Corvelle Drives Concepts to Completion IT Solutions Deliver Oil & Gas Business Value 1.

Corvelle Drives Concepts to Completion

IT SolutionsDeliver Oil & Gas

Business Value

1


Yogi SchulzBiography

Partner in Corvelle Consulting Information technology related management consulting Microsoft Canada columnist & CBC Radio host PPDM Association board member Industry presenter:

– Project World - 4 years– CIPS Informatics - 7 years– PMI - Information Systems SIG - 2 years– Convergence - 4 years– PPDM Association - several years

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PresentationOutline

• Presentation objectives• Oil & gas business trends• IT solutions• Conclusions• Recommendations• Questions & Answers

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PresentationObjectives

• Recognize business trends that are influencing the oil & gas business

• Appreciate the business pressures that oil & gas executives are responding to

• Describe IT solutions for the business trends

Presentation intended to spark ideas

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Squandering OurOil & Gas Resources


Oil & Gas Business Trends

• Asset mix/Optimization• Shareholder return• Oil & Natural gas price• Technology• Workforce demographics• Globalization• Environment

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Asset MixOptimization

• Trend Description:– Depletion of onshore & conventional reserves– NOC ownership of reserves

• Business Responses:– Focus on deep water basins– Shift to unconventional reserves– Grow through acquisition– Divest non-core assets– Manage risk formally

Offshore

SAGD



Acquisitions for growth

Deep water basins

Unconventional reserves

Business Response

Remote operations

Engineering application portfolio

Faster, cheaper asset integration

Formal risk management Risk management tools

IT Solution

Non-core asset divestiture

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Acquisition/divestiture modeling


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I hope they’re

NOT lookingfor oil!


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Shareholder Return

• Trend Description:– High return expectations– Increasing focus on compliance

• Business Responses:– Increase returns– Reduce costs– Reduce capital requirements– Improve reporting processes– Improve marketing

TSE

NYSE


ShareholderReturn

Capital requirements

Rate of return

Cost reduction

Key performance indicators

CAPEX & OPEX reporting

Design, procurement, logistics

Data gathering/reporting Financial & reserves reporting

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Marketing & communication Web presence & visualization

Business Response IT Solution


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ShareholderReturn

WWhy can’t somebody do somethingabout these high gas prices?


Oil & Natural Gas Price

• Trend Description:– Uncertainty/volatility– OPEC control– Increasing demand

• Business Responses:– Operate hedging– Manage trading risk– Operate storage– Review strategic plan

$13.00

$1.00

$4.00

$140.00

$40.00

$70.00

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Storage

Hedging

Trading risk management

Financial transaction management

Risk and contract management

Storage/ inventory management

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Strategic plan review Scenario planning



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Technology

• Trend Description:– Better materials, machining– Richer application software

• Business Responses:– Rationalize supply chain– Employ visualization– Drill directionally– Operate smart oilfields– Enhance seismic interpretation


Technology

Immersive visualization

Directional drilling

Supply chain rationalization

Sub-surface modeling systems

Procurement, materials management

3-D visualization, collaboration

Smart oilfields Remote sensing, telecommunication

Seismic interpretation Improved software

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Technology


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Workforce Demographics

• Trend Description:– Aging workforce– Shrinking workforce– Changing demographics

• Business Responses:– Manage knowledge– Outsource– Collaborate– Revise work arrangements– Form new alliances

Engineering

Exploration

Marketing

IT

Land


Workforce Demographics

Collaboration

Knowledge management

Outsourcing

Knowledge management, metadata

Supplier performance management

Collaboration facilities, tools

New work arrangements Citrix, VPN, ECM, mobile

New relationships/alliances Extend network, remote access

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WorkforceDemographics


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Globalization

• Trend Description:– Asian development & expansion– Former Soviet Union development– Government activism– Corporate citizenship expectations

• Business Responses:– Form new ventures/alliances– Enhance communication/lobbying– Understand different cultures– Operate in multiple centers


Globalization

Cross cultural understanding

New ventures/alliances

Communication/lobbying

Wide area network, remote access

Global connectivity

Multi-lingual applications, support

Multiple operation centers Distributed operations

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Globalization

Stealing natural gasStealing oil


Environment

• Trend Description:– Maritime law– Health, safety, environment– Disposal of inactive facilities– Increasing litigation

• Business Responses:– Emphasize HSE– Research alternative fuels– Reduce footprint– Communicate/lobby

Over 400 inNorth Sea

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Exxon Valdez


Environment

Reduced footprint operations

HSE attention/investment

Alternative fuels

Incident tracking, e-learning

Simulation, modeling

Engineering design tools

Communication/lobbying Web communication/design

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Environment


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Conclusions

Oil & gas business trends:– Asset Mix Optimization– Shareholder Return– Oil & Natural Gas Price– Technology– Workforce Demographics– Globalization– Environment

Information Technology is central to

meeting the challenge


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Recommendations

• Respond to oil & gas business trends with IT solutions

• Maintain awareness of leading IT practices employed by others

• Leverage IT capabilities to:– Improve operational effectiveness– Support business strategy


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DiscussionAnd now Henderson from ITwill introduce his 25-part plan

for more spontaneity


IT Solutions Deliver Oil & GasBusiness Value

Corvelle Consulting300, 400 - 5 Ave. S. W.Calgary, Alberta T2P 0L6Phone: (403) 249-5255E-mail: [email protected]: www.corvelle.com

Yogi SchulzPartner of Corvelle ConsultingInformation technology related

management consultingMicrosoft Canada columnist & CBC

Radio hostIndustry presenterPPDM Association board member

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Management Expectationsof IT

• Operate a high-availability computing 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

methods32


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IT Management Point of ViewPast & Future


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IT's biggest money wasters

Excessive software licensing The e-mail monster IT projects gone wild Excess bandwidth Gold-plated service-level agreements Too much paper usage


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Six IT Technologies for 2011Technology 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 (SaaS)Infrastructure as a Service (IaaS)Platform as a Service (PaaS)

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 SharePoint and more comprehensive solutions

Social media A social media policy for ITIntegration of social plugs-ins and APIs in custom and COTS enterprise applications


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Bogus Trends

Dave Webb: The opinion leaders I care about aren't

wasting their time on Facebook 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


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Renewable EnergyAlternatives

Good for you, RatAustralians are pioneersin energy alternativeslike solar and wind . . .


