Data is Not Scarce, But Oil Companies Hoard It As If It Were

Abstract

A growing number of oil industry leaders are saying that data sharing across the industry is needed, but change is coming slowly. Recently an executive from Shell said that “unprecedented data transparency” will be needed for the oil business to adapt to rapid change. That call for action came from Mike DeWitt, vice president of operated upstream wells for Shell, during the keynote speech at the SPE/IADC International Drilling Conference, where he asked: “Is data really proprietary?” Afterward, some delegates who heard the speech said they were struck by the call for openness in a business where that is generally not the case. DeWitt said after the talk that while the need for change is apparent, little progress has been made. He added that Shell is supporting initiatives for more sharing. There are multiple barriers to overcome, according to a panel at CERA-Week, an annual conference of oil and gas industry executives. Data-driven decision making represents a challenge to how engineers have historically made decisions in a business where companies shared as little as possible about wells and operations. “Pivoting to a data-driven culture is hard enough. Now we’re trying to change the mindset from competing to partnering,” said Kentaro Kawamori, vice president and chief digital officer for Chesapeake Energy. Digital decision analysis is a break from doing things based on experience and intuition. Companies often man-age information assuming that revealing data will be giving away valuable knowledge. “Data sharing is important,” Kawamori added. “The context of what is around it is equally important. We should get to the point of sharing more data, but we are all looking for competitive advantage.” Finding and Producing The urge to hoard data may be explained by a widely quoted comment that “data is the next oil.” Both things can be valuable. But there are fundamental differences in how one extracts value from hydrocarbons in the ground and data in the cloud. Oil prices are impossible to predict, but the world’s voracious appetite for energy ensures it has value. Data’s value depends on how it is used. Having enough of the right data can help engineers find ways to reduce drilling costs, eke out more oil from the ground, or renegotiate a service contract based on productivity rather than the number of days worked. Or it can be stored away and never looked at again, only contributing to the cost of cloud storage. “Looking at data as oil may be like the tail wagging the dog,” said Dave Mabee, global innovation manager for ConocoPhillips. The company creates value by finding and producing oil and gas. Its people use data and analytics to help create that value. “Thinking of data as the next oil may lead to focusing on doing things for their own sake rather than creating value,” he said.