IT Solutions Deliver Oil Gas Business Value Corvelle
IT Solutions Deliver Oil & Gas Business Value Corvelle Drives Concepts to Completion 1
Yogi Schulz Biography q Partner in Corvelle Consulting q Information technology related management consulting q Microsoft Canada columnist & CBC Radio host q PPDM Association board member q Industry presenter: – – – Project World - 4 years CIPS Informatics - 7 years PMI - Information Systems SIG - 2 years Convergence - 4 years PPDM Association - several years Corvelle Drives Concepts to Completion 2
Presentation Outline q Presentation objectives q Oil & gas business trends q IT solutions q Conclusions q Recommendations q Questions & Answers Corvelle Drives Concepts to Completion 3
Presentation Objectives q Recognize business trends that are influencing the oil & gas business q Appreciate the business pressures that oil & gas executives are responding to q Describe IT solutions for the business trends Presentation intended to spark ideas Corvelle Drives Concepts to Completion 4
Squandering Our Oil & Gas Resources Corvelle Drives Concepts to Completion 5
Oil & Gas Business Trends q Asset mix/Optimization q Shareholder return q Oil & Natural gas price q Technology q Workforce demographics q Globalization q Environment Corvelle Drives Concepts to Completion 6
Asset Mix Optimization q Trend Description: – Depletion of onshore & conventional reserves – NOC ownership of reserves Offshore q Business Responses: – Focus on deep water basins – Shift to unconventional reserves – Grow through acquisition SAGD – Divest non-core assets – Manage risk formally Corvelle Drives Concepts to Completion 7
Asset Mix Optimization Business Response Deep water basins IT Solution Remote operations Unconventional reserves Engineering application portfolio Acquisitions for growth Faster, cheaper asset integration Non-core asset divestiture Acquisition/divestiture modeling Formal risk management Corvelle Drives Concepts to Completion Risk management tools 8
Asset Mix Optimization I hope they’re NOT looking for oil! Corvelle Drives Concepts to Completion 9
Shareholder Return TSE q Trend Description: – High return expectations – Increasing focus on compliance q Business Responses: – Increase returns – Reduce costs NYSE – Reduce capital requirements – Improve reporting processes – Improve marketing Corvelle Drives Concepts to Completion 10
Shareholder Return Business Response IT Solution Rate of return Key performance indicators Cost reduction CAPEX & OPEX reporting Capital requirements Design, procurement, logistics Data gathering/reporting Financial & reserves reporting Marketing & communication Web presence & visualization Corvelle Drives Concepts to Completion 11
Shareholder Return Why can’t somebody do something W about these high gas prices? Corvelle Drives Concepts to Completion 12
Oil & Natural Gas Price q Trend Description: $4. 00 – Uncertainty/volatility $13. 00 – OPEC control – Increasing demand $1. 00 q Business Responses: – Operate hedging $70. 00 – Manage trading risk $140. 00 – Operate storage – Review strategic plan $40. 00 Corvelle Drives Concepts to Completion 13
Oil & Natural Gas Price Business Response Hedging Trading risk management Storage Strategic plan review Corvelle Drives Concepts to Completion IT Solution Financial transaction management Risk and contract management Storage/ inventory management Scenario planning 14
Oil & Natural Gas Price Corvelle Drives Concepts to Completion 15
Technology q Trend Description: – Better materials, machining – Richer application software q Business Responses: – Rationalize supply chain – Employ visualization – Drill directionally – Operate smart oilfields – Enhance seismic interpretation Corvelle Drives Concepts to Completion 16
Technology Business Response IT Solution Supply chain rationalization Procurement, materials management Immersive visualization 3 -D visualization, collaboration Directional drilling Sub-surface modeling systems Smart oilfields Remote sensing, telecommunication Seismic interpretation Improved software Corvelle Drives Concepts to Completion 17
Technology Corvelle Drives Concepts to Completion 18
Workforce Demographics q Trend Description: – Aging workforce – Shrinking workforce – Changing demographics q Business Responses: – Manage knowledge – Outsource – Collaborate – Revise work arrangements – Form new alliances Corvelle Drives Concepts to Completion IT Engineering Land Marketing Exploration 19
Workforce Demographics Business Response IT Solution Knowledge management, metadata Outsourcing Collaboration Supplier performance management Collaboration facilities, tools New work arrangements Citrix, VPN, ECM, mobile New relationships/alliances Extend network, remote access Corvelle Drives Concepts to Completion 20
