So while the price of oil stumbles up to the 50-60 USD/BBL mark, people are talking a lot about ways to operate at lower break-even prices. Enter the “Digital Oilfield”, a growing campaign in oil&gas innovation circles that is promising to be a savior. At RigBasket, we just finished breaking down a fairly recent report from Accenture called the Digital Oilfield Outlook Report 2016 which explains the opportunity at hand. We recommend reading it.
To give you a quick summary of what Digital Oilfield is, RigBasket stringed together this post.
In the most general sense, Digital Oilfield involves implementing available computer software and electronic hardware to improve oilfield operations. The general theme centers around more productivity, more efficiency, and more tracking. Digital Oilfield is all about how we can use data, sensors, machine learning, and anything that performs better than a human in an intensely physical industry. Real-time monitoring, mobile technologies, virtual reality all play into that scope. Basically whatever California is doing with 3D printing, Fitbits, and Samsung Headgears…the oil&gas community is discussing whether there are potential applications.
At best, most technologies remain as potential implementations to help address some of the financial-driven problems we are facing.
The implementation may appear straight forward at first. When it comes to technology, oil &gas companies are masters of technology transfer. The oil&gas industry finds pre-existing technologies from the likes of NASA or Microsoft. Engineers then figure out how the technologies can apply to our two primary activities: digging holes, and breaking rock. Finally, the implementation follows.
So the process seems as simple as asking someone like a Google or another Silicon Valley company to fly down to Houston and solve the issue quickly. It seems like the perfect opportunity to swipe in, or swipe right. And when the general view is that oil companies can afford anything, what then prevents them from roll out these technologies immediately?
Crisis is a valid excuse, but let’s look at it further.
The problem isn’t the availability of the solution. The problem is the adoption. A part of the adoption problem stems from oilfield culture itself.
One of the big influencers of oil&gas culture is the demographics of the industry. Currently, the oil&gas industry faces an event referred to as the “Great Crew Change”. The Great Crew Change is a result of a series of events starting with the 1970s energy crises, when people like my father lined up at the pump for their daily 2 gallons. The local oil industry was left devastated, leading to low hiring in the 1980s. Then came the shale gas boom of the late 2000s, which lead to many young professionals joining the industry, like ourselves.
What we have now, is a large group of baby boomers who are retiring, and a millennial generation taking over operations. RigBasket sees it as the landline vs. smart phone culture essentially.
Another major cultural influence is a preference for brawn over brains in this industry. Trust us, we had to learn how to lift pipe as scrawny engineering graduates before we could use a calculator again years later. As it turned out, we solved more of our problems with hammers than with process redesign.
So factoring in the demographics and trying to brute-force everything, the Digital Oilfield seems to be a cultural conflict from the get go. We equate it to trying to teach your grandparents how to see the value of Uber & PayPal to get around, when they insist they are more comfortable calling a taxi and paying cash. You really wonder if you will ever see the day when they will tell you to get off Twitter and get on Snapchat.
Another major hurdle is figuring out what to do with Digital Oilfield itself. Corporations are currently not setup to bring in recent graduates to just work on innovation projects. They tend to train them towards being project managers for the organization. Unless an employee has the credentials to solve the immediate problem, many projects involve pulling members away from other teams, retraining programs, followed by long R&D cycles.
So while the Digital Oilfield agenda is upon us, traction of adopting existing technology may take a while. Realistically, yes at RigBasket we can build applications and clean data to join the club. However, we ask ourselves a lot about whether what we are building can solve immediate problems for oil&gas, and how can it be accessible to all energy professionals. Thus we are aspiring to create a new culture, not technology, that we refer to as the “Open Oilfield”. We may see the Open Oilfield as a reality during our lifetimes, but it’s a moon shot (maybe more).
Until the energy industry moves to open-sourcing industry problem solving, Digital Oilfield will be a steady in-house effort. Until then, we don’t expect Siri to drill on Mars any time soon.
We’ll fill you in more on the Open Oilfield concept in one of our next posts, but if you have any questions, feel free to write to us from our website www.rigbasket.com