At the core of digitization is data along with collecting, storing and analyzing it. Even though the oil and gas sector has managed vast volumes of data over the years, it has yet to put everything in place to extract value from it.
Thierry Pilenko, executive chairman for TechnipFMC (NYSE: FTI), believes data and its challenges are both refreshing and hugely destabilizing. “One of the key elements is the data, and especially who owns and masters the data,” he said. “In our ministry, there is still a big debate about who owns the data, and I think as long as we have this debate it will be difficult, if not impossible, to implement some of the things we want to achieve with it.”
Apple was used as an example of a company that has ridden the data wave to massive success. However, Lorenzo Simonelli, chairman and CEO of Baker Hughes, a GE company (NYSE: BHGE), pointed out that it wasn’t always so. He recalled that in the early 1990s, there was a Business Brief front page article that reported the death of an American icon. That icon was Apple.
“Look at where they are today,” he said. “I think that what it shows is that there are going to be winners and losers. The various digitization strategies are all valid; it is a question of how we apply them across the ecosystem and work together to deploy them because we are going to have winners and losers in this game.
“There are going to be people that like to adapt, change, collaborate, and there are going to be others that don’t innovate and change,” Simonelli added. “Apple was very successful in changing and adapting, so I think we’re going to look at that as a case study. Clearly, there’s a lot on the data front; but clearly, it goes beyond the data. It’s the way in which we work together.”
A Lesson for Shale
When it comes to sharing and gaining value from data, Pilenko points to the U.S. unconventional area where data could be used better.
“It is the area where we have been accumulating vast amounts of data in a very short time. This data is hugely scattered because of the nature of the sector with smaller operators with a few wells at the time,” Pilenko said. “The approach is almost the traditional way the oil and gas sector started: brute force and a real fast-learning mechanical approach.
“There are areas where you can have all this data, and when you apply artificial intelligence, you can start dealing with the entire shale reservoir and not just as an individual object that you mechanically simulate,” he added. “The day that they are analyzing the data is going to be extremely destructive and could have a major impact on production and recovery.”
A Heritage of Data
Simonelli again delved into the history books for reference, pointing out that the phrase “digital oilfield” first entered the oil and gas lexicon in 1984.
“We have data; in fact, we have more data than any other industry, but we only use approximately 1% of that data to make decisions,” Simonelli said “It is because we need expertise, and we need to connect the dots along the actual value stream.”
He spoke about various stages of the industry’s recovery through the lower for longer cycle. He said that the industry has gone through cost reduction, restructuring, deselection, standardization and a shifting of the burden to the service companies and onto collaboration.
“Now, it is how do we take the inefficiency out across the whole value chain through data?
“If you look at the way in which we drill a well today it illustrates the point; multiple parties intersect but still do not look at the data together. Once you transition between the drilling, through completion and on to production, there is excessive downtime just because of the independent parties involved in that transaction,” Simonelli said.
“Once we start using the data within that ecosystem or value chain, we will drive an additional 50 to 60% reduction in the cost structure of our industry. That requires a different way of thinking and a mindset that is sustainable. We have done the easy part; the hard part is still to come. Do we have the willpower to get there?”