Data as the New Oil: Parallels and Contrasts
Is data the new oil? The conclusion of a CERAWeek panel in Houston was, “Yes and no.”
The consensus of the panel, whose members represented major and independent operating companies, the technology sector, and a startup enabler, was that, like oil, data is a raw resource that involves a lot of energy and a lot of work to transform it into something of value. But, unlike oil, it is infinitely durable and reusable.
“Data is the fuel of the digital transformation, and companies are realizing it is a source of competitive advantage,” said Carolyn Seto, director of upstream technology and innovation for IHS Markit, in opening the discussion. She then turned to her five panelists, who were
- Kantara Kawamori, CEO, Chesapeake Energy
- Craig Hayman, CEO, British information-technology (IT) company AVEVA
- Hussein Shel, Azure Global Principal Program Manager, Microsoft
- Colette Cohen, CEO, The Oil and Gas Technology Centre
- Dave Mabee, Global Innovation Leader, ConocoPhillips
Over the next hour, the group discussed the analogy of data to oil, how best to use and share data, and why the next revolution in the energy industry must be cultural.
Data and Oil—Where the Comparison Starts and Stops
Clive Humbly, the UK mathematician who is widely credited with coining the phrase “data is the new oil” in 2006, said of data, “It’s valuable, but, if unrefined, it cannot really be used.” He highlighted the fact that, although inherently valuable, data needs processing, just as oil needs refining before its true value can be unlocked. CERAWeek panelists agreed and also agreed that data needs to flow through the organization—and in some cases through the industry—to be valuable.
The consensus of the panel was that the most fundamental difference between oil and data is that oil is a finite commodity while data is infinitely durable and reusable. This could help explain why the oil and gas industry is among the last to adopt digitalization and why so many within it are reticent to share data. For oil and gas companies, every step in the value chain represents an opportunity to gain or lose competitive advantage based on a finite commodity. Data is not scarce, but the tendency has been to hoard it as if it were.
“We must be careful,” Cohen said. “Oil is elitist in how it is traded, its cost, and what it enables. We must keep data from becoming like that. Data is reusable and can be enhanced in its reuse in a way that oil cannot. Keeping data in its natural, open state vs. siloed and owned, gives more companies, including the smaller and younger ones, a greater chance of success. Don’t think of data like oil—as a commodity. Think of it as a tool, an enabler that makes everything better,” she said.
Mabee agreed. “Looking at data as oil may be like the tail wagging the dog. For ConocoPhillips, the dog is the making of value through our assets. Data and analytics are in service of creating value assets. Thinking of data as the next oil may lead to focusing on doing things for their own sake rather than creating value,” he said.
Failing Fast and Being Safe
Data is the fuel of the digital transformation. New technologies are creating more cost-effective ways to collect, transmit, and store it. The potential to harness and apply data to save time and drive profitable activity in the industry cannot be overestimated, but the need to balance speed with safety is also great.
ConocoPhillips now characterizes data as an enterprise asset within the company and is using it to keep up with the pace of change by opening silos between assets and functions, creating agile operations, and failing fast safely.
Mabee cited a revelatory trip to Silicon Valley. “Our industry has a reputation for being slow, and I was feeling bad about it, so I went to the valley and talked to the head of Google self-driving cars,” Mabee said.
“They have the technology, but they’re concerned about safety and liability. When real safety is in front of them, they slow down. We’re dealing with pressure, temperature, things that burn, and we really take care of our people,” he said.
“We used to spend more time cleaning up and throwing away data than we did looking at it and figuring out how to use it, because we couldn’t handle that much. Now, with the Internet of things, we’re getting so much more data, so much less expensively,” he continued, explaining that front-end engineering design and process simulation were completely disconnected from conceptual design before scrum teams integrated them.
Mabee also expressed his belief that agile operations and safety are mutually compatible. “We use agile environments to do very fast experiments in work flow and in piloting concepts such as job preparation, shutdown trials, and major installations. At the same time, industry safety statistics have improved ten-fold over the last 10 years,” he said.
“This revolution, or evolution, allows us to fail fast safely in ways we haven’t felt comfortable doing before. We need agile operations to give back time, but we will never put people at risk in safety situations,” Mabee said. He pointed to innovations such as digital twins that are helping companies transform the art of the possible into reality without having any people on the ground.
Sharing, Partnering, and Advancing
All panelists agreed that sharing data and partnering within and across organizations and industries are critical to converting data to bottomline value. All also agreed that the legacy culture of the oil and gas industry is a barrier to sharing.
“We look at what we do as a competitive advantage, and we have a long legacy of doing things based on experience and intuition,” Kawamori said. “Pivoting to a data-driven culture is hard enough. Now we’re trying to change the mindset from competing to partnering.”
Shel added, “We have learned from the development of unconventional assets about the necessity of changing the IT landscape and the underlying systems and process to fit the manufacturing model.”
“How do you become more nimble, to see every well not as a special project, but as a group of wells, a single project, a pad, that is moving at a much faster pace than traditionally? Data integration, curation, consumption, storage; getting to hyper scale with the cloud; making data presentable, then applying analytics—no one can do this by themselves,” he said.
“Data sharing is important,” Kawamori added. “The context of what is around it is equally important. We should get to the point of sharing more data, but we are all looking for competitive advantage.
“Common knowledge is that current shale economics don’t work very well. Data is emerging showing that the amount of cash this industry has burned is not sustainable and is not good for the economy in the long term. And, it’s not good for our business in the long term. We all want to be capital positive, to generate value for our shareholders, employees, and countries. If we all knew where we were drilling, what we were drilling, and how to do it more efficiently and profitably, we all would win.” Kawamori offered the idea of sharing subsurface data and sharing anything possible to make employees and processes safer.
Numerous initiatives and ideas were mentioned by various panelists.
- Microsoft and ConocoPhillips are among 97 members of the Open Subsurface Data Universe (OSDU) forum, which is focused on developing a standard data platform that will bring together exploration, development, and wells data to create an open, standards-based ecosystem.
- The first UK Oil and Gas National Data Repository (NDR) for petroleum-related information, scheduled for launch this year, will house and publish the collection of UK petroleum-related information, such as well, geophysical, field, and infrastructure data, to help unlock the UK Continental Shelf’s remaining resources.
- Canada’s national data repository shares volumes of E&P-associated data with organizations that produce across the country.
- Microsoft is working with Equinor on data made public from certain use cases to determine how to use that data and provide use cases to other strategic partners and then build analytics.
The consensus across the panel was that oil and gas IT infrastructure and culture need to be overhauled to unlock the power of data. The oil and gas IT infrastructure was described as the most archaic of all industries, in need of digital transformation and modernization to make it usable for the people who work with it every day. Attitudes need to be changed by helping legacy engineers and geoscientists see that, rather than discounting their expertise, data will enable them to identify the 80% of their work that can be carried out rapidly and focus on the 20% that requires more energy and concentration.
Hayman made an analogy with kindergarten. “We learn on the first day to share our toys and be nice. The technology to enable sharing of information [toys] is there. Cheap access to power computing and algorithms are available. What we need is a cultural shift,” he said. The vision for the OSDU offers a peak into how the oil and gas industry may use data going forward. Suppliers will compete with each other to provide the best applications and services using data from an open, standards-based ecosystem. Customers then will be able to select best-of-breed services and further differentiate themselves by developing proprietary applications on top of the SDU data platform. The competitive advantage will come not from the data itself, but from how it is used.
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05 April 2019
05 April 2019