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Getting DOF moving faster

Thursday, March 28, 2013

Our panel of digital oilfield experts, from the US, Europe, Singapore and Australia, came up with some great ideas about how to get digital oilfield technologies implemented faster, at our discussion session in Kuala Lumpur

Digital oilfield technology is supposed to be able to help produce oil and gas more cheaply and efficiently.

So if the oil price suddenly dropped to $10 a barrel, would that mean that the technology got implemented much faster, asked Julian Pickering from Digital Oilfield Solutions?

Or to put it another way, if people feel that digital oilfield technology are an option, as many oil people do now, because they think they can make good money without it, then will the technology ever be used?

'I'm a strong believer that the main reason we're holding back on DOF is not because of technology, it is because we have unsuccessfully articulated the business value behind the digital oilfield,' he said.

'If you can identify a business case for the adoption it would happen almost overnight. I want to move to a place where actually from a business point of view, we have to do it.
Andy Moore, IS subsurface manager with Santos, an oil and gas operator in Australia, said that the company has suddenly increased the number of well sit is drilling with its move to coal bed methane.

It was not possible to recruit many more the staff to manage the drilling, so the existing staff had to find ways to work smarter, which meant more use of technology. 'Working smarter is the only way that's going to happen,' he said.

'In that case you have no choice. You cannot run this the old way,' said Tony Edwards of StepChange Global 'That's what we call an enabling business case - it's not a business case about 2 per cent more production or 2 per cent more recovery, it's something you have to do.'

'That's where we see a business case come very quickly. If you can find the right driver, articulated in the right way you can make these things happen pretty rapidly.'Mr Edwards said that if he was advising a company how to keep afloat if the oil price suddenly dropped to $10, he would definitely not advise them to purchase new technology.

'It's happened to me twice in 2 companies. I had a phone call from someone in Trinidad saying, 'we're not going to hit our production target for the year, its July, can you help.''
With only August to December available to find ways to increase production, it would not be a good idea to install new data and information systems, and collaboration rooms, Mr Edwardssaid.

'So what do you do? You do the change management that you would have done if you were going to put in all the technology.'

'We found we got about two thirds of the value from doing that.'

'Organising people in way, getting them to talk to each other in the right way, getting the right relationship between offshore and onshore, co-ordinating the wells guys and the surface guys, adds a lot of value.'

Make more money

Eric Toogood of the Norwegian Petroleum Directorate said that companies should be able to make more money by using digital oilfield technology because they can increase production.

The higher the oil price, the bigger the benefits from getting the oil to market faster, he said. 'That represents a really enormous amount of money.'

Tony Edwards of StepChange global pointed that this incentive does not necessarily work, in a world where people do not individually get any benefit from improved production, but they do take a personal risk if they get blamed for a production decline.

So their personal motivations can be more about blocking implementation of new technology, rather than looking for ways to improve production.

Norwegian government

In Norway, the government wanted to encourage operators to provide oil and gas production data in a standard data format (PRODML). It had the option of forcing them to use the standard, but preferred not to do this, said Eric Toogood of Norwegian Petroleum Directorate.

The people who work with production data are often not the kind of people who go to conferences to talk about data standards, he said - you usually get subsurface people who work with seismic data and well logs coming to conferences.

Adopting the standard proved easy for companies starting new operations in Norway, but very hard for companies with older operations. 'That means someone has to go in and plug in the various components,' he said.

Some oil companies asked the NPD, why doesn't it force companies to use the standard. 'But it is up to the industry to fix themselves,' he said.

Now NPD is trying to encourage the industry to develop and use a standard method for seismic field data. 'We can always legislate - but we won't legislate unless we feel that's a sensible thing to do, because that's the wrong way,' he said.

'We've just taken a stepwise approach, we realise this is a complicated issue, we're working with Statoil on one particular field, doing this one step at a time. When this works we can go out and really show this in the other producing field.'