Workforce Demographics Corvelle Drives Concepts to Completion 21
Globalization q Trend Description: – Asian development & expansion – Former Soviet Union development – Government activism – Corporate citizenship expectations q Business Responses: – Form new ventures/alliances – Enhance communication/lobbying – Understand different cultures – Operate in multiple centers Corvelle Drives Concepts to Completion 22
Globalization Business Response New ventures/alliances Communication/lobbying Cross cultural understanding Multiple operation centers Corvelle Drives Concepts to Completion IT Solution Wide area network, remote access Global connectivity Multi-lingual applications, support Distributed operations 23
Globalization Stealing oil Corvelle Drives Concepts to Completion Stealing natural gas 24
Environment q Trend Description: – Maritime law – Health, safety, environment – Disposal of inactive facilities – Increasing litigation q Business Responses: – Emphasize HSE – Research alternative fuels – Reduce footprint – Communicate/lobby Corvelle Drives Concepts to Completion Exxon Valdez Over 400 in North Sea 25
Environment Business Response IT Solution HSE attention/investment Incident tracking, e-learning Alternative fuels Reduced footprint operations Communication/lobbying Corvelle Drives Concepts to Completion Simulation, modeling Engineering design tools Web communication/design 26
Environment Corvelle Drives Concepts to Completion 27
Conclusions Oil & gas business trends: – Asset Mix Optimization – Shareholder Return Information Technology – Oil & Natural Gas Price is central to – Technology meeting the challenge – Workforce Demographics – Globalization – Environment Corvelle Drives Concepts to Completion 28
Recommendations q Respond to oil & gas business trends with IT solutions q Maintain awareness of leading IT practices employed by others q Leverage IT capabilities to: – Improve operational effectiveness – Support business strategy Corvelle Drives Concepts to Completion 29
And now Henderson from IT will introduce his 25 -part plan for more spontaneity Corvelle Drives Concepts to Completion Discussion 30
IT Solutions Deliver Oil & Gas Business Value Yogi Schulz Partner of Corvelle Consulting Information technology related management consulting Microsoft Canada columnist & CBC Radio host Industry presenter PPDM Association board member Corvelle Drives Concepts to Completion Corvelle Consulting 300, 400 - 5 Ave. S. W. Calgary, Alberta T 2 P 0 L 6 Phone: (403) 249 -5255 E-mail: Yogi. Schulz@corvelle. com Web: www. corvelle. com 31
Management Expectations of IT q Operate a high-availability computing q q q environment Operate rich application functionality Lead the way to high data quality Offer superior client support services Promote the value of IT in the business planning process Lead the systems delivery process with proven methods Corvelle Drives Concepts to Completion 32
IT Management Point of View Past & Future Corvelle Drives Concepts to Completion 33
IT's biggest money wasters q Excessive software licensing q The e-mail monster q IT projects gone wild q Excess bandwidth q Gold-plated service-level agreements q Too much paper usage Corvelle Drives Concepts to Completion 34
Six IT Technologies for 2011 Technology Description/ Definition Mobile applications Both custom development and use of commercial mobile applications Simple, low cost or free business analytics tools Use of SQL servers, MS office tools, or free Web analysis tools Cloud computing Software as a Service (Saa. S) Infrastructure as a Service (Iaa. S) Platform as a Service (Paa. S) Virtual desktop infrastructure (VDI) Includes virtualization of desktops using thin clients or existing low-power PCs, laptops, or home devices Enterprise content management (ECM) Includes simple solutions such as Share. Point and more comprehensive solutions Social media A social media policy for IT Integration of social plugs-ins and APIs in custom and 35 Corvelle Drives Concepts to Completion COTS enterprise applications
Bogus Trends q Dave Webb: q The opinion leaders I care about aren't wasting their time on Facebook q I don't want to sound like a crank, but I hope that 2011 is the year that people realize that Facebook is entirely irrelevant to their lives Corvelle Drives Concepts to Completion 36
Renewable Energy Alternatives Good for you, Rat Australians are pioneers in energy alternatives like solar and wind. . . Corvelle Drives Concepts to Completion 37
New Technologies for 2011 q Consumerization of IT: – Staff are now often ahead of the organization in their familiarity with technology q External cloud: – The external cloud creates an opportunity for the organization but challenges IT’s traditional role q Remote and mobile workers: – Organizations are experiencing a reduction in the number of employees who work exclusively from the office 38 Corvelle Drives Concepts to Completion
