Guest Editorial: Technology: The 2006 Fuel Additive

Abstract

The oil and gas industry faces a conundrum. Soaring oil prices, driven by a dramatic increase in demand, are helping generate record profits. But that is creating immense pressure on the industry to not only meet that demand but replenish reserves. Producers are struggling to gain access to existing reserves and find new ways to increase current portfolio productivity levels while facing increased scrutiny brought on in part by record gasoline prices at the pump and the shifting political landscape of the Middle East. With oil prices at a high and cash surpluses at record levels, the industry is poised to make important business investments to guarantee success in the long term. While E&P and merger and acquisition investments get the most attention, investments in information technology (IT) infrastructure can go far beyond cost savings. IT infrastructure is the software and hardware that make up what some call the "digital nervous system of the business." It includes everything from networks and servers to the operating systems and the applications used to store, capture, and translate the data required to efficiently produce petroleum and petroleum products. But first, IT must be viewed as an enabler of business success vs. simply an overhead cost to be minimized. The key to successful IT investments is to draw a correlation between the investment impact of technology and the bottom line. Unfortunately, the relationships between IT investments and profit per barrel are not always clear to the business units that can benefit most from the investment. That can be attributed to a number of factors, including organizational inertia and reluctance to change, a low tolerance for technologies that may be perceived as risky, difficulty relating infrastructure technologies to production and business metrics, and the mass of hype and vague promises from the IT market. Which technologies will yield the biggest results for oil and gas companies this year? It is hard to say, but any of the following, applied appropriately with the associated behavioral and process changes and effective adoption by the end users, could enable huge bottom-line returns. Upstream Information Management—Platform automation, or the "digital oil field," has created industry buzz for the past few years. This approach, likened to the fully automated vehicle-production line, could result in billion-dollar annual cost reductions, enhanced recovery rates in the 100 billion bbl range, 2–6% production-rate increases, and 10–20% capital cost reductions (Cambridge Energy Research Assocs., 2003). These benefits will come through increased access to real-time data distributed to those who need it to make faster, better decisions. This also involves automation of many oilfield operations, thus enabling improvements in health, safety, and environment measures and the opportunity to better leverage and retain key knowledge workers in centralized, onshore sites. As demonstrated by the hurricanes that devastated the U.S. Gulf Coast last year, the ability to manage and run platform operations remotely is an important tool in overall oilfield management strategy.