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New Technologiesfor 2011

Consumerization of IT:– Staff are now often ahead of the organization in

their familiarity with technology External cloud:

– The external cloud creates an opportunity for the organization but challenges IT’s traditional role

Remote and mobile workers:– Organizations are experiencing a reduction in the

number of employees who work exclusively from the office


Bibliography- 1

• Accsys Corp. – Knowledge Management– www.accsys-corp.com/Who_Are_We/Knowledge_Management/knowledge_management.html

• Alberta oil & gas - Business Plan 2003-06– www.finance.gov.ab.ca/publications/budget/budget2003/energy.html

• The beauty of data visualization - David McCandless– 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?

– 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– www.mms.gov/itd/abstracts/95-0055a.html– www.mms.gov/eppd/socecon/gom-issues.htm

• CIOs in 2011: The IT roles and strategies in high demand– CIO Magazine, 03 Jan 2011– http://www.itworldcanada.com/news/cios-in-2011-the-it-roles-and-strategies-in-high-demand/142215?

sub=108297&utm_source=108297&utm_medium=leadership&utm_campaign=enews• CIO priorities: What must we do better in 2011

– 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


Bibliography- 2

• Developing Human Resources for the Future Oil & Gas Industry – www.slb.com/press/inside/print_article.cfm?ArticleID=194

• The Digital future of Oil and Gas in a Life Cycle Perspective– www.teknologiforlaget.no/ files/digital_future_-_dnv_software.pdf

• Editors on the Future of oil & gas - Online Forum: Sept. 21, 2004– 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

• Employment Trends in Oil & Gas Extraction– www.eia.doe.gov/oiaf/issues/oil_gas.html

• The Environment for Future Business - Efficiency will win– Jesse H. Ausubel– phe.rockefeller.edu/future_business/

• Environmental Trends– www.dpi.qld.gov.au/extra/pdf/business/1envrn.pdf

• Expect a hot polluted future, says EU forecast– By: Pearce, Fred, New Scientist; 5/24/2003, Vol. 178 Issue 2396, p8, 3/4p, 1c

• ExxonMobil Investment Approach– www.exxonmobil.com/corporate/Newsroom/Publications/eTrendsSite/chapter2.asp

• ExxonMobil Releases Study on oil & gas Trends, Greenhouse Gas Emissions and Alternative Energy– www.scandoil.com/moxie/news/company_news/exxonmobil-releases-study.shtml– www.peakoil.net/Publications/20040201ExxonMobil.pdf


Bibliography- 3

• Future Natural Gas Supplies & the Ultra-Deepwater Gulf of Mexico – 12 March 2003– www.energypulse.net/centers/article/article_display.cfm?a_id=232

• The Future of the oil & gas Industry– www.globalchange.com/ppt2/energyforum5/– www.globalchange.com/ppt/exxonmobil3/

• Future roles of business in society: the expanding boundaries of corporate responsibility and a compelling case for partnership

– www.wbcsd.ch/plugins/DocSearch/details.asp?type=DocDet&ObjectId=MTMzNjY• Future of the Oil & Gas industry: Past Approaches, New Challenges

– Harry J. Longwell, Director and Executive Vice President, ExxonMobil Corporation– www.worldenergysource.com/articles/pdf/longwell_WE_v5n3.pdf

• Gas Demand & Supply Overview: Getting Past The Near Term Difficulties– www.seniorscientist.org/SSEPres1/

• Hubbert Peak of Oil Production– www.hubbertpeak.com


Bibliography- 4

• Information Technology in the Oil and Gas Industry in Latin America– By Jorge Grinpelc and Richard Siegfried, PricewaterhouseCoopers, SOACAT– www.pwcglobal.com/gx/eng/about/ind/energy/itog.pdf

• IT Business Trends 2010– en.sap.info/smart-grid-enterprise-cloud-mobile-app-2/21376

• IT trends putting oil companies on the road to maximized values– April 11, 2003, Pradeep Anand– houston.bizjournals.com/houston/stories/2003/04/14/focus4.html

• Large offshore platform packs up– http://www.cowi.dk/news/UK/2003/Oktober2003/

Stor_produktionsplatform_skal_skrottes_uk.asp?COWIframe=OK• Long Lake bitumen project

– www.longlake.ca/default.asp• Looking at Our oil & gas Future

– by Russell Felton– www.imperialoil.ca/Canada-English/thisis/publications/2004Q1/pages/energyFuture.html


Bibliography- 5

• Managing Risk in an Uncertain World– www.globalchange.com/ppt/risk/

• New Old Econmy Challenges Scarcity Assumption – www.futurist.com/futuristnews/archive/archive__new_old_economy.htm

• The Oil Sands Story – www.oilsandsdiscovery.com

• Oil & Gas Forecast: This Year and Through 2025– By Katrina C. