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EnergySys - production allocation in the cloud

Thursday, January 17, 2013

Computer systems to manage production data, or 'production allocation', are much easier to work with if they are hosted in the cloud, reckons UK company EnergySys

UK company EnergySys has developed a cloud based system for oil and gas companies to manage their production data.

Production systems are very complex to administer and update, and need to be viewed by a number of different people in different locations, so putting them on the cloud makes a lot of sense, reckons managing director Peter Black.

He was speaking at the June 7th Finding Petroleum Aberdeen forum, 'IT infrastructure for the digital oilfield.'

The system is being used by 'hundreds' of subscribers in the UK, Houston and West Africa, he said.
'People are using this now to get the job done.'

One client, an independent oil and gas company, uses the system to manage production from a number of wells in West Africa, which were recently acquired from an oil major.

Instead of keeping the oil major's existing production allocation software, the company built a new solution in the cloud with EnergySys, loading all the historical data onto it.

'To be able to use the system remotely was a huge benefit,' Mr Black said. 'The owners who are not in Africa are able to share the data with partners much more effectively.'

Another client, a UK North Sea operator, uses the cloud system because it is much easier to make changes and allow partners to view the data, Dr Black said.

This client subsequently decided to build a supplementary system to manage trading, although did not plan to do that when it started using the software.

Production allocation

Production allocation is the task of figuring out how much of the produced fluids, commingled and flowing through pipes, plant or equipment, is coming from each well or is owned by each party involved in the asset.

The calculation involves knowledge of metering, chemistry, measurement methodology, statistics and mathematics.

The production allocation calculation at oil companies is continously changing, as companies buy and sell fields or blocks of leases, drill new fields, and tie back new wells or fields to existing facilities.

Companies often experiment with different injection techniques to improve production from older fields. Commercial rules change as new production with different product characteristics are added.

Every time one of these changes is made, the computer system needs to be updated.

What is the cloud?

Applications in the cloud have the same benefits as your cloud based e-mail - no significant up-front costs, no requirement for IT infrastructure beyond connectivity, and no software or hardware licensing worries.

Dr Black said that a cloud service should have three characteristics - be structured as a service, purchased on consumption, and with flexible computing power.

Structuring it as a service means that it is not a product, software, database, storage, or IT component. 'There's a real but subtle change in your relationship with vendors. Instead of buying a bag of bits and trying to meld them all together, you're buying a service,' he said.

Purchasing it on consumption means that you pay for it on a time basis. 'If someone comes and tries to sell you a data centre in a box for £10m, that's not cloud,' he said. You should be able to start and stop using it whenever you want.

Flexible computing power means that you can scale your computing power up or down according to your needs. For example, if you need a lot of extra computing power suddenly to do a big job at the end of the year.

This is something you can't do on your own computer systems, where you have to purchase all the computer power you use as hardware. 'An IT director who tries to build an internal cloud by buying double or treble the required capacity, leaving it idle for much of the time, would not be in his job for long,' he says.

Oil and gas data systems could move to cloud faster than many people expect, Dr Black said, comparing it to the TV repair men, who have disappeared faster than anyone would have expected, with the switch to flat screens. 'When change happens it is quite radical.'

Many people now believe that cloud based systems are 'inevitable,' he said.

Dr Black believes that there is no such thing as a private cloud or a hybrid cloud. If you own the IT servers yourself, it is not a cloud, he said. 'A system is either a cloud or it isn't.'

Can't run it in house

Customers regularly ask if they can have the EnergySys software running on their in-house servers, and we have to tell them that they can't, he said.

Even if the servers are being managed by EnergySys (but physically located in the client's premises) it won't work, because it means that it isn't possible to increase server power suddenly if required for complex transactions, or easily and cost-effectively upgrade the software, he said.

EnergySys supports a clear separation between the product and an individual customer's configuration, he said. 'We can upgrade the product for all customers simultaneously
All of those opportunities would be lost to us if it wasn't managed by us in the cloud.'

Across borders

Many companies have restrictions on production data passing across borders, he said.

When this happens, EnergySys isn't able to service the company unless it has a data centre within the country.

To date, it has avoided marketing its service to countries with these restrictions for this reason.

However it is always possible to open a new data centre; the company is currently opening an office in Houston and 'will almost certainly have a replicated centre there,' he said.

What system you need

Companies often start from the wrong place in the process of acquiring a production allocation system, and in their subsequent efforts to get it running, he said.

In many traditional projects, they start by asking someone to write down a 'wish list' of everything they think a 'perfect' system should do, which implies a bespoke development and possibly years to build, he said.

Such companies often allocate a large amount of capital budget to be spent on building the system at the outset, but no ongoing budget. This means that users spend as much money as they can initially, but have little money left to fix it when they find that the system is not what they want.

'Invariably you find, after 6 months, that a significant portion of what they do, they do in a different way, or what they thought they do, they don't. Their suppliers then spend another 18 months updating it,' he said.

And if people don't find they can do what they want on the system, they start using spreadsheets, he said.

Standards

It is usual for companies to ask for a 'standard' system, but the term 'standard' is mis-used, he said.

'Often software companies say they are offering a standard software product, but what they actually mean is a bag of different modules that they have used elsewhere and you can pay them to knit them together for you. That's not really standard product,' he said. 'Every time I see that, it's effectively a license for the vendor to print money.'

'We almost never see solutions built on standard product. And the evidence, in the form of the levels of effort required to implement these solutions, seems to be easy to disregard and people carry on down the same route.'

'At EnergySys we're building on a standard product, and any differences for each customer are just configuration.'

Security

EnergySys currently keeps its data secured in two different data centres, which protects it from hard drive damage or hacking.

It's strange, but probably understandable, that most people tend to ask more questions about EnergySys' security than they do about the security of their own internal systems, Dr Black said.

The company uses the Cloud Security Alliance Cloud Controls Matrix to guide decisions on security, he said. In that context, it's essential to adopt role-based access mechanisms for everyone accessing the system, whether that's external customers or internal staff, he said.

Associated Companies
» EnergySys

External Links
» view the video of Dr Black's talk

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