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Expert panel - What is happening to data management in the downturn?

Saturday, August 13, 2016

Oil and gas data consultancy NDB put together a panel of experts in London to discuss what is currently going on with data management. In the downturn, does it become more important or less important?

Data management in the oil and gas industry - the practise of ensuring compliance, high quality and availability of business critical data - was enjoying greater recognition at the point when the oil price began to fall. How is this progress affected by the oil companies' response to the low oil price? What are the essential data activities for the oil companies?

Oil and gas data consultancy NDB put together a panel of data management experts, including people who had worked at for many years with many oil companies and service companies, to discuss the question. This article is based on the key points raised in the discussion. The full list of participants is shown below.

The oil companies response has to reduce contractors reduce staff and cancel or postpone projects. Business projects as well as any projects to address data. Typically the data models and plans that are created in projects that are stopped are not effectively archived. Meaning that the technical records are lost and will need to be recreated.

However, the low oil price could mean that oil companies take data management more seriously, because there might be mergers and acquisitions of companies coming up, and a company with better organised data might be more valuable to a buyer.

One of the barriers to better data comes from a lack of engagement from the business, at all levels. Perhaps the discipline and management teams have more time at the moment to examine their own practice and how it is recorded and managed (through data).

Divestment projects

The quality of the data impacts the value of the asset.

Divestment projects have been a major source of work for data management consultants over the past year and a half. It can involve a great deal of work, sometimes feeling like untangling a ball of wool.

There was one example of a UK company who wanted to sell a UK offshore asset, but their data was not in very good condition, which meant that the sale dropped through, the buyer didn't want to take on responsibility for the data.

Under UK law, companies are responsible for managing data about their operations forever, and the only way they can avoid this responsibility if by finding a buyer for the asset.

There is another example of a sale of some offshore oilfields, which was close to agreement. The sale included all of the seller's assets in and offshore UK.

A data management consultant, assisting with the transaction, found that the selling company had also done some onshore drilling, including on land which was later paved to make a road leading to the company headquarters, which the company had completely forgotten about.

The buying company would have been responsible for this forgotten onshore well - and liable if it had caused any problems.

Increase capability

Consultants - people who previously worked in the industry in full time positions but are now available for a daily rate - could find themselves in much bigger demand after the industry gets going.

'You can get consultant onboard quickly and cheaply,' one participant said. 'Consultants [will be] the main sources of expertise.'

However companies might be advised not to outsource too much. One participant recalled an example at a (name undisclosed) oil major that went too far with outsourcing - and found it did not have in-house personnel with the skills to detect when a vendor was changing the scope and extending deadline unnecessarily.

The phrase 'big crew change' has been used in the industry since around 2008, where companies believed they were about to lose a big chunk of their skilled staff to retirement, and wanted to implement systems to 'capture their knowledge'.

Looking back on those times, it seems that the industry did not really address the problem.

Perhaps it will be the same after the current downturn - the industry might lose may people and have new people entering it when the business picks up - but still without the habit of getting better at capturing knowledge.

SUBHEAD
Getting people to care

A fundamental problem with oil and gas data management is that staff and managers still don't care about it enough. Looking after it is nobody's job, and the people who benefit the most from it are the people who will need to use it in future, not the people who are using it at the moment.

Perhaps the only way to get people to care about data management is through company enforcement. The company needs to specify the minimum that needs to be kept in good order - for example say that the well logs, at least, must be well managed.

One issue is that oil companies often seem to treat the entire IT function as a commodity, something necessary but which adds no value, and so the emphasis is on doing it for less cost. This approach is perhaps not the best for oil and gas data management, because good data management can increase the company's competitive advantage.

Perhaps in low oil price era companies can be more persuaded of the value data management can give.

'Data management is a core competency of an oil company,' one participant said. 'That's the only way an oil company makes money. And yet senior managers see it as IT - something they want to do as cheaply as possible.'

Data management can help subsurface experts get a better understanding of their reservoirs, which becomes more critical in a low oil price era, where there is less room for error. One company plotted a fault 110m away from where it actually was, due to misaligning their subsurface data. This meant that they actually had a lot more oil than they thought when planning the development.

Medium sized companies

Data management is perhaps a bigger challenge for medium sized companies.

In smaller companies, there often just a few people doing technical work, which knows where everything is. In smaller companies, there are often individuals who will do all of the data management as well as many other roles. They are unlikely to be cut due to cost savings.

Larger companies, oil majors and NOCs, will typically have entire departments covering data management and spend all day worrying about it. Someone can move from Nigeria to Aberdeen, and they know where to find things. The data 'service' for a large company is a relatively low cost.

It is the medium sized companies who have problems as they are trying to achieve a certain maturity level and define a service for technical data. They are likely to abandon these efforts and revert back to a reliance on one or two individuals.

Panel participants

This article is based on a roundtable discussion forum hosted by New Digital Business at their office in London in early 2016

The participants were

Steve Hawtin, author of a book 'The Management of Exploration and Production Data' and formerly solution architect at Schlumberger;

Dave Cowen, senior consultant with New Digital Business with over 30 years working in petrotechnical computing, predominantly with oil majors.

Andy Thompson, a consultant, former senior account manager with Schlumberger Information Solutions;

Chris Eastment, a data management consultant, who spent 25 years in full time oil industry roles, including with Burlington Resources and Premier Oil.

The facilitator was Ed Evans, MD of New Digital Business.

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Comments from discussion facilitator Ed Evans of New Digital Business:

Should the recession persist or worsen then further options such as outsourcing, offshoring, remote data storage (cloud) and 'applications as a service' will become more common.

Decisions such as these require competency in E&P Data Management to sift through the hype, risks and potential benefits for such a service and to ensure that benefits are realised.

This leads nicely to the most important factor for the 'essentials' identified by the panel:

Retain or build data management competency within the organisation. It is critical to the E&P organisation that data management competent resources are working in your interest, ideally as employees.

Ensure that the formal organisation is in place and is supported by effective Governance.

Redraft your 'strategy and principles' around data management, in order that all activity is in support of the business purpose. This means that 'vanity projects' and 'cottage industries' can be cut.

Data relating to safety critical systems is managed as an essential to the business.

Activity (business cases) should be examined with more scrutiny. This is already happening and it is a good thing that the decision makers look more closely at data management business cases and the claimed costs/benefits. This is high quality business engagement.

In the UK the new Oil and Gas Authority (OGA) compliance rules will allow reduced obligations and costs.

SUBHEAD
What to stop

These are things that destroy value and increase the sense of division between DM/IT and the business.

Poorly conceived and poorly defined projects and activities with unrealistic expectations

Stop implementing software as 'the solution' without understanding consequences for the business - including user productivity, team productivity, workflows, project data and corporate asset data management, support and infrastructure costs

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» New Digital Business

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