Core Laboratories has turned ‘disappointment’ (see last month’s Oil IT Journal) into $21 million cash by divesting its Reservoir Technologies Division (RTD) to Paradigm. Core’s RTD provides seismic data processing and depth imaging services to the upstream oil industry. The acquisition bolsters Paradigm’s offering in geoscience technology and geophysical services.
Demshur
Core president and CEO Dave Demshur said, ‘We selected Paradigm as the new owner of RTD because of its commitment to the seismic data analysis business. Paradigm will provide the Division’s customers and employees with technological infrastructure and business focus.’
Synergy
Core Lab’s Reservoir Technology Division has many years of experience and market leadership in both land and marine time and depth processing throughout the United States, Canada and Mexico. Paradigm will immediately gain strong synergies in its service capabilities from the transaction, which will complement its extensive integrated product portfolio of processing, imaging and reservoir characterization software.
Weiss
Paradigm CEO Eldad Weiss said, ‘This acquisition demonstrates our commitment to setting a new standard for the highest quality service and deliverables to our clients. We are confident the combined experience, relationships, compute power and technical expertise of the Paradigm and RTD services groups will make us the provider of choice for subsurface and reservoir imaging solutions.’
Liabilities
The transaction includes ‘certain assets and assumed liabilities’ in Calgary and Houston and a business entity in Mexico. The assets and business generated approximately $24 million in revenue for Core in 2003. Core received approximately $18 million in cash at closing which will be used by Core to pay down debt, continue its Stock Repurchase Program or fund potential future acquisitions.
Charges
Core will record charges of approximately $6 million for the write-off of goodwill and approximately $2 million for fixed asset impairment associated with the transaction. Core will also record expenses for ‘severance and other related costs’ for the discontinued operations as they are incurred.
Statoil has awarded Roxar a two-year, $14 million contract extension for permanent downhole monitoring systems (PDMS) in the North Sea. The instrumentation provides critical information relating to downhole pressure and temperature, enabling Statoil to improve reservoir management and production.
Hviding
Gunnar Hviding, MD of Roxar’s Flow Measurement business said, ‘This extension recognizes the role downhole instrumentation and associated data acquisition and management plays in improving oil and gas recovery. Roxar has proven its ability to maintain the highest product standards and deliver a reliable high-performance solution for reservoir management.’
Framework
Under the framework agreement, Roxar provides project planning, installation and maintenance services to help Statoil maximize its investment in downhole instrumentation. Roxar has held an agreement to be Statoil’s primary PDMS vendor in designated North Sea fields since 1987. For more on Roxar’s strategy and products see our interview with Roxar president and CEO Sandy Esslemont on page 3 of this issue.
As a foretaste of next month’s report on the 2004 conference of American Association of Petroleum Geologists (AAPG), I bring you the headlines from the plenary session and reflect on some geological and existential issues raised. But first a confession, a pet dislike and embarrassment if you like, concerning the nature of geological discourse. This comes from the observation that geologists’ talks too often follow a set piece along the lines of ‘before I came along, nobody understood a thing about this prospect—then I introduced the notion of [insert Pet Theory X here], we drilled the well and produced a zillion barrels of oil’.
Dumber?
But not only were folks dumber in the past—listening to some speakers, you’d think that they are dumber today too. That industry has lost something (here reference is frequently made to those darn computers, ‘Nintendo geology’ etc.). That we need to return to a heyday of geological enlightenment, to get back to the rocks, re-discover Pet Theory X or whatever.
Bias?
Now these observations cause me concern for three reasons. First there is the sheer improbability of the repeated ‘dumb, enlightened, dumb’ cycle. Second, I think we have a slight bias in our observation, you don’t hear many talks on ‘how we tested my great theory and it proved wrong’. And third, such geological ‘tilting at the windmill’ makes me worry about some of my own editorials. Intimations of old fart-dom inevitably arise.
‘Dry hole’ Downey
It was therefore with some interest that I attended the AAPG Forum on ‘Lessons Learned from Failures’. An introduction from Bob Downey (‘Dry Hole’ Downey to his friends!) promised something different but in fact, Bob Sneider told of, not failures, but two massive successes. The first, a billion barrel West African condensate discovery was found after Downey and his colleagues reevaluated an exploration well deemed as having made a non commercial gas discovery. Re-evaluating the logs, tweaking the Archie M&N values and looking carefully at shows in the mud pits led to a second well that tested at 12,000 bbl per day.
Elmworth field
You would have thought that a 5,000 square kilometer field with 60 wells drilled through the reservoir would be hard to miss, but that is exactly what happened in Sneider’s case history. The Elmworth field in Western Canada, discovered in 1974 is 10TCF gas field with an unusual, hydrodynamic updip trapping mechanism. Sneider’s company, along with Canadian Hunter made the find in a ‘systematic search for bypassed pay’.
Sonneberg
Sneider bemoaned the fact that some of his younger colleagues refuse to look at older data. This complaint found an echo in AAPG president Steve Sonneberg’s plenary address on the decline of professionalism in our industry. This is due to a move to a ‘short term, get rich quick attitude’. Some companies ‘have relegated geosciences to second or third class status’. Sonneberg wonders if recent reserve write downs are ‘perhaps related to ethical problems’. Sonneberg advocates the adherence to codes of conduct and mentoring of younger colleagues. Or as Crosby Stills Nash and Young put it (sometime before the Elmworth discovery!), ‘Teach, your children well!’
Mentoring
While individuals should try to keep up with the latest developments in technology, companies should support training initiatives. Today there is a lack of recognition of educational achievement and a lack of mentoring—and the industry is getting worse. There is a ‘gradual erosion of professionalism in our world today’. On the topic of ethics, Sonneberg cited a French proverb—that ‘there is no pillow so soft as a clear conscience’. He showed a graphic that put ethics as the central building block of the professional pyramid.
