June 30, 2017

Summoning the Demon

Recently, we published an article on the "AI Coworker". Thanks for all your views. We talked about the role that "Buddy" might play in operations to increase productivity in the field and decision support center analysts to make sense of all the data that is being generated, and get a jump on predictive decisions that could create more value out of your existing assets. It sounds like a great opportunity to integrate human experience with artificial intelligence, but there are a few challenges along the way that we will discuss in this article. Will artificial intelligence take over in a digital world putting humans to the side? Will "Buddy" be a valuable partner, or will AI be considered "our biggest existential threat" as the entrepreneur, Elon Musk, said as he compared the research under way equivalent to "summoning the demon."

Warnings about the potential impact of artificial intelligence have recently been discussed by prominent business and technology leaders. Some warn the technology will destroy jobs while others point to ways it will create new jobs. In December 2014, in an article for the BBC, Professor Stephen Hawking said, "the development of full artificial intelligence could spell the end of the human race." Hawking goes on to summarize that artificial intelligence "would take off on its own and re-design itself at an ever-increasing rate. Humans, who are limited by slow biological evolution, couldn't compete and would be superseded." 

Continue reading "Summoning the Demon" »

June 13, 2017

AI Coworker

With everyone talking about Big Data, Advanced Analytics and the Industrial Internet of Things, I have been trying to look beyond the hype, think about what's next and the adoption challenges all this brings. These new technologies are coming at a time when the oil and gas industry is trying to see if it is safe to lift their heads out of the bunker they have been in for the last several years due to low commodity prices. Some, especially those invested in unconventional plays in the Permian Basin, have already left the bunker and are charging ahead with lease acquisitions, mergers and new drilling programs. Oil production is going up, inventories are going up, more pipelines are getting built, oil field service rates are rising on higher demand, but their prices are staying down.

Others are more cautious and many are still trying to "fix" their asset portfolios, selling properties to repay debt, (many majors reducing downstream assets for a few examples), cutting capital budgets and projects from their annual plans, leaning on suppliers to keep prices low and some are even trimming staff a little more. Exploration is down and close attention to the operating budget is still essential.

But the technology advances are not waiting for commodity prices to rebound. The cry for digitization and new business models ring from consultants' speeches at every conference. Are we looking at these new technology advances in the right way? Are they just new and more capable tools or is there another way to think about adoption and transformation?

Continue reading "AI Coworker" »

June 2, 2017

Battle for the Digital Core

While no one is popping corks on the champagne yet, things are looking a little better in the oil patch these days. Oil prices have recovered to a range between the mid $40s to the low $50s. Drilling and production costs in some basins have fallen to the point where $50 oil can mean a positive cash flow again. The Permian Basin looks healthy with lease prices in the best trends near $60K per acre, and increased drilling activity has added hundreds of drill rigs to the fleet over the past few months. OPEC has announced a production cut of over a million barrels of oil per day and crude oil inventories have fallen a little. A few major capital projects have been approved including:

·         Chevron's Tengiz Future Growth Project (Caspian Basin)

·         Statoil's, Johan Sverdrup (Norwegian North Sea)

·         BP's Mad Dog 2 (Gulf of Mexico)

·         Eni's Zohr (offshore Egypt)

This appears to be a sign we have reached the bottom of the commodity cycle and can start planning for better times.

I am not brave enough to try and predict future oil or natural gas prices or even global demand for fossil fuels, but I do want to talk about some of the interesting new developments in the digitization world that apply to our industry. I want to introduce a concept I call "the battle for the digital core." If the industry is preparing for new investments, investing in data as an enterprise asset and integration capabilities to help each employee become a more productive and better data analyst can have profound, long-term returns.

Continue reading "Battle for the Digital Core" »

February 23, 2017

Operational Technology (OT) vs. Information Technology (IT)

One of the many themes coming out of new digital technologies is the concept of operations technology or OT. This theme is more than just a new suite of technologies, sensors and smart equipment, but a different paradigm coming more from the world of control systems and field automation rather than from corporate IT. How will these new developments and the new data coming from field instrumentation fit into the world of digital data defined by IT and structured data management practices?

Continue reading "Operational Technology (OT) vs. Information Technology (IT)" »

February 1, 2017

In Defense of Silos

The Oil and Gas industry is frequently criticized as being a slow adopter of new technology and of innovations proven in related industries. We are also criticized as an industry that works in our functional and geographic silos and are reluctant to share data. This laggard behavior (we don't like that term and suggest we are "fast-followers") and our parochial behavior (we don't like this term either and would replace it with the term "functional excellence") around data and technology often creates barriers to information sharing. Data integration and even information protection are often late add-ons creating a complex architecture behind our firewalls.

Continue reading "In Defense of Silos" »

January 12, 2017

The Digital Disruption of Corporate IT

Is corporate IT in jeopardy of digital disruption? What does that even mean? If you read the latest doomsday warnings in articles by management consultants and technology vendors, there are constant references to the impact of emerging digital technologies on mainstream business models. They coined the term "digital disruption" and use the case histories of Amazon®, Uber®, Airbnb®, Travelocity® and others to warn executives of traditional brick and mortar firms to watch their digital backs for unconventional competitors.

Continue reading "The Digital Disruption of Corporate IT" »

December 15, 2016

All I want for Christmas is a Data Driven Application

I have been a very good boy this year and hope you can give me a very special present - a Data Driven Application. Now, I know that most of the other geeks are asking for Apple watches, FitBits or self-driving cars, but for me it's a DDA all the way!

With all kidding aside, DDA appears to provide everything I've ever wanted an application to provide from: automating processes from multichannel data sources that combines operational and analytical capabilities, to an app that produces business value with unquestionable ROI, by continuously measuring outcomes and producing metrics including cost savings, which customers are the most profitable and how your business decisions are yielding results. And as the late night commercials say, "but wait, that's not all!" 

Continue reading "All I want for Christmas is a Data Driven Application" »

November 17, 2016

Interesting Things Happen at Intersections

The challenging part of driving doesn't happen on the long stretches of straight road you encounter on a highway or a country road. Of course you have to watch your speed, avoid distractions, slow moving trucks and passing vehicles, but the more interesting aspect of driving happens at intersections. There are traffic signals, stop signs, traffic, pedestrians... well, you get the point. Your attention must be at a higher level in order to proceed safely on your journey.

I want to expand on this driving metaphor for data management challenges for oil and gas. In my metaphor, the long straight road is our functionally driven work processes. For a drilling engineer, there are a number of potential tasks that range from designing a well, overseeing the construction of the well bore to evaluating previous well programs to learn and capture best practices. But all these tasks are still in the world of the drilling discipline - on the straight road - and all of the individuals, companies and data sources are speaking the same language and traveling in the same direction.

Continue reading "Interesting Things Happen at Intersections" »

October 25, 2016

Why Hire a Consultant?

Like many people, I have a suspicious nature about consultants. Unlike many people, I have these feelings even though I am one. To be clear however, I have only worked for a consultancy for a little over four years; the rest of my career was spent on the other side of the desk. So, even though I work as a consultant, why do I remain suspicious of them? Probably because of some encounters earlier in my career. There was the newly minted MBA from a major consulting firm with no previous work experience, not even a summer job, who came into my office (at the direction of corporate headquarters) and told me she would exponentially improve my department's efficiency. She only needed us to give her access to everyone for two weeks because she had a foolproof methodology. Or the consultancy who lands two people to provide executive advisory services and six months later you have an infestation. There's a reason for the saying that a consultant is someone who borrows your watch and then charges you to tell you the time.

Continue reading "Why Hire a Consultant?" »

October 18, 2016

Re-Imagining Data Management in Oil and Gas

Technology advances enable oil and gas companies the ability to unlock reserves at lower costs, at greater depths and in more remote locations, but currently the oil and natural gas industry is in one of the deepest downturns since the 1980's. Prices have dropped over 70% since mid-2014, resulting in the expected decline in investment and drilling activity. The industry has reached the bottom of the cycle with slowly increasing oil prices and a few more rigs going back to work, but this downturn has the characteristics for a "lower for much longer" scenario. With prices this low, the industry is taking a hard look at every aspect of their business including how they can use their collected data to improve operational efficiency and increase profitability.

Continue reading "Re-Imagining Data Management in Oil and Gas" »