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How Oil Companies are Losing Money & Talent by the Billions

02 Oct 2014
Oil

BY BEN LOVEJOY

There’s an old saying that applies to the state of the Oil & Gas industry, “The consequences of today are determined by the actions of the past. To change your future, alter your decisions today.”

For the Oil & Gas industry, that statement has never been more applicable. It’s widely known that the industry has been enjoying a sustained period of unprecedented growth, largely due to fracking and improved oil drilling technologies. So much so, that the U.S. position in the global supply market has gone from one of participant, to leader.

“We’re in the middle of an incredible energy revival, which has already played a role in stabilizing our country’s economic health. The technology and talent implications on U.S. energy independence will impact our country for decades”, says Michael Hall, Chaotic Moon’s Director of Strategic Accounts. “It’s what makes the energy business so unique and exciting—speed of innovation matters. Whether in exploration or services, even minor operational efficiencies can have a big impact on the bottom line”, says Hall.

However, while location and extraction technologies are getting better, a vast number of these same companies are collectively wasting billions of dollars due to their continued use of antiquated, inefficient and user-unfriendly software infrastructures.  Hall adds, “one industry stakeholder recently told us, they are definitely drilling more, but they’re not drilling smart—and they know it.”

According to a McKinsey report cited by the Oil & Gas Monitor, the untapped potential of a cohesive digital and mobile strategy in the industry currently exceeds $100 billion a year. This is not due to any lack of willingness to make the investment. A recent CIO survey by Oil & Gas iQ found that “55 percent of CIOs believed that mobile technology would greatly enhance operations,” but they lack the guidance necessary for deploying it.

INNOVATION MEANS TALENT

While all boats have risen with the metaphoric tide, it’s the companies that invest in cohesive mobility solutions—and attract the talent needed to design them—that will thrive during this sea change.

Due to demand, technology investment is as much about acquiring top talent as it is about increasing efficiencies. The most accomplished engineering and business graduates choose to work for innovative companies that are investing in future forward digital tools. Hint: Not companies still using Windows XP.

Software firms of all sizes are competing with the likes the Google, Apple, and Microsoft to land the best talent.  It’s only logical that in-demand Oil and Gas engineering candidates would want to work for a company that not only pays the top salaries, but can also demonstrate innovation and vision. Millennials expect the software they use at work to compare with the applications they use in their personal lives, such as Evernote, Instagram and Pandora.  “Even now,” says one seasoned gas industry engineer, “we are getting raised eyebrows when we introduce our new hires to our Window’s 3.1 user interface, or our one dimensional waterfall data charts of wellhead operations. Clearly we are behind the software eight ball.”

MIND THE GAP

For recruiters in the energy space, the problem is even more compounded. Prior to the latest boom, talented engineering graduates were not flocking to the energy industry. “That created a huge generational gap,” said one full-time energy recruiter. “The explosive growth in O&G means that we have to compete for in-demand, digitally savvy engineering candidates. At the same time, we’re losing experienced engineers in droves to retirement. It’s not exactly like finding a needle in a haystack, but that’s not far off.”

And the technological delta between companies is only widening by the fiscal quarter. “It’s hard to imagine a modern logistics company plotting its routes using a highlighter pen on a paper map, or tracking the location of its drivers by asking them to phone in each time they reach a new town or using Excel sheets that are only saved locally,” says Marc Boudria, Chaotic Moon’s Lead Solutions Engineer. “And yet, that’s exactly what many O&G clients are still doing.  The good news is now many of them are rethinking their entire digital infrastructure, incorporating modern development methods, and prioritizing best practices when it comes to user-centered UX/UI design.”

Overwhelmingly, this is still the exception and not the norm. According to same O&G report, 84 percent of oil and gas (O&G) companies are failing to fully exploit the benefits of a cohesive digital & mobile strategy. And the 16 percent leading the way are all too happy to see that technology gap widen as they increase their margins by optimizing their operations at each opportunity. “The challenge still involves getting to the oil, but increasingly it’s about optimizing the drilling, extraction and delivery efficiencies thereafter.” Says Boudria, “This is the value that modern software development can deliver. The return on investment from modern UX/UI that incorporates mobile technology deployment is tremendous, but as yet relatively few companies are taking advantage of the opportunities. A great many O&G companies are still living in the mid-20th century when it comes to their business processes, and that’s a seriously expensive mistake.”