Déjà vu?
Ethics is a popular topic for AAPG presidents. Exactly two years ago, AAPG Robbie Gries made a heartfelt plea for greater enforcement of the AAPG’s Code of Ethics (see Oil ITJ Vol. 7 N°4). In fact Gries suggested that the AAPG should either enforce its code, or abandon it completely. At the 2003 AAPG, I asked Gries whether her suggestion had been acted on. She intimated that the subject was still a matter of debate. It was therefore something of a surprise to hear Sonneberg on essentially the same subject, with no reference to Gries’ previous entreaty.
Motherhood, apple pie
The bottom line here is that ‘ethics’ is a motherhood and apple pie of an issue. It is easier to entreat about than to act. Not that I am actually advocating action—not in the rather narrow context of ‘professional conduct’. This is an essentially pocket-book oriented debate where the object of the exercise is to stop one geologist cheating another out of his or her royalty check. I would be in favor of a broader look at industry ethics—at the way certain exploration permits are obtained from dodgy third world governments.
Global Witness
If you are seriously interested in ‘ethics’ then I would recommend reading a recent report from the ginger group Global Witness. The report, ‘A Time for Transparency—coming clean on oil, mining and gas revenues’ does a good job of showing for instance how up to 25% of some countries’ oil revenue goes AWOL, ending up in Swiss bank accounts. But what distinguishes the Global Witness report is that it advocates, not nebulous ‘ethics’, but practical ‘disclosure’. If I said, ‘transparency is the new ethics’ would someone put me up for Private Eye?
OITJ—Tell us about Roxar and the new deal with Statoil.
Esslemont—Roxar is structured into two divisions—software solutions (headed up by Mark Bashforth) and flow measurement (Gunnar Hviding). The Frame agreement with Statoil concerns the flow measurement division—for provision of downhole monitoring. 80% of our downhole business is in Norway. We are also working with BP, Hydro and Statoil and are expanding into eastern hemisphere markets.
Oil ITJ—What about North America?
Esslemont—The US is a different kind of marketplace—there is still some skepticism of high tech downhole solutions and Roxar’s products have something of a ‘Rolls Royce’ perception. A typical specification for a downhole temperature gauge for Statoil might involve 1/10th psi accuracy—with a measurement every second. US focus is more ‘fit for purpose’.
OITJ—How is data acquired from such devices? Is it all fiber?
Esslemont—No, Statoil have proved very supportive of our next generation technology with the Frame agreement as an example. This calls for the development of an integrated downhole network using proprietary Silicon on Insulator (SOI) technology from Honeywell. This lets electronics work upwards of 225°C. A lot of money was spent to develop the system for a limited number of high temperature fields. Today’s downhole electrics are reliable, actually more so than fiber—previously considered a prerequisite for high temperature operations. Our integrated data network (IDN) is a step change over current solutions—and will evolve into a true downhole instrument network. Today’s intelligent wells are monitored and controlled using a bunch of wires and hydraulic lines. IDN will perform the same monitoring and control function on a single wire.
OITJ—At last year’s SPE ACTE there was a lot of talk about smart wells and the ‘e-field’. Is Roxar supplying smart well technology to Statoil?
Esslemont—No. Although Statoil is a big sensor client, Roxar is not a completion company.
OITJ—What is your take on the smart well movement? At the SPE we heard some reticence as to over-equipping wells. There was a comment from one operator about not wanting ‘jewelry’ downhole.
Esslemont—Technology is actually getting more and more robust—even in everyday life. Consider the automobile. These used to be simple—today they are full of control systems—airbags, ABS and cruise controls that adjust your speed to the car in front.
OITJ—Downhole jewelry is here to stay?
Esslemont—More and more instrumentation is moving downhole but much of today’s engineering quick wins are on equipping sub sea completions at the sea bed. Today’s wells cost millions to drill and complete—but without proper instrumentation, you don’t know what’s going on in your well. In a multi-well cluster, the traditional way of investigating a rising water cut is to shut in wells one by one for observation. In some cases, this has taken so long that gas wells died before the investigation was complete. Multiphase meters give advanced warning of encroachment, allowing for remedial action—such as choking back production—in time to save the well. Multi-phase metering at the well head is insurance—and can save the cost of a well.
OITJ—What about the software side of the business? Are you moving into the real time ‘sim-opt’ business, linking flow data with the reservoir model?
Esslemont—We are a product company, not a service company like Schlumberger. Our IDN network will provide a cable to the surface allowing for a variety of measurements and control of downhole devices. Our field data acquisition and management system (DACQUS) lets you remotely view and interrogate devices—even perform a simple well test or PVT analysis. Current technology offers what-if type analysis—allowing for multiple realizations of what would happen if a well was choked back etc. Ultimately we will be able to close the loop and use the reservoir model to drive downhole actuators in real time control. Currently it is more of a piece meal offering. Ultimately this will form part of the downhole ‘factory’—with across the board integration from flow metering to 4D seismic monitoring.
OITJ—Is the IDN network standards based?
Esslemont—Yes. IDN leverages the intelligent well interface standard (IWIS)—an open protocol for subsea and downhole control supported by major operators and service companies. Our DACQUS data harvester and analyzer will roll-in geology and production data and services—moving towards the ‘e-field’. But we don’t want to lose focus on selling our discrete products for integration with third party environments.
OITJ—Where does your RMS modeling product fit into the picture?
Esslemont—RMS has evolved from 3D modeling to reservoir management—particularly now that a simulator module is embedded into the RMS workflow. Operators want an integrated workflow not five separate products. Our modeling and simulation solution is the best integrated package in town. We have our work cut out marketing this—especially to the US independent sector. We want to move away from the ‘expert user’ reputation—and we want all to benefit from the new user friendliness of the product. We had a great success with Statoil—they did a year of analysis of all available packages—and RMS came out ahead. It also models very large reservoirs.
