The objective of any operating company is to increase production and control costs. New digital tools are allowing companies like Occidental Petroleum Corp. (Oxy) to employ its IT operations to achieve these goals.

The digital implementation for Oxy was completed about two years ago. Not surprisingly, employees were not excited about the change, but once the system was in place, distrust turned to enthusiasm. The situation went from people complaining to IT, “Why is this happening to us?” to “We can’t operate without it.”

Effective transformation

“That is an amazing transition over a two-to-three-year period,” said Don Moore, vice president and chief information officer for Oxy, at Oracle’s fifth annual Oil and Gas Day at Openworld in San Francisco. “I was in Bahrain about this time last year, and the operations managers were talking about how quickly we brought the Bahraini operations up using all these tools and techniques. In fact, the Bahraini government sent letters of appreciation saying they couldn’t believe it went up in four or five months.”

Success was the result of the company leveraging the technology so business tools were aligned with operations to run the business and the major projects, he explained. “We could run all of our operations out of Houston. The technology could run anything in the world. It gives us a lot more transparency than we had in the past.”

A digital canopy is the placement of layers of wireless technology over a geographic area. (Image courtesy of Oxy)

When the company began building its IT infrastructure in 2002, it turned out to be the most important thing the company did, Moore said. “We said we’re going to build an infrastructure that doesn’t depend on whether we sell things, buy things, and/or what our joint venture structure looks like with other partners.”

Oxy’s goal was not only to create a centralized infrastructure but to operate using standardized project management and financial business software solutions (Oracle Out of the Box functionality).

“What we were trying to target was the tactical part of the oilfield where the rubber meets the road,” he said.

It became very clear years later how important it was to have that infrastructure in place for the digital oil field.

“Today there are two presidents of oil and gas in Oxy – international and domestic. Both of them feel like the number one thing they are concerned about is the ability to better manage projects. Just to give you a feel for this, there are 7,000 contracts we’re currently trying to deal with. There are 200,000 master items. Today, we have more than 50,000 projects of some sort.”

The primary goal was to find a way to get financial information to the operations people to help them make better decisions and better manage projects. “It has improved how we’re spending our money,” he said.

Before the implementation of this solution, divisions and countries could have their own system with little or no integration capacity back to headquarters. Once the plan to centralize the systems was approved, Oxy had to make software and technology decisions. That is when OneOXY was introduced. Integrating concepts

“One of the things we’ve been doing is trying to leverage information, tools, and our way of doing business to make sure we improve project management,” Moore said.

That impetus led the IT group to focus on improving operations in a wireless world. What was needed was a way to manage people, assets, cameras, safety, everything. “That’s when I thought of a digital canopy (the placement of wireless technology layers over a geographic area),” he said. “We went to the oil and gas ministry in Oman and explained it to them. The response was: ‘We don’t know what it is, but we’re in.’”

High sand dunes in Oman previously had complicated crew logistics. “The sand dunes were so high you had a hard time finding your way back,” Moore said. “We had 2,000 to 3,000 contractors to manage at the same time. What we did was erect our own towers to cover our operations with wireless communications.”

A joint venture between Oxy and the Bahraini government started implementing the same system in Bahrain in January and within four months had hooked all existing wells into the wireless system. “Implementation was easy,” Moore said. “They said it was the best experience they ever had.”

Since that time, all of Oxy’s general managers have asked for implementation, Moore said.

IT innovation improves profits

Bret Bolin, CEO of P2 Energy Solutions, a company that worked with Oxy and Oracle in implementing the infrastructure, said companies need this integration. “Companies want to be incredibly successful whether oil is at $120 per barrel, or $100, or $80, or $60. I think that’s driving how CSC, Oracle, we, and others look at developing the solutions that really align with those needs.”

At Oxy, P2’s Enterprise Upstream software is developed on an Oracle technology platform and seamlessly integrates Oracle eBusiness Suite. P2 was chosen because of its level of integration among land, production, accounting, and Oracle’s financial functions. Some of P2’s products include production management, land and concessions, partner balancing, revenue settlement, AFE, and joint venture accounting.

“There are operational challenges that we’re seeing in the way we execute. The way we have success in shale plays, for example, has created a whole different level of thoughtfulness,” Bolin explained. “Historically, drilling programs that had 10 or 50 or 100 wells now have 1,000, 2,000, or 3,000 wells.

“Lease management is more advanced, as are financial systems that help support the high-velocity work that is happening. The new types of solutions and programs, even the people we hire, are purely because of the game-changing events inside the dynamics of a heavy manufacturing approach toward gas production,” Bolin explained.

“Oxy is a great partner for P2 and Oracle. There are specific business issues around wanting to consolidate multiple instances of infrastructure. Oxy valued that underlying information and the ability to make operational decisions and investments that enable success at the completion, site, field levels, and even within the multidimensional level of operational performance. Once you have that level of information, it gives you the ability to merge your different tool sets,” Bolin said. “What Oxy has been able to do with these systems makes it one of our more innovative clients.”