api unlocking value in big oil
TRANSCRIPT
Unlocking Value in Big Oil:
125 Years of European Influence and Innovation
Delfina [email protected]
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Content
Oil Industry Fundamentals
Technology Innovation
Digital Innovation
Human Innovation
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We dominate the markets
Global 500 2016: 5 out of the top 10 are oil companies
2013: 6
2012: 7
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And with a fraction of the employees
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Prices Break at Every Segment
Exploration&
ProductionTransportation Refining
Petrochemical
Commercial
Retail
UPSTREAM MIDSTREAM DOWNSTREAM
Businesses inside of businesses
77% 23%23%
EBIT
“Integrated” oil company is a misnomer
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Exploration&
Production
Siloed Mindset All the Way to the Edge
Behavior reflects operating philosophies
Explore Appraise Develop Produce Abandon
Well Planning & Execution
Production Optimization
Completions/ Development
Maintenance Management Functions
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Nonetheless, our industry is the MOST exciting
RiskyVolatileSpeculativeDIFFICULT
SpindletopPerdido
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Let’s put production domination into perspective:
OPEC: 43% Europeans: 40%
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European innovation has been significant…
The first successful oil tanker, the Zoroaster,
designed by Ludvig Nobel of Sweden
introduced in 1878
Schlumberger recorded the first-
ever electrical resistivity well log in France in
1927
The first FPSO, Shell Castellon, was built in
Spain in 1977
The first use of a spar in the oil industry was
Brent Spar 1976 in the North Sea. Technip is
now the leading manufacturer out of Pori,
Finland
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…and will continue to be critical
Well complexity continues to increase
• Drilling deeper wells in deeper water
• Drilling longer lateral and horizontal sections
• Drilling into higher pressure and temperature regimes
• Running heavier casing strings
Finding and development costs have risen more than 600% since 1997.
Technological innovations will only get us so far
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European influence will be needed in other ways
MB
OE
Prod
uctio
n
2005 20202010
1 to 3%
Low-risk placesUS, North Sea, Australia
High-risk placesKazakhstan, Iraq, Angola, Libya
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1990’s 1999 2001 2003 2005 2007 2009
Chaotic ERP Deployments
eBusiness Floods Market- Oil Industry
Resists
Y2K Distraction
COP Deploys First Onshore
Operations Center
Pockets of IO Experimentation
Shell Reserve Write Down
Norwegian Shelf Regional
Commitment to IO
IO Benchmarking Study:
•COP Ekofisk IO program #1 location•BP #1Corp Program •Statoil IO just starting
Meta-Process Transformation Top-of-
Mind for Oil Execs
Digital Oil Field Initiatives Emerge:HAL: Digital Oil FieldSLB: Realtime OperationsBP: Field of the FutureRDS: SmartfieldsCVX: iFields
Norwegian Shelf Emerges as THE Epicenter for IO
Statoil #1 Corporate Program
IO Progress in the
Middle East
Statoil Plans to Embed IO into Overall Operating
Model
1
3
2
4
5
6
European influence and innovation paved the way in the digital space
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Ekofisk: Pioneers in Leveraging Information & Communication Technology
19 PlatformsAge: 45 years
50-70k Operations Onshore Collaboration Center
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1990’s 1999 2001 2003 2005 2007 2009
Chaotic ERP Deployments
eBusiness Floods Market- Oil Industry
Resists
Y2K Distraction
COP Deploys First Onshore
Operations Center
Pockets of IO Experimentation
Shell Reserve Write Down
Norwegian Shelf Regional
Commitment to IO
IO Benchmarking Study:
•COP Ekofisk IO program #1 location•BP #1Corp Program •Statoil IO just starting
Meta-Process Transformation Top-of-
Mind for Oil Execs
Digital Oil Field Initiatives Emerge:HAL: Digital Oil FieldSLB: Realtime OperationsBP: Field of the FutureRDS: SmartfieldsCVX: iFields
Norwegian Shelf Emerges as THE Epicenter for IO
Statoil #1 Corporate Program
IO Progress in the
Middle East
Statoil Plans to Embed IO into Overall Operating
Model
1
3
2
4
5
6
European influence and innovation paved the way in the digital space
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Ormen Lange Gas Field is an example of global influence
North Sea deepwater field in Northern Norway
2 Exploration wells in 2003 drilled before development
5 Partners agree on ownership but do not report relative reserves booked
Only Statoil had a 3rd party auditor
*Source: Simmons & Company International
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1990’s 1999 2001 2003 2005 2007 2009
Chaotic ERP Deployments
eBusiness Floods Market- Oil Industry
Resists
Y2K Distraction
COP Deploys First Onshore
Operations Center
Pockets of IO Experimentation
Shell Reserve Write Down
Norwegian Shelf Regional
Commitment to IO
IO Benchmarking Study:
•COP Ekofisk IO program #1 location•BP #1Corp Program •Statoil IO just starting
Meta-Process Transformation Top-of-
Mind for Oil Execs
Digital Oil Field Initiatives Emerge:HAL: Digital Oil FieldSLB: Realtime OperationsBP: Field of the FutureRDS: SmartfieldsCVX: iFields
Norwegian Shelf Emerges as THE Epicenter for IO
Statoil #1 Corporate Program
IO Progress in the
Middle East
Statoil Plans to Embed IO into Overall Operating
Model
1
3
2
4
5
6
European influence and innovation paved the way in the digital space
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The Fleeting Promise of Information and Communications Technologies
Billions of dollars have been spent by governments and companies in building IT infrastructure and deploying systems and “solutions”
Yet, less than 1% of the terabytes of data that is collected is actually used
The path forward is not scientific or operational. The answer is anthropological.
Industrial Anthropology: the study of human behaviors - both that of employees and customers of an organization, and the elements and
environment that impact people.
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$
Time
Settle for MediocrityPockets of partial adoptionQuestionable resultsIT Led Project
Program, Assess, Build, Deploy
Cajole People & ProcessesSlow adoption at best
Traditional IO Approach
A lot more time and $ for a lot less value a lot later on
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$
Time
Drive Organizational AlignmentAlign metrics & rewards, Distribute decision rightsEstablish Line of Sight / KPIsAddress control vs accountability
Invest in People & ProcessesUnderstand “Why”Break down the barriers that create functional silosBuild collaboration Identify & develop new capabilities
Apply Fit‐for‐Purpose Technology
Expanding the IO Capability Platform
You can get 70% of the way there with NO NEW TOOLS
Integrate, Improve & ControlDrive competency developmentFocus on knowledge captureBuild a continuous improvement culture
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Good News / Bad News
Average Age of the Current Workforce
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Search results for images of “oil drilling workers”
Our public image isn’t always pretty…
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Search results for images of “Google workers”
…hurting our efforts to attract talent
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The Tough Questions
Are we prepared to admit we need a new set of capabilities?
Are we prepared to embrace the concept of human innovation?
Are we prepared to take on a new workforce?
Our European counterparts have paved the way. Will we follow?
Unlocking Value in Big Oil:
125 Years of European Influence and Innovation
Delfina [email protected]