OITJ —How big is this business?
Esslemont—Roxar generated $85 million revenues in 2003. Roughly a third from software and two thirds from metering/monitoring. We spend around $10 million per year on R&D and this has made us a market leader in multiphase, wet gas metering. This is typically deployed at the sea bed—but companies’ interest in the ‘e-field’ is making folks look at putting the technology downhole. This is now possible thanks to our IDN. Over the next few years, reservoir monitoring will move from offshore to universal deployment. By then multiphase meter costs will have dropped to around $50k per device—and it will be economical to deploy them all wells. Another significant development will come about when multiphase meters are approved for fiscal transfer and allocation.
In a recent study preformed by Schlumberger for Australia-based Origin Energy, Linux blew the pants off comparable mid-range workstation configurations running GeoFrame—Schlumberger’s flagship interpretation suite. Origin Energy previously ran GeoFrame on Sun Microsystems’ hardware and Solaris. Origin Energy decided to upgrade its hardware and undertook a benchmarking study comparing its existing setup with new hardware and operating system offerings.
GeoFrame
The benchmark tested the new Linux-based release of GeoFrame running in three client-server modes: Solaris client and server, Solaris client with Linux/Intel server and a ‘homogeneous’ system of a PC client running Linux and an Oracle server also running Linux. Tested workflows included seismic interpretation with IESX, GeoViz visualization, geological applications and data management.
Stable and fast
The new PC Linux version of GeoFrame proved stable and fast, ‘clearly outperforming the existing Solaris network and meeting the criteria for adoption’. The best performance with the hardware tested was for the Linux/Linux configuration of client/Oracle server.
Taylor
Summarizing the results, Origin chief geophysicist Randall Taylor said, ‘That Linux combination clearly outperformed Origin’s existing setup. The improved performance of GeoViz on a Linux workstation enables the application to be more effectively used in everyday interpretation.’
Four times faster
Many operations were three to four times faster than the current setup, some up to seven times faster. Gridding and contouring in was almost three times faster when compared to a Sun Blade 1000. Operations that were impossible in 3D, due to previous graphics refresh speeds, became instantaneous, allowing interpreters to use 3D visualization and interpretation in everyday workflows. Following the benchmark study, Origin Energy will be implementing GeoFrame on Linux ‘real soon now’.
OpenSpirit Corp. (OSC) is to take over development and maintenance of Earth Decision Sciences’ GoCad/Open Spirit adaptor. Both companies will be marketing the adaptor. Earth Decision Sciences’ (EDS) GoCad is a flagship application for the Open Spirit framework and has long been used to demonstrate interoperability with OpenSpirit enabled data stores including OpenWorks, GeoFrame, Finder and SMT’s Kingdom Suite.
Piette
OSC president Dan Piette said, ‘This agreement strengthens our long-standing partnership with EDS, GoCad users will benefit from present and future functionality and performance that OpenSpirit offers.’
Dulac
EDS CEO Jean-Claude Dulac added, ‘Our core strength is building decision support solutions for our upstream customers. As a pioneer in the Open Spirit world, we realize that Open Spirit ensures that our solution retains state of the art interoperability with other environments.’
Core strengths
OSC anticipates similar agreements with other vendor partners. Piette continued, ‘This allows each company to focus on its core strengths. We welcome similar arrangements with other vendor partners.’
The latest release of UK-based Exprodat’s NitroView extension for ESRI’s Arc Internet Map Server (ArcIMS) offers enhanced, browser-based mapping functionality.
Smith
Exprodat Director Gareth Smith said, ‘NitroView 4.3 development was driven by feedback from our early adopters, including ConocoPhillips, Kerr-McGee and BG. We’ve added end-user functionality and expanded the range of administration options to provide an even more compelling web GIS experience. We are now actively working with clients to integrate NitroView with third-party applications like Landmark’s TeamWorkspace portal solution, further enhancing the value of both products.’
GIS toolkit
NitroView’s GIS toolkit includes scaled hardcopy, user-defined labeling, layer creation, map preferences, and downloading of attribute results. An ArcGIS 8.x extension supports ArcIMS-based map publishing in .axl format, layer grouping, metadata access and stored queries. A NitroView map can be created on the fly based on the results of a query.
Mature
Smith concluded, ‘NitroView is a mature, highly functional option for any company working with or thinking of using ArcIMS to share data.’ NitroView requires ArcIMS v4.x, and IE 5.5 or above, supporting both ImageService and ArcMapService ArcIMS deployments.
Houston-based Energy Graphics has released a new version of its Intellex Exploration System for oil and gas exploration data and mapping. The new PC-based version includes the company’s proprietary Gulf of Mexico data, and provides functions for data management, mapping, and reporting.
Upgrade
Existing Intellex clients will have the option of upgrading from the current Unix version to the new version which includes an updated version of the company’s Intellex Report tool. The user interface has been redesigned to suit the Windows environment. New software capabilities include exporting of shape files and workstation files, and access to the Energy Graphics new logs database.
3D
Intellex Report now features a well log database and can display 3D lease block data including well bore tracks derived from a directional survey database.
Geophysical processing specialist Veritas DGC is to deploy a high end network system from Milpitas-based Force10 Networks. Veritas will install a Force10 E1200 series network of switches and routers to support its geophysical data processing centers in Houston, London and Singapore.
Gaskell
Veritas’ global network manager Phil Gaskell explained, ‘Our success is determined by the pace at which we introduce technological improvements. Force10’s E-Series provides the resiliency and scalability that brings predictable performance and flexibility to our network.’
