Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: Robert T. Quasius who wrote (46560)	6/17/1999 12:12:00 AM
From: Tomas	Respond to of 95453

IT has the potential to alter the way oil companies organise upstream exploration Bad energy pervades - Anarchic attitudes to IT are hampering the potential for common advance, writes Robert Corzine Information technology has the potential to alter the way oil companies organise and view their upstream exploration and production activities and assets. But few companies appear willing to embrace that potential, according to IT experts from outside the industry. The pervasiveness of computers and various IT processes in the upstream exploration and production sector would seem to contradict such a view. So too would the steady introduction of new IT-based systems to enhance the integration of previously compartmentalised upstream activities. New "immersive" three-dimensional laboratories, such as the "Decisionarium Lab" recently opened in Houston by Landmark Graphics, reflect the move towards an ever more IT-intensive environment. It includes a theatre-round screen and various interactive technologies that enable different upstream specialists to work together to debate drilling prospects, interpret geologic structures and try to pinpoint the likely characteristics of a reservoir while viewing computer-generated representations of the data in 3D. But critics say such advances - while obviously useful - can divert attention from the "IT anarchy" that all too often is the rule rather than the exception on the ground. One of the big problems facing explorers and development teams alike is the lack of data standards and systems for data sharing. Andrew Lloyd of Oracle, the US-based software provider, says the problem of so-called "lost data" can be particularly vexing. Specialists can spend "60 to 80 per cent of their time looking for data or arguing over which copy of the data you should believe," he says. Even defining how a part or process should be described or labelled can differ inside companies or between partners in a consortium, an increasingly common way in which big upstream projects are tackled. "Lost data" can take many forms. The use of corporate intranets or the internet for communication is commonplace in the oil world. But in most companies e-mails which might have useful information for a broader audience are usually locked away in an individual's files. The costs of IT anarchy are substantial, say experts. "Eighty per cent of design changes on a new plant are due to lack of information or the wrong information," says Paul Pestille of Intergraph, an IT consultancy that focuses on process industries, including oil and gas. Surveys suggest the industry's ability to manage data is at times questionable, even though it forms an increasingly large part of its cost base. In the process, industry information processing and handling can account for a big chunk of capital and operating expenses, according to Intergraph. Mr Pestille says there are too many examples of companies spending money unnecessarily. One operator was forced to spend $12m to ensure plant safety following a gas leak, after it was found that the technical drawings and data did not reflect the layout of the actual plant. Another operator found that 85 per cent of the information contained in more than 1,000 data sheets was inaccurate. Some observers believe cultural issues prevent some companies from recognising the benefits that could flow from more effective use of IT: "The industry grew by exploring for oil, finding it and moving it through the system," says Eric Leon, head of the chemical and petroleum industries group at IBM. "The more you moved through the system the better was the return." But in future the benefits may flow more to those who take decisions faster and who can speed up the time between finding oil and gas deposits and developing them: "It's uncanny how similar the oil exploration and pharmaceutical industries are," says Mr Leon. "If you can shorten the development process by two or three years, or even if you can only shorten it by a day or a week, there is tremendous money to be made." IT consultants say another weakness in the way oil companies use IT is their tendency to add to standard software: "Customisation makes it very difficult to merge or migrate to new versions," says Jim McLoughlin of J.D. Edwards Energy and Chemical Solutions, a Denver Colorado-based IT provider. Although knowledge-sharing has become an industry buzzword, the ability of specialists to share data remains a weak link in the information chain. Walk into almost any exploration and production department and there is likely to be a video-conference unit. Companies such as BP Amoco have made particularly heavy investments in such technology. But in most cases the people who have just held a video conference to share their experiences and views cannot share the technical data in a standard format acceptable to all. Some observers believe that until such problems are solved, there is little scope for implementing even more advanced concepts, such as blending the highly complex upstream technical data with more commercial information. The benefits of that should be substantial, given that many oil companies have reorganised their businesses around the asset group model. "Asset managers need to compare their assets on an apples with apples basis," says Mr Lloyd at Oracle. With asset swaps likely to play an increasingly important part of the industry's restructuring following the mega-mergers of the past year, the need to have absolute confidence in the value of an asset - whether buying or selling - will become even more important. Financial Times World Energy, June issue