energy optimization consumption through the chain.

 

Analytics for intelligent refining operations: example of adjacent innovation

 

These innovations consist of technological advancements that propel a product or service ahead of existing competitors.

 

1. Name of the product implemented: Gross Refining Margin Optimization.

 

Impact on business: This product has created a common language for all levels of the organization and improved the performance management of valuable products. The product allows to optimize the operation of the valuable products trains in the Barrancabermeja and Cartagena Refineries, capturing benefits associated with largescale, real-time coordination and optimization of multiple refinery units and aligning refinery economics with control of process units.

 

Impact on technology: This product is based on advanced analytics, and it allows the visualization of the main operational variables and their economic impact on the refining margin in real-time, integrating comprehensive analysis to assess the impact of operating movements on the Refining Margin.

 

4.0 Digital ecosystems and innovation

 

Our learnings after two years of digital-based innovation led us to define and build a national and international ecosystem that consist of allies in different fields of knowledge, which will fuel and help accelerate innovation at Ecopetrol.

 

We believe in the impact digital ecosystems and partnerships can bring to our organization and are currently promoting digital and technology entrepreneurship for the energy sector based on sustainability drivers as a competitive advantage for the company and our country.

 

The Digital Ecosystem strategy aims to allow Ecopetrol make its digital reinvention sustainable, through different digital allies. From 2019 to today, more than ten new digital collaboration and innovation alliances have been established to strengthen internal capabilities and position Ecopetrol as an actor in the Science Technology and Innovation ecosystem, , some examples of our ecosystem: Innpulsa, Plug and Play, Connect Bogotá, AtlantiConnect, C4IR.CO, Google, Microsoft, Universidad de los Andes, DARCY and GII.

 

Also, we are currently a key part of the Government's initiative known as CEMPRENDE, which facilitates the articulation between the academy, private and public sectors, and society to strengthen and stimulate the development of entrepreneurship and innovation in the country as an important driver for economic development.

 

Having the chance to work and tap into the full potential of growing ecosystem is pivotal to boost the impact in our core business, explore new opportunities within the energy transition space and contribute to the economic recovery of Colombia. It places us one step closer to making the impossible, possible.

 

We are convinced that by working jointly with the best, we can continue to make possible the impossible, for the benefit of the company, our stakeholders and Colombia. All this ecosystem we are building, will allow us to have a greater position in a national and international level, be part of the discussion around the development of innovation and energy transition and boost the role of the company as the engine of economic reactivation.

 

Some of the results under open innovation programs:

 

Innovate Generating Value: Open Innovation Contest

 

Innovate is an initiative operating since 2017, aligned with Ecopetrol's technological strategy. This contest challenges innovators, technology-based entrepreneurs and, in general, the country's science and technology ecosystem, to propose solutions for the energy industry.

 

Since its beginning, 196 proposals have been evaluated, coming from Companies (96), Universities (36), University-Business partnerships (61) and Technological Development Centers (5). Through a top expert evaluation, and using methodologies such hackathons and coworking groups, 34 projects have been awarded. For Ecopetrol, these 34 projects, have turned out into 32 Technology Prototypes; 3 of them are in patent application and 8 new technology-based companies have been created.

 

The fields of application range from core business needs to promoting science at all stakeholder levels. For example, for climate change and air quality, different solutions of national impact have been developed. The technology “Rotam Fuel” presents a device, based on Internet of the things, that allows the reduction of fuel consumption by 10% based on driving patterns and habits, and sending real-time feedback to drivers; technology developed by ROTAM Technologies Company. Other relevant solutions are: “10R”, a project by UDES University, which studies carbon footprints of industries and gathers potential forestry projects that act as CO2 sinks which have strong social values and require support. The product MOCAMI, which stands for “air quality monitoring for intelligent towns”, presents a low-cost group of IoT technologies that allows for monitoring and controlling air pollution in territories where common technologies are not available; innovation developed by EAN University.

 

Allocating technology in the communities where Ecopetrol operates is fundamental for Innovate. For example, in the Municipality of Puerto Wilches, were implemented three low cost water treatment plants, which benefit more than 1,500 students, developed by the Colombian tech-based company BPC. The mobile app "Medirural", by UDES university, was developed to provide the community with a solution to connect them with health experts, which has enabled the training of 22 youth health managers, within the framework of the COVID-19 Pandemic, to impact their community. In the field of new drilling operations, for example for the development of Pilot Projects for Comprehensive Research (PPI) of NonConventional Reservoirs, a state-of-the-art environmental mobile laboratory was developed to promote science appropriation in the communities and the application of science and technology to find solutions to local problems.

 

The above are only 5 technology solutions, out 32 initiatives applied at different business level within Ecopetrol. Innovate focuses on addressing industry problems using technology, innovation and most importantly talent from entrepreneurs, innovators and universities.

 

National Ecosystem: 100x100 program

 

Open innovation has been a pivotal vehicle to access solutions to internal challenges at different segments and levels of the business. 100x100 is a program, with open innovation at the core, developed two years ago: launching 100 challenges to be solved by one hundred national entrepreneurs.

 

The digital innovation studio, allow us to attract the best ideas based on fourth industrial revolution technologies. This program has received more than 200 applications and evaluated more than 140 startups from all over the country. Today, 11 of these startups are working with us, generating more than 65 new jobs in the pilot phase. Our aspiration is to beworking with 100 startups by 2022.

 

The national digital ecosystem we are building, seeks to strengthen and contribute to the economic reactivation, transferring technological knowledge and promoting the country's digital growth via open innovation as a competitive advantage for both Ecopetrol and Colombia.