Gartner
Gartner researcher Todd Hanson added, ‘The exploration vertical is an early adopter of next-generation networking technologies. 10 Gigabit Ethernet has proven its value in research and academia, enterprise deployment will follow soon.’
Scalable
Force10’s E1200 scales to 336 Gigabit Ethernet or twenty-eight 10 Gigabit Ethernet ports per chassis. Distributed hardware and modular software deliver line-rate throughput across all ports regardless of traffic conditions. The E-Series offers system-based security to protect Veritas’ clusters from outside attacks seeking to disable the networking infrastructure.
Two projects from the Calgary-based Public Petroleum Data Model Association are taking shape - PPDM ‘Lite’ and an embryonic taxonomy initiative. PPDM Lite—supported by PetroCanada, Anadarko, Nexen and ESRI—has just released its first simplified, spatially-enabled data model for wells. The Lite data model also supports PPDM’s latest metadata schema. Test population of the Lite data model from PPDM V3.7 is a straightforward, rapid process. The Lite data model is currently being extended to seismic data.
Taxonomy
PPDM is inviting interested organizations to sign up for its new Taxonomy and Meta Data (TMD) initiative. TMD sets out to provide support for text-based, unstructured information within the PPDM data model. The initiative will leverage work done on XML-based information exchange by the World Wide Web Consortium (W3C).
Sarbanes-Oxley
PPDM believes that integration of structured, unstructured and semi-structured information is critical to the efficient work processes that are mandated by the 2002 Sarbanes-Oxley act.
Nork Hydro and UK-based image processing specialists Foster Findlay Associates (FFA) are to collaborate on the development of a new tool for image-based seismic interpretation.
Exclusive
The companies have signed an R&D agreement to create ‘a world leading seismic volume interpretation tool’ for Norsk Hydro’s exclusive use, based on FFA’s state of the art 3D Image Processing and Analysis technology.
SEA 3D
The new tool will build on and extend, FFA’s SEA 3D volume interpretation package into the field of automatic recognition of geological elements in seismic. Focus will be on ‘innovative concepts for attribute generation, attribute analysis and visualization.’ The research aims at giving Hydro new 3D seismic interpretation capability which will confer a ‘powerful competitive advantage’.
Stuart Ferguson, now CTO with Weatherford International, started work at BP in 1987. He noted the oil industry’s ‘aging issue’, ‘Two-thirds of our oil comes from mature fields that produce more water than hydrocarbons. In the next ten years, we will produce ten times more water. Fields today are ten times smaller than they were ten years ago, and they are drained using fewer wells. Consolidation, and cost-cutting have not got our industry where it needs to be. We do not have a reserves problem, but in the next five years, the problem will become one of revenues. We need technology to boost productivity, increase recovery and drive down costs.’
Enemy
Ten years ago, Ferguson was the ‘enemy’ of digital energy: ‘I had access to all of BP’s source code, and I was king. I never documented anything I did, and only I was able to use the programs.’ Ferguson said the five key focus areas for computer programs in the upstream oil and gas industry are: knowledge management, business efficiency, characterization and visualization, process automation, and production optimization.
Mentoring
Another facet of the ‘aging’ process is the fact that, ‘Fifty percent of the human years of experience in the industry will be leaving in the next five years. We need to figure out how to transfer that knowledge and experience to others without transferring prejudices. Mentoring may be even more important than knowledge management. Knowledge management cannot tell you what’s important and what’s not. It cannot tell you how to apply the knowledge.’ That being said, Ferguson emphasized that ‘the online world is a remarkable place. The www.spe.org is a great resource; I use the online e-library every day.’
Production
Historically, characterization and visualization have been focused mostly on the subsurface domain. ‘The production arena has been poorly characterized. The industry needs low-cost instrumentation that you can afford to implement in the field. The problem of squeezing more oil and gas out of a field has become more important, so we will likely see a growth in virtual instruments.’
Integration
‘Integration across disciplines is still something we struggle with. The wellhead choke is like a Chinese wall in this industry. Single-well optimization is only part of the story; we need to optimize the whole network to maximize the hydrocarbons coming through and to de-bottleneck old facilities with water-handling constraints.’ Ferguson prefers ‘right-time’ over real-time, ‘Real-time is important in many applications, such as controlling equivalent circulating densities (ECD) while drilling, but a lot of wasted effort can be avoided if we consider how often we need to perform a certain task.’
E-Field
Today’s hot digital energy topic is the e-field, the smart field, the Field of the Future, whichever you wish to call it. ‘The scope is enormous. And it’s always two years away. Well, bloody well get on with it, then! We need to have banks of passion and drive. I hope that this is the last Digital Energy Conference we ever have. Digital needs to become a part of the fabric of our business.’
Occidental
Ron Hinn, Knowledge Management Lead at Occidental, described his company’s Communities of Practice (COPs) as ‘evolving.’ ‘We wanted them to be a benefit, not a burden,’ he said. The budget for KM at Oxy includes four people: two full-time support personnel for the two COPs, plus Hinn and an administrative support person. ‘We have a very parochial organization with a lot of silos. To share information without going through the hierarchy is a challenge.’ One key to the success of the online COPs is the peer reviews, which are cataloged – providing a record of verification that builds trust. Quick wins are critical and Oxy is aligning its KM efforts with PetroSkills’ ‘competency maps’, which have four levels of mastery per skill, and anywhere from 58 to 134 skills per discipline, depending on the job. This integration will be completed by the end of 2004. A questioner asked, ‘If I share what I know, my value decreases. How do you deal with that?’ Hinn replied that there is a range of skills in knowledge sharing built into the learning program, and senior managers hold employees accountable for sharing.