Bibliography -1 q Accsys Corp. – Knowledge Management – q Alberta oil & gas - Business Plan 2003 -06 – q CIO Magazine, 03 Jan 2011 http: //www. itworldcanada. com/news/cios-in-2011 -the-it-roles-and-strategies-in-highdemand/142215? sub=108297&utm_source=108297&utm_medium=leadership&utm_campaign=enews CIO priorities: What must we do better in 2011 – – q www. mms. gov/itd/abstracts/95 -0055 a. html www. mms. gov/eppd/socecon/gom-issues. htm CIOs in 2011: The IT roles and strategies in high demand – – q Business Week Oct 02, 2002 www. geni. org/globalenergy/library/media_coverage/business-week-online/can-oil-giants-and-green-energy-mix. shtml Characteristics and Possible Impacts of a Restructured OCS Oil and Gas Industry in the Gulf of Mexico – MMS – – q http: //www. ted. com/talks/david_mccandless_the_beauty_of_data_visualization. html? ga_source=embed&ga_medium=embed &ga_campaign=embed Can Oil Giants and Green oil & gas Mix? – – q www. finance. gov. ab. ca/publications/budget 2003/energy. html The beauty of data visualization - David Mc. Candless – q www. accsys-corp. com/Who_Are_We/Knowledge_Management/knowledge_management. html Silicon. com, Mark Samuels, 13 January 2011 http: //www. silicon. com/management/cio-insights/2011/01/13/cio-priorities-what-must-we-do-better-in-2011 -39746806/2/ The Competitive Challenges – – – Kenneth T. Derr, Chairman of the Board and Chief Executive Officer, Chevron Corporation San Francisco, California, September 6, 1996 www. chevrontexaco. com/news/archive/chevron_speech/1996/96 -9 -06. asp Corvelle Drives Concepts to Completion
Bibliography -2 q Developing Human Resources for the Future Oil & Gas Industry – q The Digital future of Oil and Gas in a Life Cycle Perspective – q www. teknologiforlaget. no/ files/digital_future_-_dnv_software. pdf Editors on the Future of oil & gas - Online Forum: Sept. 21, 2004 – q www. slb. com/press/inside/print_article. cfm? Article. ID=194 msnbc. msn. com/id/6064719/site/newsweek/ Eight Wrong Ways To Think About The Future Of Energy – By: Nikiforuk, Andrew, Canadian Business, 00083100, 1/17/2005, Vol. 78, Issue 2 q Employment Trends in Oil & Gas Extraction q The Environment for Future Business - Efficiency will win – – – q Jesse H. Ausubel phe. rockefeller. edu/future_business/ Environmental Trends – q www. eia. doe. gov/oiaf/issues/oil_gas. html www. dpi. qld. gov. au/extra/pdf/business/1 envrn. pdf Expect a hot polluted future, says EU forecast – By: Pearce, Fred, New Scientist; 5/24/2003, Vol. 178 Issue 2396, p 8, 3/4 p, 1 c q Exxon. Mobil Investment Approach q Exxon. Mobil Releases Study on oil & gas Trends, Greenhouse Gas Emissions and Alternative Energy – – – www. exxonmobil. com/corporate/Newsroom/Publications/e. Trends. Site/chapter 2. asp www. scandoil. com/moxie/news/company_news/exxonmobil-releases-study. shtml www. peakoil. net/Publications/20040201 Exxon. Mobil. pdf Corvelle Drives Concepts to Completion
Bibliography -3 q Future Natural Gas Supplies & the Ultra-Deepwater Gulf of Mexico – 12 March 2003 – www. energypulse. net/centers/article_display. cfm? a_id=232 q The Future of the oil & gas Industry – www. globalchange. com/ppt 2/energyforum 5/ – www. globalchange. com/ppt/exxonmobil 3/ q Future roles of business in society: the expanding boundaries of corporate responsibility and a compelling case for partnership – www. wbcsd. ch/plugins/Doc. Search/details. asp? type=Doc. Det&Object. Id=MTMz. Nj. Y q Future of the Oil & Gas industry: Past Approaches, New Challenges – Harry J. Longwell, Director and Executive Vice President, Exxon. Mobil Corporation – www. worldenergysource. com/articles/pdf/longwell_WE_v 5 n 3. pdf q Gas Demand & Supply Overview: Getting Past The Near Term Difficulties – www. seniorscientist. org/SSEPres 1/ q Hubbert Peak of Oil Production – www. hubbertpeak. com Corvelle Drives Concepts to Completion
Bibliography -4 q Information Technology in the Oil and Gas Industry in Latin America – By Jorge Grinpelc and Richard Siegfried, Pricewaterhouse. Coopers, SOACAT – www. pwcglobal. com/gx/eng/about/ind/energy/itog. pdf q IT Business Trends 2010 – en. sap. info/smart-grid-enterprise-cloud-mobile-app-2/21376 q IT trends putting oil companies on the road to maximized values – April 11, 2003, Pradeep Anand – houston. bizjournals. com/houston/stories/2003/04/14/focus 4. html q Large offshore platform packs up – http: //www. cowi. dk/news/UK/2003/Oktober 2003/Stor_produktionsplatform_skal_skrottes_ uk. asp? COWIframe=OK q Long Lake bitumen project – www. longlake. ca/default. asp q Looking at Our oil & gas Future – by Russell Felton – www. imperialoil. ca/Canada-English/thisis/publications/2004 Q 1/pages/energy. Future. html Corvelle Drives Concepts to Completion
