Why Petroleum Industry Should Adopt Business Analytics More Proactively

The upstream and downstream Petroleum industry collects enormous data covering the areas of exploration, drilling, production, maintenance, safety and environment. This data collection has been made possible due to the abundance and low cost of technology and instrumentation that has made data collection easy and at granular level. However the vast data collected often goes unnoticed due to data lying in silos and inability to share the data across the organization due to incompatible IT applications that drive the existing systems. The need to beter connect the data and apply greater analytical intelligence thereby improve decision making is necessary for managements that would like to take informed decisions thereby reduce decision errors arising from intuitive decision making.

WHY BUSINESS ANALYTICS?

In the last two decades Distributed control systems and SCADA have been implemented across the Oil Industry and this has led to more data available at the hands of operators be it exploration, drilling, production, HSE or other activities in the Petroleum Industry. To convert this immense amount of data into intelligent, useful information requires the steady and broad application of powerful analytics. Other reasons to adopt Business Analytics by the Petroleum Industry are the shortage of skilled talent which will impact the industry . The shortage of talent is due to rapid industry growth due to demand increasing globally for Petroleum products, highly specialized nature of the job, aging workforce, rising technical complexity of job and fewer number of engineering graduates in developed countries and completion for workers from clean technology and IT sector.

New Thinking

Managers should no longer consider the data available due to adoption of technologies as burden and rather need to utilize the data and make data driven decisions. However analyzing the data the traditional way though not impossible would be time consuming, besides requiring more hands to churn the data to make sense. Progressive managements in the Industry need to provide appropriate analytical tools to their managers to enable them to quickly make business sense out of the data made available though adoption of complex multiple instrumentation at every stage, to identify paterns, develop scenarios and models, estimate likelihoods and take decisions. Such data driven approach can help the organization to seize opportunities that improve business efciency or avoid adverse events in the future that can hit the botom line.

From our discussions with managements in the Oil and Gas industry we noticed a patern of high performing companies in the sector using more of business analytics compared to low performing ones. The high performing companies have been able to leverage from Business Analytics to gather information from within their areas of operations as well as outside, sort and distill the information and align it to their business objectives. Since decisions are data driven in these companies the management allows decisions to be taken lower down the hierarchy instead of driving intuitive decisions from the top down the line. Such a data driven decision not only eliminates variability induced by individual thinking or experience but also empowers managers to take decisions in line with company objectives and make them feel part of the decision making process.

Applying the Business Analytics and Optimization Strategy to the Petroleum Industry

The uncertainty of the Petroleum industry to vagaries of demand and supply, pricing and stringent regulatory requirements in the areas of Safety and Environment makes it imperative for the industry to adopt every possible measure to make their operations more efcient and control their costs. This should be possible only if the industry is able to efectively make us of every data and information available to them on real time basis. Such an approach only will help them to improve
productivity from their existing operations,
plan rationally their future projects in the areas
of exploration and drilling, reduce operational
costs from existing production, schedule
maintenance activities that are reliable and
efective, meet regulators requirements and
increase shareholder value.

Companies should also be in a position to answer some of the critical questions such as:

• How can we fnd potential felds more quickly?
• How production can be optimized from each of the production wells and reservoir?
• How can unintended production shutdowns be eliminated or minimized?
• How can predictive maintenance help the company to beter manage the maintenance and reduce production downtime?
• How can reliability and control of defeat of critical systems and devices be improved?
• How historical data on incidents, near misses and accidents can help in estimating likelihood values for undesirable events and risk computation without damaging the reservoir?

With analytics, companies can combine data from a variety of sources—production, reservoir, drilling, maintenance, etc. into a single dashboard. Companies have recognized the value of implementing a unifed Business Analytics and Optimization approach to replace standalone solutions in which information is incoherent and disjointed. A Business Analytics and Optimization approach can ofer the Petroleum industry many competitive advantages, including:

• Improved production efciency by providing near-real-time information and analytics;
• Beter incident and accident management by benefting from analysis of historical data;
• Beter maintenance of operating assets through enhanced data on health of equipment and machinery;
• Enhanced collaboration by embedding analytics within business processes;
• Taking decisions on real time basis

Companies need to understand that Business Analytics by itself is not a capability. To derive value, its principles, methodology and tools must be an integral part of existing activities, including exploration, drilling, production, maintenance, logistics, Safety and environment and project management.

Way Forward

Organizations that execute a Business Analytics strategy in general make it a vital part of their overall business, treating information as a crucial asset. It is not necessary for companies to go with a big bang approach and instead selective approach can be beter and help learn the process sooner and avoid mistakes later. Based on our interaction with senior executives in the industry we feel the following approach can be tried out by organizations planning to adopt Business Analytics and optimisation:

1. Focus on the biggest and highest-value opportunities that create interest and sound bytes within the company but carry intrinsic lower risk values;
2. In each opportunity bother about business results and not availability of data;
3. Add new skill sets and competencies that complement existing teams to beneft from data and information;
4. Estimate the cost of new Business Analytics strategy in comprehensive manner and conduct a cost beneft analysis. The cost should include hardware, application and licensing cost, scalable architecture, maintenance and people.

Conclusion

The challenges faced by Petroleum industry are from many fronts including depleting production levels from existing wells, greater cost for exploration and drilling and higher outlays on safety and environment management due to regulatory pressures and higher damages and subsequent higher insurance outlays in case of accidents and fatalities.

The availability of large amount of data due to instrumentation and SCADA has provided opportunity for companies to discard intuitive decision makings where data is available for decision making.

Use of Business Analytics makes data driven decisions a reality and outcomes that are more certain and less unlikely. When implemented as an integral part of a company's overall business strategy, Business Analytics and Optimization can help companies manage their business better.