 

While being exposed to different realities and markets, business units can access novel ideas that stray away from the “business as usual” category, tapping into new technologies and business models to solve internal and external customer needs.

 

Plug and play

 

At the international Ecosystem, Ecopetrol has been working with Plug and Play, a Silicon Valley corporate innovation platform. This has allowed us to orchestrate the connection to international high-tech ecosystems to accelerate digital transformation.

 

Plug and Play facilitates the access to a pool of global leaders and tech companies from Europe, Asia, LATAM, and the rest of the world, with a proven track record to allow the discovery and piloting of new technologies. Advances in artificial intelligence and machine learning algorithms are helping our teams to make data-driven decisions to mitigate risk, reduce costs, and maximize output. To the date, Ecopetrol has been exposed to over 109 startups having been able to execute a total of 10 deal review sessions that allow us to get a more granular and focus innovation initiatives.

 

We are currently developing pilots with different business units, assisted by the digital innovation study. Among others, we are testing acceleration of reservoir simulation and optimization of the field development plan, prediction of NPTs (nonproductive drilling times) in drilling operations, optimization of rig scheduling and enhanced oil recovery.

 

5.0 Uses cases of digital innovation

 

Disruptive innovation:

 

1. Name of initiative: Office Hotelling

 

Impact on business: Optimize the current operating models for assigning workspaces and scheduling slots within the framework of the new normal for the Ecopetrol Group.

Impact on technology: Implementation of an artificial intelligence model that allocates demanded bio-secure workplaces based on the users that will rotate in the following weeks.

 

Adjacent innovation:

 

It involves technological advancements that propel a product or service ahead of existing competitors.

 

1. Name of initiative: NPT (Non-Productive Drilling Times) In Pilot phase

 

Impact on business: Generation of prediction alerts in drilling activities when the probability of an event that could trigger non-productive times is increasing. Identify and verify the business value of stuck pipe predictive Machine Learning (ML) Agents for Ecopetrol by running a pilot on three live wells over a three-month period. NPT's have caused a significant economic impact on GPN. The possibility of identifying their occurrence in a preventive manner, based on available data (historical and real time, directional profiles, and hole conditions) using predictability, will allow mitigating their impact on drilling operations reducing unwanted costs.

 

Impact on technology: This product is innovative because it seeks to make decisions in advance through an analytical model.

 

6.0 Conclusions and next steps

 

This covid-19 crisis has been an opportunity to confirm our company's resilience levered by our workforce's capabilities and teamwork to overcome the crisis. It is not the first time we faced a crisis. In 2015 with the oil price crisis, we had to "fasten our seatbelt and pull the brakes," and we came out of it and learned a lot as an organization. In the current crisis, we are doing the same; with discipline and adapting to the new environment. Today, we feel the same need of remaining together, and we are convinced and confident that we can make it in an outstanding way.

 

In terms of innovation, we have realized the need to continue with the development of solutions and the promotion of innovative talent, that is why in the Ecopetrol Group we are creating a program based on mission-driven innovation. It consists of finding people who help us face 5 key missions for our future, these people are going to; work hand in hand with innovation leaders in Colombia and the world, solve strategic challenges of the organization in a mission of learning in action, live virtual and face-to-face learning experiences in different parts of the country and apply the latest trends and innovation tools such as Design Thinking, rapid prototyping, among many others.

 

Digital transformation has proven to have a key role in addressing the main challenges of today’s world and in pursuing Ecopetrol’s aim to become a multi-energy regional platform. The reinvention process has enabled the company to streamline processes, anticipate with innovative solutions, set an innovative mindset and above all ‘derobotize’ people. Acknowledging, the value of digital and innovation, Ecopetrol is making a reinforced bet, putting a spotlight on the role of science, technology and innovation (STI) in its 2021-2040 strategy, in order to approach energy transition challenges. This evolution attempt to foster access to knowledge; increase productivity, industrialization and competitive growth and to promote renewable energy technologies in order to respond to the dual challenge of growing while mitigating climate change.

 

This commitment is supported by a multiyear study held by McKinsey that found innovation to be the differentiator factor between race to the bottom companies and race to the top ones, specifically, a set of eight essential attributes that ignite performance (McKinsey, 2015) Similarly, by the recommendations of multilaterals such as UN (2013) and OECD (2021) which firmly believe networked innovation processes are catalyst platforms to openness, transparency, integration and better results.

 

Having this in mind, Ecopetrol is reformulating its STI strategy, in order to ensure its potential is harnessed, as the McKinsey study highlights, strategic and organizational factors are what separate successful big-company innovators from the rest of the field (2015), therefore Ecopetrol aspire to orchestrate, migrating from a separate model between Digital and Knowledge Development to an integrated STI function that provides a specific and unified value proposition that allows the decentralization of knowledge and the accelerated appropriation and adaptations of technology, enhancing technological value to the company.

 

Ensuring an integrated vision of the science (research and development), technology (digital and technological appropriation) and Innovation agendas, through an integrated portfolio that allows prioritizing opportunities and capital allocation, in order to tackle the energy transition challenges, is Ecopetrol's big bet today.

 

References:

 

 

Key words: Ecopetrol, Energy Transition, Innovation, Transformation

 

1About the authors: Ernesto Gutierrez De Piñeres - Digital Vice-President (Ecopetrol); Alexis Eduardo Ocampo - Digital Strategy Manager (Ecopetrol); Andrea Del Pilar Tapias - Digital Innovation Coordinator (Ecopetrol); Alicia Morales Rivadeneira - Digital Professional of Innovation Studio (Ecopetrol); Maria Clara Otalvaro Rendon - Digital Vice-President Trainee (Ecopetrol)

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