Get the pace right

Tony Edwards, StepChange Global said he thought that perhaps it is more important to set the pace right for implementing technology, rather than create strong reasons for implementing the technology.

'Typically we see a lot of people doing the change management too early,' he said.

'You need to do communications and get people involved, you need to do workshops.'

When you've built your collaboration room with lots of technology, you have to expect that the first thing that happens is that the people working in it do the same as they did the day before. 'And slowly you change what's going on,' he said.

You also need to be careful about setting a date when the project will be finished.

'We don't think it has an end, it carries on,' he said. 'We mentor, monitor, coach, facilitate, on a very long tail. We will still be coaching 18 months, 2 years or 3 years later.'

Bottom up

Perhaps oil companies are too obsessed with implementing new technologies from the top, said David Hattrick of Oracle.

In Japan, there is a culture where change percolates up from the bottom, he said.

Mr Hattrick said he thought that bottom up change can take just as long as top down change, but the effects are more permanent.

'I suspect digital oilfield would happen quicker if it was bottom up,' he said.

Improving collaboration

Another way digital oilfield tools can add value is if they can help people collaborate, and by collaborating more, people can do better work.

Surely if we get everybody talking together, you'll be able to fast track through the minds of many, down to the issues,' said Andy Moore, IS subsurface manager, Santos.

'We can get more people looking at the problem in different ways, to actually separate the wheat from the chaff very much more quickly and easily than working in silos.'

'That's what we learned when we did this in Trinidad,' said Tony Edwards of StepChange Global. 'You get the right people sitting next to each other and connect them to the right people in the field and you get a huge amount of learning.'

'The basic thing is we are human beings and we behave culturally,' said Eric Toogood of the Norwegian Petroleum Directorate.

'One of the reasons we do things reasonably well in Norway is that we are a small country and don't work in hierarchies.'

'That's always the problem in big organisations, it's getting the message across because there are so many people.'



Do it with less people

Another strategy to get digital oilfield technology implemented faster is to restructure it.

'What I find is, the bigger the [organisational] unit, the slower the change,' said John Redfern of Digital Earth.

So 'one of the things that can enable change a lot, is to have an industry which is more dynamic, has more independent profit centres, that's more fragmented,' he said.

You get something like this in Calgary.

'In a 4 block by 10 block radius you've got a thousand different oil companies and about 8,000 service companies, they slowly grow up, they get hived off, acquired,' he said.

'When you have that amount of fragmentation, people aren't sitting there with a big cushion underneath them, they are scraping every penny, they are starting new companies from scratch'.

Mr Redfern said that he is currently involved in a digital oilfield start-up business in Calgary, developing a system which runs on mobile phones, and he thinks Calgary is the best place to launch it because there are so many small companies.

'I'm trying to find something that's easy to adopt, low cost, and away you go,' he said.

'Scale is definitely a disadvantage in this game,' agreed Tony Edwards, StepChange Global. 'You see someone like Santos who started digital oilfield 6 years behind the big boys - they can potentially finish 6-10 years ahead of the big boys.'

'Getting to talk to David Knox (CEO of Santos) is relatively easy compared to getting to talk to the CEO of Exxon, Shell or BP,' he said.

Lose IT managers

Another way to get digital oilfield technology implemented faster is to encourage oil and gas companies to manage without internal IT departments, by putting as much as they are able to into the cloud.

'IT has been a 'cottage industry' - and it's sort of ridiculous, that enterprise by enterprise the wheel has been reinvented,' said Oracle's David Hattrick.

'Now Cloud has come along, I really question why a lot of things are really done in house anymore.'

'What are [internal IT staff] doing running email systems, keeping the ERP lights on. All this stuff can go out to the cloud.'

'My prediction is the shortest profession in history is going to be the internal IT guy. However, the oil and gas aware internal IM (information management) guy has a bright future - it's the I in IT that's the important bit.'



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