The IT in Your Future

Abstract

Published in Oil & Gas Executive, Volume 1, Number 1, 1998, pp. 24-29. The challenges confronting every E&P operating company are the same: increasing productivity, managing risk, and making sound business decisions at every operational level. To succeed in a climate of increasing global competitiveness, E&P divisions of top upstream petroleum companies are challenging themselves to double productivity every 3 to 5 years. The challenge is not easy. Technology has played a dominant role in the productivity gains of the last decade, but technology alone will not be enough to reach the new goals. Increased levels of productivity, in both operational and financial performance, will require significant changes in process and culture as well as leveraging emerging technologies. The focus of change for top performers will be on how they capture, manage, and use information and knowledge. This new focus on knowledge reflects a broad cultural shift in the constantly evolving upstream petroleum business. It manifests itself in what E&P companies consider core competencies and how they manage their people and operations. A corporate culture is pervasive and influences both decision process and operating style. A historical review of the petroleum E&P business helps to put this in perspective. The following historical perspective is summarized from "The Emerging Knowledge Culture in Upstream Petroleum companies," (J. Kennell, September 1997 World Oil E&P Information Management Conference, Houston). A broad overview of upstream petroleum business over the past 50 years shows three distinct cultural eras, with the industry just now entering a fourth cultural era:The post-World War II to 1972 period can be characterized as asset centered.The OPEC-sponsored boom era of 1973-85 was characterized by price euphoria.The post-boom era of 1986 through the middle to late 1990's was corporate-capabilities centered.The emerging culture for the top performing companies is characterized by knowledge management. From World War II to 1972, each oil company depended on its own unique assets - its crown jewels, so to speak. Later, from 1973 to 1985, the industry was dominated by the "price euphoria" of the OPEC-driven era. Since 1986, oil companies centered on more sophisticated development of their core competencies.