Big data needs big value to attract independents

Effective data management can mean big savings for operators, but less than a third of firms currently regard it as a priority, according to an independent report.

A recent study by GE and Accenture said only 31% of oil and gas companies regard big data as a top priority. This is on a par with the power generation sector but lower than in the aviation and wind power industries, which measure 61% and 45%, respectively.

Inventive new data management tools provided by the likes of Informatica, SAS, ESRI, Oracle and INT.com are providing more effective data recording and sharing, but these services can come with a steep price tag, a challenge given current low oil prices.

Data tools allow operators to identify unexploited oil wells and provide more control and less operational down time, but thus far the oil and gas majors have thus far been the main buyers of data management services.

The consolidation of results from an increasing range of data uses will demonstrate the value of this growing business area to smaller operators.

Upstream Intelligence has examined why the oil and gas sector has been slow on the big data uptake and why this should change in the coming years.

Source: Industrial Internet Insights Report, GE and Accenture, 2015. 

Field data challenge 

Data sharing can be difficult for offshore operators due to practical challenges in data access and mistrust of seasoned engineers towards new, disruptive technologies.

 “Several studies have indicated that only 5% of the real-time data from a modern offshore drill ship is sent to shore and used to help monitor complex wells,” said Jim Crompton, of Reflective Data Consulting. Crompton published the report Big Data and the Internet of Things Meet the Oil & Gas Industry.

Data collection has until recently been conducted manually, through spreadsheets and workbooks, rather than standardised across the business and requires efficient communication between in-office analysts and offshore field workers. 

In addition, much of the data does not provide value unless the appropriate systems are put in place, John Hedengren, Assistant Professor at Brigham Young University, said. 

“You need the intelligence to interpret the data so that someone, or a computer program, can use it in a way to deliver value”.

Cost scrutinized by oil slump

 The oil price drop has led operators to examine all of their business operations to ensure they are cost effective.

“It is easy to make a profit when oil prices are at $100 per barrel, but when it drops to $50 per barrel it is the companies who are innovative and concerned about the bottom line that will survive,” said Hedengren.

Companies must demonstrate the value of IT costs against other spending initiatives, Philippe Flichy, Senior Digital Oilfield Advisor at oil services firm Baker Hughes, said.

“The problem is understanding the value and [Return on Investment] of data as an asset and that is way more tricky,” he said.

“Business value is critical as budgets tighten, managers will ask what all this data is good for and you will have to come up with a good answer”, Crompton said in his report.

Data management can produce immediate benefits, according to Jeff Baker, IT applications manager at Rosetta Resources.

“Right now we are doing a lot of work on automating reporting duties and reducing the manual data collection. By doing this you can free up an entire department for a couple of hours a week. You have then already illustrated the cost savings and shown the business case to the company,” Baker said.

Independent firms, the next big market

A growing record of the savings from big data is being created, primarily by the largest operators.

"Shell and Chevron are generally regarded as ‎ leaders when it comes to adopting modern methods in preventative maintenance and reducing the amount of man power through automation", said Peter Smith, Region Leader for GE Oil and Gas's automation and optimisation portfolio.

Indeed, Chevron’s ‘i-field’ digital oil field has ‘delivered hundreds of millions in cost savings and improved output since 2002’, according to the company.

Shell has said its Smart Fields technology can “help increase the total amount of oil recovered from a field by 10% and gas by 5%”.

The large number of smaller oil and gas operators should provide incentive to data firms to target this market area, said Baker of Rosetta Resources’.

“Some of the service platforms initially went after the super majors and larger companies and rightfully so,” Baker said.

“Now that they have a larger footprint within these companies they will need to offer a slimmed down version to the smaller operators. They recognise that we may not have the budget of Shell or Chevron, but there is also only one Shell and one Chevron, and there are thousands of independents,” he said.

The costs of data management has already fallen sharply, said Baker Hughes’ Flichy.

“I really think the cost has already dropped down dramatically, the cost of a server is nothing compared to where it was a few years ago. So there will be a definite downward trend in cost”, he said.

“A lot of the service companies and new emerging companies are taking advantage of the fact that there is a drop in the oil price, so people will have to be more efficient in what they are doing, pushing them to utilize the data more effectively,” Flichy added.

“Once there are tailored oil and gas [data] platforms in the market it will change and we will see vast adoption,” he said.