Anadarko
Bill Liddell, supervisor of operations technology at Anadarko, described his company’s virtual file room. A study found that staff members spent 80% of their time searching for and manipulating data, wasting more than a million hours per year. ‘We have about 800 engineers and G&G people, so if we could make just a 10% improvement in their use of time, it would be the equivalent of adding 80 more people to the staff,’ Liddell said. The goal was to provide storage and retrieval of data at the desktop within 15 seconds. The virtual file room is enabled by tagging documents with end-user developed categories. A student was tasked with assigning a proper title, date and tags to some 50,000 files. The system will be expanded to offshore and international locations.
Kerr-McGee
Steve Miller, director of global information management at Kerr-McGee, describes his goal as, ‘Easy-to-use, quick access to research web sites to share ideas and tips. Integration with e-mail is important because that’s where a lot of work gets done.’ Kerr-McGee’s E&P Forum was built from Open Text’s Livelink, with a customized user interface. Users can browse categories and subscribe to a topic. Whenever there is an update, they will receive a link to the discussion via e-mail. So far there are 200 subscribers with 13 discussion forums. ‘It’s best to get things into the system fast so searches will get hits - incentives are needed,’ Miller said. ‘The system is self-service and is used by all levels of the organization over a distributed architecture with servers all over the world.’
Shell
Ed Dubnick, knowledge manager at Shell, and Kathleen Honeycutt from the American Productivity and Quality Center (APQC), did a tag-team presentation on how to assess your company’s progress on the KM continuum using a 33-question survey developed by APQC. According to Dubnick, ‘We know what KM is and how it fits in our organization, but we don’t spend the time learning about it. There’s no ownership yet. Committees have been formed, but there is low awareness and low activity. We are still trying to find senior-level management ownership.’ The APQC survey gave Shell, ‘a composite prescription to revitalize, rethink and get adequately funded and resourced.’
Marathon
For Tim Tipton, technical services VP with Marathon, ‘Management of knowledge or data is a formidable task. The real value is to transfer knowledge to applied technology, which starts with a compelling need or opportunity.’ Keys to success include creativity and culture, time and temperament. ‘The volume of data generated by a single individual is staggering—data is getting more complex. We need to enhance access and utilization of the data.’ Marathon’s focus is to integrate data across disciplines through visualization. ‘Data analysis is where the rubber meets the road. Our goal should be to be more right and less wrong. The more we use error bars around our data sets, the more precise our solutions will be.’ Marathon uses cross-functional workspaces to improve communication. Oil industry information spans many scales—from scanning electron microscopy of cores through well logs to 3D seismic. ‘The key to the future is to integrate all these data so that the solutions will become much more rigorous and consistent.’
Selling short?
‘You need the right people and the right processes to foster creative moments’. Management focus used to be more on the longer-term as opposed to the current ‘quarterly report’. Today, ‘We live in an age of early adopters and fast followers—and we are selling our own technical personnel short. We are relying on others’ creativity and our own agility. Opportunity is driving innovation—and these challenges will continue. Integration will remain the key, with knowledge management and collaboration as the drivers’.
‘Our industry is terrible at managing projects. 95% are late or over budget. We need a combination of project management, IT and people to squeeze more performance from existing technologies, and to rationalize investments made during the boom.’ Pradeep Anand, President, Silicus Technologies.
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‘Only the IT industry uses more computing power than we do. We may have a ‘good ole boy’ reputation, but we are highly innovative.’ Tim Tipton, VP Technology Services, Marathon Oil.
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‘Anarchy struck with the introduction of e-mail.’ Con Goedman, Head E&P Business Information, Shell International E&P.
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‘Change is a painful process we have to go through. You can’t wave a wand and say, ‘Thou shalt collaborate’.’ Linda Brisbay, Senior IT Specialist, Marathon Oil.
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‘A core team keeps the momentum going. They’ve got to be passionate and know how to compromise. If management’s key performance indicators include knowledge sharing, you get much better support. The time spent on business unit work and communities of practice needs to be balanced, and that’s hard to do. Our own experience with communities of practice has been a very positive one, but it takes a lot of care and feeding.’ George Laguros, Core Team Leader, Marathon Oil.
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‘You can buy technology all day long, but the art is in making the tool invisible.’ Tiffany Tyler, Senior Technology Strategist, Anadarko Petroleum..
IHS Energy has announced the appointment of Ron Mobed as its fifth president since the company was acquired in 1998. Mobed was previously with Schlumberger.
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In a single week last month, Electronic Data Systems Corp. signed 13 contracts with the energy industry—a total of over $235 million.
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John Anderson, Jose Guzman, Richard Footitt and Suvimol Maingarm have joined C&C Reservoirs’ geoscience team.
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Aspen Technology has appointed Irwin Weiss as Chief Information Officer. Weiss was previously with Akamai Technologies.
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Speaking to analysts, Schlumberger CEO Andrew Gould forecast that accelerating oil demand in China and the US will sustain robust E&P activity worldwide.
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Mercury Computer Systems has acquired 3D visualization specialists TGS Group in an $18.5 million cash and paper deal.
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A Federal judge has ruled that part of LizardTech’s image compression patent is invalid. The ruling clears ER Mapper of patent infringement allegations dating back to 1999.
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Divestco reported revenues for the year ended December 31, 2003 at $15 million—up from $5 million in 2002.
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Gores Technology Group has acquired web-developers Proxicom from Dimension Data Holdings. Proximcom’s products are deployed on ChevronTexaco’s website.
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The 2004 AAPG salary survey conducted by Tulsa-based MLA Resources showed no increases in overall salaries—and small decreases in some experience ranges. The survey reflected ‘a lack of hiring and some downsizing by majors last year’. MLAR’s Mike Ayling described the trend as ‘alarming, indicative of the boom-and-bust hiring practices of the past decade’.
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Imation Corp. has announced a road map to multi-terabyte capacity storage for its Tera Ångstrom tape cartridge.
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Infield Systems has announced a new report on ‘Deep and ultra-deepwater Oil and gas markets— 2004/08’.