THE COST OF INACTION

While many other business sectors have been able to take advantage of software stacks that are commercially available, or that can be modified to suit their needs, the unique nature of the O&G industry requires taking a step back to access the individual situation, opportunities, needs and goals of a given day-to-day operation. There are a handful of off-the-shelf apps available, however they are relatively few and far between and are hardly provide a comprehensive fix.

The expertise required to develop a coherent mobile strategy requires a true partnership with O&G sector stakeholders, and depth of experience in designing custom mobility solutions. It’s for this reason that, in the words of Oil & Gas iQ, “the oil and gas industry has been late to the party in taking advantage of the benefits that enterprise mobility can offer.” And those benefits are wide ranging, starting right from the planning stage.

FROM PROJECT MANAGEMENT TO COMPLIANCE

Traditional project management processes separate the back-office planning from the on-site realities. Talk to any front-line worker about the challenges he or she faces, and you’ll likely hear about a gap between the plans devised by management and the “real world” realities at the well—sentiments most likely expressed in more colorful terms.

These information gaps can be closed by employing mobile devices on-site to capture metrics and ensure that plans are based on accurate data. With modern communications networks, it doesn’t matter whether the well is 10 miles down the road, 50 miles offshore or across the globe — the management team can access the right information at the right time.  For example, when a resource is conducting a pipeline inspection, the recipients no longer need to wait until s/he prepares a formal report: the data from each element of the inspection will be available to project managers the moment the field worker enters it into their mobile device.

By employing similar mobility tactics, unattended remote monitoring equipment can automatically report problems without the need for a field technician to be anywhere near the site. Issues can be identified and addressed before they threaten production. Such approaches not only minimize downtime, but they also enable the efficient allocation of maintenance personnel.

Automated GPS reporting can also greatly enhance the accuracy and efficiency of accounting tasks, automatically coding assets to the appropriate well. Further, GPS can track not just hardware, but also personnel. Oil & Gas iQ notes, “This can obviously be helpful in a number of situations, for example, when finding the nearest technician to react to a leakage or when trying to pinpoint workers’ whereabouts in the case of an evacuation. In this way mobility can not only save time and money, but lives.”

Another huge challenge facing O&G companies today is managing the water resources associated with fracking. With millions of gallons of water injected at each site, accurate tracking of water movement and usage is vital to everything from cost-effective planning to accurate accounting and environmental reporting.

A number of companies involved in fracking operations are already using mobility solutions to perform these water management tasks.  These include the real-time logging of water deliveries to the appropriate wells and cost centers, and the accessibility of automatically generated reports required by regulatory bodies.

REAPING THE REWARDS

The old adage of “adapt or die” has never been more apt, argues Mike Mueller, vice president of analysis at MicroSeismic Inc., speaking to American Oil & Gas Reporter. “In the old days, we operated at a slower pace because the ability to react quickly was limited,” Mueller reflects. “With advances in real-time technology and mobile computing, there is a greater ability to not only respond faster, but to impact the outcome through more informed decision making. Mobile devices have become a critical driver of efficiency, allowing us remote access to information necessary to get the job done right.”

If making a start can seem daunting, it needn’t be. Even beginning with something as simple as data dashboards on a mobile platform can deliver impressive returns, a point demonstrated by Valero Energy, which racked up annual savings of $120 million through doing just that. Improved efficiency, increased profitability, better metrics, greater accuracy, reduced downtime, large-scale automation — the rewards of developing an effective mobile strategy are too great to ignore.

Chaos Theory is a Chaotic Moon Studios publication. We are a creative technology studio in Austin, TX obsessed with creating innovative user-centered design and developing intelligent custom software for the world’s biggest and best brands. To engage us about a potential project, send an email to hello@chaoticmoon.com