Bibliography -5 q Managing Risk in an Uncertain World – www. globalchange. com/ppt/risk/ q New Old Econmy Challenges Scarcity Assumption – www. futurist. com/futuristnews/archive__new_old_economy. htm q The Oil Sands Story – www. oilsandsdiscovery. com q Oil & Gas Forecast: This Year and Through 2025 – By Katrina C. Arabe – news. thomasnet. com/IMT/archives/2004/06/oil_gas_forecas. html q Oil And Gas Industry - Strategies For Profitable Growth – SAP – www. sap. com/industries/oil-gas/pdf/BWP_Strategies_Growth_Oil_Gas. pdf q Oil & gas photo gallery – www. canadian-wellsite. com/ Gallery/gallery. htm q The Oil Patch gets Slippery – Business. Week, 28 February 2005, p. 52 q Oil Price History and Analysis – www. wtrg. com/prices. htm Corvelle Drives Concepts to Completion
Bibliography -6 q Peak Oil: an Outlook on Crude Oil Depletion – By C. J. Campbell - Revised February 2002 – www. mbendi. co. za/indy/oilg/p 0070. htm q q Petroleum Industry Perspective briefing - IHS Energy Risky business - trends and issues in the geophysical business – Mark Klingbeil - Vigorex Consulting Ltd. – www. cseg. ca/conferences/2002 abstracts/Klingbeil_M_Risky_Business_BUS-1. pdf q Seven factors that drive today’s gas shale business – webcache. googleusercontent. com/search? q=cache: http: //warlickenergy. info/oil-gasarticles/seven-factors-that-drive-todays-gas-shale-business/ q The slumbering giants awake - oil & gas companies will never be the same again – Feb 8 th 2001 - The Economist – www. economist. com/surveys/display. Story. cfm? Story_id=497418 q Statement On New World Trends And The Future Of Oil & Energy – www. hazelhenderson. com/recent. Papers/final. Vancouver. Statement. html Corvelle Drives Concepts to Completion
Bibliography -7 q Trends Driving Advancements In High-Performance Computing, Visualization – q UKOOA - Meeting the Challenge - Investment Intentions – q July 21 st, 2010 - oil & gas Business Daily energybusinessdaily. com/power/what-energy-industry-trends-will-affect-your-business/ Why The CIO Role Is Under Fire – – q September 2004 - CSEG RECORDER www-1. ibm. com/industries/cpe/download 0/22030/chemical_visualizing. pdf www-1. ibm. com/industries/cpe/download 8/19589/chem_petro_emerg_technol_1. pdf What oil & gas Industry Trends will Affect Your Business? – – q Hugo Sarrazin and Andy West , Mc. Kinsey Quarterly, January 2011 http: //www. mckinseyquarterly. com/Corporate_Finance/M_A/Understanding_the_strategic_value_of_IT_in _MA_2709? gp=1 Visualizing the Future: The Upstream Industry Unleashed by Technology – – – q www. ukooa. co. uk/issues/economic/econ 01_challenge. htm Understanding the strategic value of IT in M&A – – q www. sgi. com/pdfs/3303. pdf Nov. 22 2010 - Forbes http: //blogs. forbes. com/ciocentral/2010/11/22/why-the-cio-role-is-underfire/? boxes=techchanneltopstories You can't tell the players without a scorecard – By: Ryser, Jeffrey; Mullen, Theo, Platts oil & gas Business & Technology, 1540367 X, Sep 2003, Vol. 5, Issue 7 Corvelle Drives Concepts to Completion
Information Technology is Enabling Technology • High availability computing infrastructure • Rich application portfolio Corvelle Drives Concepts to Completion • High quality data • Superior support services • Low cost
IT Alignment with the Business Poor Alignment Descriptions • “I can’t login” • “My PC crashes” • “The applications I need aren’t available” • “The data I need is poor” • “IT never gets it right” Corvelle Drives Concepts to Completion Consequences • Unhappy customers • Severe, even ridiculous, cost pressure • Little or no investment • Inappropriate/excessive outsourcing
IT Alignment with the Business Good Alignment Descriptions • “Computing is available when I need it” • “I can access the applications I need” • “IT is helping me to improve my data” • “I understand my role in the systems delivery process” Consequences • Happy customers • Reasonable cost expectations • Willingness to make investments • Little outsourcing Good IT Alignment is difficult to maintain Corvelle Drives Concepts to Completion
IT Trends q q q q q Cloud computing High-availability IT services Mobile workforce Consumer technology usage in corporate setting Collaboration – Virtual workforce/teams Social computing Compliance Cyber security Staffing issues Corvelle Drives Concepts to Completion 49
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Terrific Future for Oil & Gas Corvelle Drives Concepts to Completion 53
US Imports are good for Canada Corvelle Drives Concepts to Completion 54
Terrific Future for Oil & Gas USA Imports Heading Up Corvelle Drives Concepts to Completion 55
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