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Saudi Aramco president Abdallah Jum’ah and Olivier Appert, president of the French Petroleum Institute (IFP) have signed a heads of agreement covering a joint R&D, training and technology transfer program.
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Calgary-based WellPoint Systems has acquired EnCompass Solutions in a paper and royalty deal.
Open Text Corp. and Houston-based Frontline Group are working together on an Enterprise Content Management (ECM) solution customized to the upstream oil and gas vertical. The solution will be built around Open Text’s flagship Livelink document management suite.
Collaboration
Livelink’s collaboration tools, document, workflow and content management will be offered with The Frontline Group’s process and change management consulting services. Frontline’s solution will offer new ways to link globally dispersed teams of people involved in oil exploration, and will provide a single place for collaboration, information sharing and project document maintenance.
Brooker
Frontline president Mark Brooker said, ‘Effective collaboration and information sharing result in decisions. Exploration teams from joint venture partner companies all have to work closely together. A single, project-based system lets everyone access and manage information, reducing cycle times and improving decision making.’
Baraiolo
Open Text VP Mike Barailol added, ‘The energy sector offers a great opportunity to extend Livelink’s capabilities as we’ve done in pharmaceuticals, financial services, government and other markets.’ The upstream customization will be followed by solutions targeting other sectors of the energy business.
Occidental Petroleum has deployed a 25-node cluster of 2-way HP Itanium 2 servers for reservoir simulation in its Qatar operations. Oxy was previously using Schlumberger’s Eclipse reservoir simulation software in a ‘proprietary RISC-based environment’. The company deemed that additional processing capacity was required to support higher model resolution and ‘greater predictive accuracy’.
Testing
Preliminary test work was conducted at the SIS Competency Center in Abingdon, U.K., followed by on-site performance testing at Occidental headquarters in Elk Hills, California. The solution offered faster simulation runs, improved scalability and reduced costs. Simulation results from the new system were said to ‘reduce reservoir uncertainty’.
Moore
Don Moore, Oxy VP and CIO said, ‘Eclipse Parallel optimized for Itanium 2 processors and Linux-based clusters sped up our reservoir simulations for multi-million cell reservoir models tenfold while reducing costs 4-5 times over traditional methods.’
ExxonMobil (Exxon) has just published its annual report for 2003 and it makes for interesting reading— particularly in the context of the return on investment debate. Up in the front of the report is something of a boast: a comparison of Exxon’s return on capital employed (ROCE) with a peer group consisting of BP, Shell and ChevronTexaco. In 2003, Exxon turned in a healthy 21% ROCE against 15% for the peers. Over the last five years, average ROCE for Exxon was 17% compared with 12% for the peers.
Technology
How is this performance achieved? While Exxon isn’t exactly giving away all of its secrets for success, the annual report does give a hint—in the form of 92 references to ‘technology’ in the 94 page document. In fact, ‘developing and deploying cutting-edge proprietary technology’ is the subject of a whole chapter in the report.
Tradition
Unlike some of its peers, Exxon appears to eschew the ‘buy not build’ mantra—and has maintained ‘a long tradition in technology development’ in the form of R&D focused on developing ‘next-generation’ breakthrough technologies that have a ‘significant potential to provide a step change to the company’s competitive position and financial performance’. To achieve this, Exxon has filed 10,000 patents over the last ten years.
$200 million
Exxon maintains what it claims is the industry’s largest proprietary upstream technology R&D effort with a $200 million plus annual budget. Coverage is broad—from basin analysis through seismic acquisition, processing and interpretation to reservoir modeling, drilling and production and sales.
Stellar
Exxon’s proprietary basin modeling tool ‘Stellar’ features as a predictor of reservoir fluids ahead of the bit—with a claim for reduced risk in Exxon’s West African deepwater plays. Exxon is also investing in training, with a new 100,000 sq ft upstream training center to be opened mid-year 2004.
Organization
The company places great importance on its globally-operated functional organization. Global opportunities are ranked and personnel deployed to ‘ever changing’ business conditions. This helps prioritize ‘high impact technology needs’ and facilitates ‘sharing best practices and ideas across the organization’ . The functional approach has delivered $1 billion pre-tax operating cost savings in 2003.
Lifeblood
‘Technology is the lifeblood of our business. It allows us to maximize value by increasing recoverable resources, reducing costs and creating new markets for our products. We manage technology with the same disciplined approach we use in making all of our business decisions. Technology is and will continue to be fundamental to our business success.’
IT
Exxon’s Global Enterprise Management System (GEMS) investment continued through 2003. GEMS is ‘a global IT platform which supports a broad range of business processes, strengthens global operations and enables common practices around the world in support of consistent service delivery to global customers’.
Reserves
New technology has contributed to Exxon’s average of 662 million barrels per year over the last five years of upward revisions to reserves. Even Groningen, Exxon/Shell’s jointly developed Dutch gas supergiant, got an upward revision—some irony there surely!
Qatar Petroleum (QP) has successfully deployed Schlumberger Information Solutions’ InfoStream data management solution to reorganize its massive collection of well log data, accumulated over 50 years of operations. QP’s log library houses thousands of tapes and hundreds of thousands of curves—a ‘valuable national data asset’ that was rapidly becoming unmanageable.
Unsecure
QP’s logs were stored in unsecured and unconditioned environments. Retrieval had become problematical due to poor indexing, resulting in lost data and poor data validation. Older wells had no digital data and some drilled in the 1940s were only available as hand-drawn logs. A major challenge was cleaning, qualifying and validating log data so as to regain end users’ trust in their data.
