IT Revolution in Oil Industry: Challenges and Opportunities

Strategic Insights -

The upstream exploration and production sector in the oil industry has been reluctant to adopt new IT technologies, despite the pervasiveness of computers and IT processes. However, new innovative solutions, such as immersive 3D laboratories, are emerging to facilitate collaboration and data sharing among upstream specialists. Despite these advancements, critics argue that the industry is plagued by "IT anarchy," characterized by a lack of data standards and systems for data sharing.

Key Takeaways:

  • IT anarchy is a significant problem in the upstream exploration and production sector, with 80% of design changes on a new plant due to lack of information or incorrect information (Paul Pestille, Intergraph).
  • The use of corporate intranets or the internet for communication is widespread in the oil industry, but e-mails containing useful information are often locked away in individual files.
  • The lack of data standards and systems for data sharing results in "lost data," with specialists spending 60-80% of their time searching for data or arguing over which copy to believe (Andrew Lloyd, Oracle).
  • The costs of IT anarchy are substantial, with one operator spending $12m to ensure plant safety after it was found that technical drawings and data did not reflect the plant layout (Paul Pestille, Intergraph).
  • Cultural issues prevent some companies from recognizing the benefits of effective IT use, with a focus on speed and efficiency becoming increasingly important (Eric Leon, IBM).
  • Effective IT use could lead to significant cost savings, with a one-day or one-week reduction in the development process potentially resulting in "tremendous money to be made" (Eric Leon, IBM).
  • IT consultants emphasize the need for standardization and interoperability, with customization making it difficult to merge or migrate to new versions (Jim McLoughlin, J.D. Edwards Energy and Chemical Solutions).
  • Video-conference units are widely available in the industry, but technical data sharing remains a weak link, with many observing that until this problem is solved, advanced concepts like blending technical and commercial information will be difficult to implement (Andrew Lloyd, Oracle).

Statistics:

  • 80% of design changes on a new plant are due to lack of information or incorrect information (Paul Pestille, Intergraph).
  • 60-80% of specialists' time is spent searching for data or arguing over which copy to believe (Andrew Lloyd, Oracle).
  • 1,000 data sheets contained 85% inaccurate information (Paul Pestille, Intergraph).
  • $12m was spent by one operator to ensure plant safety after discovering that technical drawings and data did not reflect the plant layout (Paul Pestille, Intergraph).

Sources:

  • Financial Times Limited 1999. All Rights Reserved.
  • Oracle (Andrew Lloyd)
  • Intergraph (Paul Pestille)
  • IBM (Eric Leon)
  • J.D. Edwards Energy and Chemical Solutions (Jim McLoughlin)