Is the Oil & Gas Industry Overcoming the Big Data Resistance?
Editor’s Note: While VISAGE rebranded to VERDAZO in April 2016, we haven’t changed the VISAGE name in our previous blog posts. We’re proud of our decade of work as VISAGE and that lives on within these blogs. Enjoy.
A recent article by Adam Farris “How big data is changing the oil & gas industry,” provides a very detailed explanation of Big Data realities in the industry and points out that: “resistance regarding workflows and analysis approaches remains in place, as it has for the last 30 years.”
Today’s VISAGE and GLJ announcement demonstrates that both of us consider this an important time for Big Data analytics in the energy industry. In putting together this deal,we had a hard look at where the industry is at and affirmed our own sense that O&G producers, investors and financiers need to be equipped to accelerate their adoption of Big Data analytics.
First let’s be clear that VISAGE remains anti-hype. Big Data has been around a long time and sometimes we agree with critics who see the phrase as misused, as a marketing hook for the business intelligence industry. Gartner, who originally coined the term in 2001, provided a 2012 update to the definition as follows: “Big data are high volume, high velocity, and/or high variety information assets that require new forms of processing to enable enhanced decision making, insight discovery and process optimization.” (Douglas, Laney. “The Importance of ‘Big Data’: A Definition”. Gartner. Retrieved 21 June 2012.) The growing limitation of an organization to manage, process and analyze the volume and variety of data is what GLJ and VISAGE see as Big Data in our industry.
Big Data in O&G – why now?
The oil and gas industry has seen a growing shift towards unconventional resources. This shift involves more expensive drilling and completion technology in an increasingly competitive landscape coupled with profound fluctuations in the price of oil and gas commodities. The oil and gas companies that will distinguish themselves are those that will “compete using analytics.” I was first introduced to this concept in the 2006 book Competing On Analytics: The New Science of Winning. The book highlights several examples of companies (non-oil and gas) who have developed competitive and strategic advantage because of their “analytic maturity.” The gains made by these non-energy companies are in operational efficiency, cost control, strategic foresight, technology adoption and product innovation… all fueled by analytics. So how do we see this advantage being applied in our industry?
The Big Data opportunity – Why are O&G players making the shift?
- Visual analytics display trends quickly. You can see a trend or data relationship far quicker in a visual display than you can in thousands of rows in a spreadsheet. An Aberdeen Group research report determined that 66% of business decision makers face a shrinking decision window (i.e. I need your decision yesterday). How do we better accommodate the need for faster decisions? Answer: with more, and better, visual analyses.
- WCSB data volume demands visual analysis & interpretation. The Western Canadian Sedimentary Basin (WCSB) is rich in data. With over 700, 000 wells, and a broad range of datasets, the use of visual tools (both geospatial and graphical) provide the best means to identify and understand trends and opportunities quickly.
- Your own data is rich with insights. An Oil and Gas producer has many datasets that can collectively communicate how well that company is performing. Visual analysis of operational indicators, both production and financial, can allow you to identify and mitigate issues, or learn from your greatest successes in a fraction of the time.
We’re in a moment of the industry where Big Data is at the heart of business profitability. Several executives have said to me in recent weeks, “We’re in the business of making money, not making oil and gas.” Visual analysis of Big Data, especially financial data is proving to be a key advantage sought by industry leaders today.
The Big Data adoption essentials: Challenges Oil and Gas producers must face
1) Data collection and quality
I often encounter engineers who would like to have data for specific analyses, but that data is not collected consistently or reliably. If you don’t collect the necessary data and ensure that it is accurate, you’ve compromised your ability to analyze and optimize.
2) Appropriate technology planning and deployment
Companies have to operate within budgetary constraints and have IT rules, regulations and procedures to follow when adopting new technology. These can facilitate business advantage or constrain a company’s ability to advance. When compared to the cost of drilling and completing wells and overall operational costs, companies have opportunities to make small investments in technologies that can optimize their capital ROI and operational performance. Software technology can be expensive … making the right decisions is not easy. The size of the company is often a limiting factor to how quickly and easily technology improvements can be deployed.
3) People with analytics skills
Now that you have the right technology to enable faster and better decisions, do you have the people you need? The ability to analyze, understand and inform decisions needs to be a skill set that is part of a successful company’s culture. Resistance to this has been pervasive in the industry for decades and is difficult to overcome.
4) Technology that can be adopted quickly and easily
The best way to make technology and analytics a pervasive part of your culture is to choose tools that are easy to use and learn. The more time and effort it takes to understand and use new technologies, the less people will use them. This can increase your total cost of ownership (i.e. you will have to hire a specialist to run the tools and provide results to other people). Self serve visual analysis that is easy to use will help companies achieve their analysis, and performance goals more quickly.
We’re excited by the opportunity we see today for Big Data analytics adoption in the industry, and for the impact we can have with GLJ taking an equity stake in VISAGE. Our technology will benefit from GLJ’s broad perspective and market reach, and VISAGE self-serve visual analytics will enable better decisions for clients at the heart of both businesses.
What do you see as major opportunities, or challenges, with Big Data in our industry?
Thanks for reading. I welcome your questions and suggestions for future blogs.
Some other blogs you may find of interest:
About VISAGE – visual analytics for the petroleum industry
VISAGE analytics software equips operators and analysts in the petroleum industry to make the most valuable and timely decisions possible. VISAGE brings together public and proprietary oil and gas data from multiple sources for easy to use interactive analysis.