InfoStream
SIS’ Information Management division applied its InfoStream solution to QP’s problem dataset. The project team loaded QP’s data into the LogDB data management solution. Log films and prints were scanned and verified before loading to the physical asset management system. Raw curve data was edited and spliced to form a composite and hybrid curve for the each well. The exercise was carried out for each well, producing raw, edited and composite curves in measured depth and true vertical depth sub sea. The final composite logs with markers, cores and deviation surveys for each well were loaded into the results data store.
80 million feet
A total of 80 million curve feet of log data was digitized, and 25,000 log films and prints and 30,000 A3 and A4 size pages of log reports and studies were scanned and cataloged as part of this corporate well log database. The project also helped QP standardize well and field naming conventions. Interpretation cycle times have been reduced by 30 to 35 percent according to SIS.
UK-based AnTech revealed a new rigsite data acquisition system last month at the SPE/ICoTA tradeshow in The Woodlands, Texas. DAQ>W (pronounced ‘dak dubya’) comprises a network of sensors and transmitters certified for use in Zone 0 hazardous areas. Data is transmitted at regular intervals to the a base station in the control cabin. Readings are immediately displayed via custom DAQ>W software on the base station.
Miszewski
AnTech claims DAQ>W as a first for the drilling industry. AnTech MD Toni Miszewski said, ‘The well site environment is extremely tough on electric cables, especially those required to transmit sensitive instrumentation signals from data sensors. Standard acquisition systems require a clumsy network of vulnerable cables which may pose a safety hazard.’
64-sensors
A DAQ>W base station can handle up to 64 individual ATEX-certified sensors. Systems are available for operations including coiled tubing drilling and work-over and wireline. Sensors are available for temperature, flow or pulse, level, load/strain, pressure and pump stroke data capture.
Local Area Network
Signals from the transmit-only devices can be transmitted up to 500m to a base station. Base stations themselves can relay data to other base stations at distances up to several kilometers. DAQ>W data is transmitted in a simple ASCII comma separated format. The acquisition system can be located anywhere, on a drilling platform, moving car or vessel, allowing for remote monitoring of operations. More from www.antech.co.uk.
The Fieldbus Foundation, a not-for-profit grouping of 120 of suppliers and end users of process control and automation products, has announced its new AT-446 H1 Starter Kit. The starter kit is described as ‘fast track’ to cost-effective automation solutions.
Bi-directional
‘H1’ Fieldbus is a digital, bi-directional communication system operating at 31.5kbps. The specification provides peer to peer communications between devices on the ‘control backbone’ avoiding dependencies on a central computer. A second level high speed Ethernet (HSE) protocol interconnects H1-linked devices to control systems.
Conklin
Joe Conklin, Fieldbus VP Marketing, said, ‘The Starter Kit is a valuable asset for controls and instrumentation companies that want to take advantage of the growing global demand for Foundation technology. Suppliers can ‘jump start’ their H1 product development programs and engage the expanding Fieldbus market.’
Tokenizer
The Starter Kit features a test environment for intermediate device developers. The kit contains a word-searchable CD of the most recent Fieldbus specifications, including the device function block specs, the Device Description Tokenizer, a one-year subscription to the Device Description Library and a test kit. Sixteen hours of consulting is included in the package, along with all the tools required for Fieldbus device development.
Windows
The Fieldbus Starter Kit runs on standard Wintel hardware and includes all of the development tools and documentation needed to develop H1-compliant devices. The H1 Starter Kit is available to Fieldbus members at an all-in price of $19,000—a 35% saving over individually purchased components.
BP is to use software from Cleveland-based Axentis Inc. to ease the burden of Sarbanes-Oxley reporting for its worldwide operations. Axentis supplies governance, risk and compliance (GRC) management software as managed service applications. GRC addresses requirements such as Sarbanes-Oxley, Code of Conduct, Anti-Trust, AML, and HIPAA. Axentis Enterprise will be implemented across the entire BP organization as part of the company’s program of internal control.
Desmond
BP’s Mike Desmond said, ‘We reviewed a range of GRC applications and found Axentis best met the needs of our complex organization. These range from drilling operations in northern Alaska to selling food in convenience stores all over the world. The rapid pace of Sarbanes-Oxley process evolution and breadth of our implementation make delivery of Axentis Enterprise as a managed, ‘on demand’ service a fundamental requirement for BP.’
Frank
Axentis CEO Ted Frank added, ‘We are committed to helping companies turn the perceived burden of Sarbanes-Oxley into a driver of better business performance. Companies such as BP, which are the forefront of corporate governance, will have significant impact on the evolution of GRC technology.’ Axentis claims over 500,000 users in 100 countries. More from www.axentis.com.
Aspen Technology has just announced the commercial release of the Aspen Operations Manager (AOM) suite of products. AOM enables companies to integrate plant-floor and business applications, aggregate data from operations, and analyze information for improved decision-making. AOM will power AspenTech’s vertical industry solutions – including Upstream – to address what is described as a new market - enterprise operations management (EOM).
Barnreiter
Describing the installation at ConocoPhillips’ Ferndale refinery, Barry Barnreiter said, ‘AOM allows us to integrate many disparate systems ranging from advanced control, blending, document management, alarm management and business systems, into a single environment. We leverage installed systems inexpensively because integration does not mean system replacement. AOM gives others in the ConocoPhillips organization access to the refinery’s software applications without any help from IT support staff.’
McQuillan
AspenTech president Dave McQuillin said, ‘Operations Manager is a central pillar of our strategy and will provide a strong technology platform for our new vertical industry EOM solutions. These solutions solve a well-defined array of operational problems specific to each sector, and will include dedicated suites for the Oil and Gas, Petroleum, Chemicals, Polymers, Pharmaceutical and other process industries.’
