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Data is the New Oil – Especially in Oil and Gas

If you do a Google search on the quote “Data is the New Oil,” you’ll find a host of attributions and 2,830,000 search results. Usually the quote is used to explain the increased (and untapped!) value of exploding “gushers” of personal and organizational information that can transform customer experiences and business processes. And ironically, the “new oil” quote is usually used to describe transformations in industries other than the massive one that is occurring in the oil and gas industry.

The reality is that there is no industry in which the quote “data is the new oil” is truer than in oil and gas. Central to surviving – and thriving – in this unstable era is reinventing an organization’s information strategy. As noted in Next Generation Information Management Helps Oil and Gas Adopt to the New Normal, “During the last few years, oil prices have been unstable, competitiveness has increased and massive IT budgets have all but disappeared. Oil and Gas companies found themselves locked in by their technology. They had already made seven to eight figure investments in information management software and services AND they still had to pay five to six figures in annual support.”

As industry information management veteran Neale Stidolph notes in Oil and Gas: The Move from Documents to Data, “The current oil & gas business environment is very challenging. It is tough enough finding and exploiting reserves, be it oil sands, fracking, high-pressure / high-temperature, deep water and often unstable geopolitics. Add to that the problems of huge swings in oil price, fast-rising costs and falling production volumes in mature provinces and you have a perfect storm.” 

There are also enormous opportunities in this instability. In Connected Barrels – Transforming oil and gas strategies with the Internet of Things, Deloitte offers this assessment:

“After years of high and rising oil prices led to a longstanding oil price of more than $100 per barrel, new extraction technologies have opened up fresh sources of supply that suggest a new price equilibrium of $20 to $30 less per barrel. This new normal of lower oil prices not only will lay bare inefficient oil and gas (O&G) companies but will push even the efficient ones to find ways to preserve their top and bottom lines. Luckily for the O&G industry, a new suite of technologies promises to help companies tackle these challenges.”

So what are the unique information management challenges facing oil and gas companies? Here are four.

“Oil and Gas” isn’t actually a single industry

For the sake of convenience, we usually apply the short-hand notation “the oil and gas industry” to describe what is not actually a single industry, but rather a mosaic of connected industries, each with their own set of priorities. For example, Deloitte notes that exploration and production companies sit on top of vast and expensive – and untapped – troves of exploration data. Their challenge is to aggregate this data in some sort of intelligent way in order to mine it with the goal of optimizing expensive and risky exploration initiatives. Transportation, pipeline and storage companies place a high value on information accessibility, availability and system monitoring; avoiding costly bottlenecks and shutdowns is a key strategic priority. Refiners and retailers are the closest to the ultimate end customers, and place high value on how information can be used to understand where new business opportunities exist.

If you add to this equation increasing source complexity, “oil and gas” includes everything from conventional onshore and shallow water drilling to deepwater wells to shale oil and gas to oil sands – you get a sense for the complexity of the oil and gas industry and the need for information management solutions that can serve the complex needs and requirements of all companies operating underneath this umbrella term.

The stakes in managing the information associated with physical assets are particularly high

One of the core issues for oil and gas companies – or for that matter any physical asset intensive industry — is managing the technical information associated with the vast array of physical equipment that is needed to make the business run. It is here that the physical world (which drives the Internet of Things) truly connects with the digital world (information and content assets).

Oil and gas companies refer to this “asset change management” and the information management solution set associated with it is called “Asset Lifecycle Information Management” or “Enterprise Asset Management.” Because the information intersection between the physical and digital worlds is: a) changing rapidly; b) directly tied to health and safety; c) critical to compliance; and d) critical to security in an age of natural disasters and terrorism, it is fraught with content management challenges. As the Deepwater Horizon disaster demonstrated, there is no industry in which the delivery of emergency information in real time is more important than oil and gas.

“Energy producers have precise needs when it comes to information management. Most important is the ability to manage information related to an asset such as wells/production sites, reports, inspection forms, leases, equipment inspections, etc. Additionally, the energy industry is highly regulated, which brings its own set of requirements when it comes to information management. Overall, the management of information needs to be conducted in a way that optimizes operations and mitigates risk around discovery and compliance.” (Next Generation Information Management Helps Oil and Gas Adopt to the New Normal)

The volume of data that must be managed (especially on the producing end) is massive and the potential rewards in successfully mining “dark data” are dramatic

According to Deloitte, “The Internet of Things (IoT), which basically integrates sensing, communications, and analytics capabilities, has been simmering for a while. But it is ready to boil over, as the core enabling technologies have improved to the point that its widespread adoption seems likely. The IoT’s promise lies not in helping O&G companies directly manage their existing assets, supply chains, or customer relationships—rather, IoT technology creates an entirely new asset: information about these elements of their businesses.” 

Deloitte further notes that the O&G industry’s digital maturity is among the lowest, at 4.68 on a scale of 1 to 10, with 1 being least mature and 10 being most mature, setting the stage for enormous competitive advantage for those who move quickly on technology adoption and innovation. Some estimates conclude that only one percent of the information being gathered by oil and gas companies is actually available to decision-makers.

The ability to manage and access information based on what it is – rather than where it is – becomes increasingly important

The information assets associated with oil and gas are uniquely varied in size, format, and complexity. Large project documents and drawings must continually be exchanged and updated. Furthermore, many of them still exist in paper. Oil and gas documents must be available to a host of process-specific applications, departments and personnel — ranging from accounting to HR to contract management to land lease and well file management systems.

All of this points to the need for an organization’s underlying content management strategy to 1) support seamless integration with multiple systems, 2) be easy to use for employees with wildly varying roles, 3) not interfere with day to day – and often mission critical – processes. This means that the defining characteristic of an information asset is not so much where it is stored, but rather what it is and whether it can be utilized in multiple processes.

Intelligent information management allows organizations to automate and streamline core business processes and mine data and documents for business insight and value. And nowhere is it truer that “data is the new oil” than in the oil and gas industry itself.