How oil and gas companies invest in innovation

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  How oil and gas operators invest in innovation

By Stephany Romanow, Industrial Advisor

The oil and gas industry is under pressure due to volatile commodity prices, worsening regulatory conditions, antagonistic political pressures and other factors. In recent years, O & G companies have also had to cope with volatile commodity prices, a shrinking pool of experienced workers, and shareholders' demands for higher profitability. To navigate and thrive under these conditions, leading O & G operators are focusing on technological advances and modernization to solve operational problems and generate profits.

The Challenge: Innovate or Die

Owing to the ever-changing business environment, O & G operators can no longer survive or rely only on yesterday's technologies. They need to reinvent themselves in order to compete in the market and remain attractive to investors.

Wall Street knows this and has set the course for recognizing and rewarding companies using new technologies to gain a competitive advantage. Specifically for the O & G industry, investors are aware of the innovative practices that enable operators to reduce capital (CAPEX) and operating costs (OPEX), increase production, and optimize the supply chain.

For example, according to Goldman Sachs' latest O & G report Shale Innovation: Brawn to Brains to Bytes " After the oil field relied initially on" brawn "and" brains "to improve well productivity , it is shifting its focus to "bytes" (Figure 1), with big data analytics, artificial intelligence (AI) and machine learning (ML) at the forefront of multiple E & P and service providers as they not only increase productivity, but also want to reduce CAPEX and OPEX through better and faster decision-making: manufacturing, more reliable equipment, less human intervention, etc. "

Figure 1: The improvement of oil and gas shale and other production moves from muscle power to brains and bytes. Courtesy of Goldman Sachs

O & G executives take this message to heart. "We have to disturb ourselves," said Tim Dove, CEO of Pioneer Natural Resources at a recent industry conference. "That's why the transformation must be from top to bottom."

The challenge for O & G companies looking for new technologies and solutions is that answers are not always found in the larger service companies. Instead, smaller and more flexible startup companies often provide better solutions, as they tend to be faster to market with innovations, especially for Big Data, KI, and ML.

Often these innovative companies may be hard to identify for O & G companies It may be that O & G companies are reluctant to work with non-established companies on projects that may prove mission-critical. At the same time, many startups do not have the deep connections needed to gain credibility with O & G companies. The O & G companies are increasingly aware of this discrepancy between top ideas and their access to them, which can lead to an "innovation gap" in their technology portfolio.

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Just as operator companies often shy away from working with smaller, innovative companies. Often, these companies lack the tools, resources, and customer consulting necessary to move from great ideas to audited products, and ultimately, to sales.

Investor / Owner / User Model

One solution to the needs of innovators and operators is to create an investor / owner / user model where O & G companies can work together to find and innovate companies to try their solutions

Four O & G companies – Apache, Devon Energy, EQT and Pioneer Natural Resources – have chosen this approach. As part of their internal strategies for introducing new technologies into their organizations, these leading O & G companies have invested in Altira, an O & G venture capital firm founded in 1997.

These Altira partners are very interested in identifying the latest technology trends. More importantly, they need early access to innovative tools and products from start-up companies to improve operations and production results. The investment in Altira will provide them with less risky access to start-up companies and thus an accelerated innovation pipeline. The model is also beneficial to the innovative companies in which Altira invests because it gives them preferential customer access to Altira investors.

An example is Seeq, a company that provides solutions for "byte" solutions. With Seeq's analysis software, users can gain insight by using large amounts of data and ML innovations.

With this type of collaboration, operators can reduce the risks to the latest technologies and accelerate market penetration and revenue growth.

The Value of Advanced Analytics

This partnership between inventor and operator is demonstrated by the participation of Altira in Seeq. Seeing Seeq, Altira was impressed with the company's analytics software addressing a problem that is occurring in many manufacturing industries, including the O & G sector. Most process industry companies are "data rich" because they have been collecting and storing time series data in process historians for years.

And due to the IIoT and its associated innovations, many companies will save even more time. Serial data. At the same time, many of these companies struggle to leverage these massive data sets for decision-making. The process industry, including the O & G companies, still has a poor view of their operations and assets, as shown in Figure 2.

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Figure 2, DRIP: Most oil and gas companies have enormous amounts of data at hand, but not enough actionable information

A major reason for this until recently is engineers and other process experts, which relied on outdated solutions, typically spreadsheets, wasting valuable engineering time cleansing, modeling, and data mining. Seeq is working to solve this problem by helping to develop insights for these companies. For this reason, awareness of Seeq and its products is growing within the O & G sector and other process industries (Figure 3)

Figure 3, R17 screenshot: Seeq directly empowers engineers and other process experts Interact with the data of interest without the help of data scientists or IT personnel.

Altira's model works to add value for both operators and startups. Seeq is being brought closer to O & G investors by providing access to senior management, input into development roadmaps for subject matter experts (SMEs), industry-led presentations on behalf of Seeq, published case studies, influential reference customers and more. As a result, Seeq is learning to use its analytics in the four O & G companies that invest in Altira.

Workshop in Oklahoma City shows the Altira model at work

An example of the Altira model in action was the Seeq user group meeting at Devon Energy's offices in Oklahoma City. (Figure 4). This workshop was not a traditional user group event as the speakers and participants came from the investing operators along with the main Seeq employees. Altira's presence and coordination efforts supported the spirit of collaboration between Altira's operator partners and Seeq.

Figure 4, Workshop: The Seeq User Group Meeting took place at the Devon Energy offices in Oklahoma City, Oklahoma, April 2018. Speakers and attendees came from Altira's investors, important employees of Altira and Seeq joined.

Such open feedback is critical when adopting new technologies from startup companies. The participants gave feedback on the features of the Seeq products and the desired improvements and improvements. Altira, the operators and Seeq discussed product roadmaps and use cases. Seeq's engineers have reviewed past improvements and new solutions for upcoming releases.

Accelerated by Altira's investment, all four operators have installed the Seeq software. Existing users presented their current projects and included areas for improvement with Seeq products. New users sketched projects with Seeq.

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At the event, the operators shared a common goal: engineers should be empowered to solve problems rather than seek and clean up data. "I want smarter tools and solutions to solve my problems, and I do not want a black box that just solves the problem," said Adam Scarr, Senior Drilling Team Leader at EQT.

Goldman Sachs believes the O & G industry is adopting this kind of advanced analytics software and making progress. Michael Behounek, Senior Drilling Advisor at Apache, commented: "Data quality is the key to any simulation or modeling project – if your data is not valid, your models will not work and will not work." Seeq tools promise our engineers the data cleanup step We have a lot of data and we want a reliable way to move forward. "

The illustrated case histories of the operating companies differed considerably from the very different plans and approaches for using Seeq.

Improving the efficiency of these operating companies is critical as they prepare for coping with increased workloads. "Oil production in the Permian Basin is expected to quadruple, finding the oil is not the problem, but the challenge is to make the oil economically and at the same time expect less available human resources." Seeq outsources our valuable engineers, SMEs and managers are able to use our data more effectively and improve operational efficiency, "noted Chris Cheatwood, Executive VP and CTO of Pioneer Natural Resources.

Faced with challenges in the O & G industry, companies need access to the latest technologies to enhance global competitiveness. As they transition from the brawn to the brain and byte stages, O & G operators are looking for cutting-edge technologies to fully extract knowledge from their big data. The Altira model has revealed a new approach to solving this problem for O & G companies.

About the Author

Stephany Romanow is a downstream oil and gas industry expert with over 25 years experience in process operation and publishing. She led editorial content for the technical publication Hydrocarbon Processing as Editor and Senior Process Editor, and published over 100 articles and editorials on market trends and hot issues in the energy industry. Stephany is a speaker and panelist on petrochemical and petroleum markets and holds a BS in Chemical Engineering with a minor in Petroleum Engineering.

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