ISA S95
AOM offers four key functions, which can be licensed separately or as part of an integrated suite: role-based visualization, score carding, event management and infrastructure integration. AOM is aligned with the emerging ISA S95 standard allowing interoperability with third-party plant and supply chain applications, ERP systems and other third-party business applications. The infrastructure supports open standards and integration with leading market technologies including Microsoft .NET, SAP NetWeaver, web services and J2EE.
No upstream yet
Aspen’s Peter Watt told Oil IT Journal, ‘Operations Manager can be used in combination with our Upstream software to create an enterprise-level application that gives companies the ability to manage and optimize multiple fields and facilities using a single integrated system, but no upstream companies are using this approach at the moment.’
In a presentation to the investment community last month, Calgary-based Sterne Stackhouse’s CEO Ron Sterne announced a name change for the company to Labrador Technologies Inc. to reflect the company’s focus on its core Labrador software offerings.
AspenTech
Sterne Stackhouse (SSI) has been working with AspenTech’s Calgary-based upstream unit Hyprotech to provide enhanced capabilities for AspenTech’s production asset management solution for the oil & gas industry. Under the partnership agreement, Labrador’s Well-LAB production and well test data-flow system will be available as an add-on module for Aspen’s AssetBuilder modeling software. Well-LAB will enable companies using AssetBuilder to access a wide range of commercial and proprietary oil and gas production data sources to feed its integrated asset simulation models.
Automation
It automates the process of connecting to real-time production and well test databases that exist within, or external to, an organization. The Well-LAB module is currently in beta test. SSI is porting its Labrador tools to Microsoft’s .Net environment (AspenTech’s platform) but will keep existing Java versions.
Start-up
Sterne described a rejuvenated and cash positive SSI as an ‘experienced start-up’ with ‘robust, innovative software offerings and experience’. The company is moving forward ‘carefully and methodically’ and is committed to growing and evolving distribution partnerships into immediate revenue generating initiatives.
Version 2.5 of Houston-based Energy Solutions’ PipelineStudio supports facility design, steady-state and transient analysis of pipeline fluid flow. The software is used to improve financial performance of gas and liquid pipelines. A new Pipeline-Simulator provides modeling improvements and leverages modern software architecture and emerging standards. XML is used to store portable configuration files, easing data integration and improving overall data value. The new release also includes a configuration element for gas storage reservoir modeling.
Three oil and gas companies recently endorsed SAP’s Netweaver infrastructure at a presentation made during the 2004 Hannover Cebit. Netweaver is SAP’s web services infrastructure designed for cross platform interoperability between Microsoft’s .NET and IBM’s J2EE (see OITJ Vol. 8 N° 1). Shell, RWE and South African Sasol were all described as early adopters of Netweaver’s master data management, business intelligence and knowledge management support.
Shell
Shell is using Netweaver to ‘consolidate and harmonize’ master data for applications and users worldwide. The company expects to derive more value out of previous IT investments as global deployment continues.
RWE
For RWE, SAP’s exchange infrastructure links internal and external processes and systems across the corporation to provide its purchasing unit with improved supplier integration. This ensures shipment of supplies ‘within 24 hours’.
Sasol
Sasol has used Netweaver to standardize business processes, consolidate its IT ‘landscape’, and provide portal and analytics across the entire organization. An IDC report on Sasol’s Netweaver implementation found a 450% return on investment over a five year period. Initial investment paid out in just 2 ½ years.
Amerada Hess has chosen Schlumberger Information Solutions to provide a global connectivity solution providing a reliable, secure communications network between its offshore and land-based facilities in West Africa and its offices in Aberdeen and Houston.
VSAT
The solution provides voice, fax and data communications between remote locations with no local IT infrastructure. Schlumberger uses the latest NdSatcom Skywan TDMA VSAT technology and the Spacetrack 4000 Stabilized Platform. This platform offers resilience, fully meshed operation (single hop voice and data path from any location to any location) and high speed burst optimized for internet traffic. Hess’ Aberdeen office links to the system through the Schlumberger teleport facility. Houston traffic routs through the Aberdeen teleport and a transatlantic T1 connection via Schlumberger’s multi-protocol label switching (MPLS) Global Network. MPLS allows faster, simpler, multi-application data transmission and reliable connectivity, as well as options for bandwidth on demand.
Rouylou
SIS VP of Connectivity Services, Jean-Michel Rouylou said, ‘With the implementation of stabilized systems designed for marine or remote use as well as fixed, land-based connectivity, Amerada Hess can now communicate in real-time with all its offices in West Africa and other locations. Our network supports all of the world’s oil provinces to satisfy the industry’s demands, anywhere, anytime.’
South African oil company Sasol is using an enterprise content management (ECM) solution from Open Text and Ixos Software. The ECM is the fruit of a joint development that offers e-mail management, content archiving and web content management capabilities.
Slaghuis
Sasol Information Manager Eric Slaghuis said, ‘Currently Ixos’ data archiving software is linked with our SAP system, while Sasol uses Open Text’s Livelink to manage capital projects, support ISO certification and processes, and collaborate on research. By combining these solutions, Sasol will optimize its storage solutions and further consolidate systems to reduce costs and overhead.’
Compliance
The integrated solution manages, tracks and stores e-mail to improve compliance with corporate governance and other legal requirements. Web content management products and content archiving for Livelink provide flexibility storage solutions. Ixos provides connectors to a range of storage devices from vendors such as StorageTek, Hitachi and Network Appliance to provide access to unalterable storage and migration capabilities for new devices.
Jenkins
OpenText CEO Tom Jenkins added, ‘Demand for end-to-end ECM solutions is growing as companies wrestle with compliance concerns, while trying to reduce the costs of managing and storing information. Customers don’t want to put the ECM pieces together themselves anymore, there’s too much at stake. They want enterprise-wide solutions that integrate the diverse pieces of ECM from collaboration to document management to content archiving and everything in between. We’re taking the first steps in our strategy to deliver those capabilities to customers.’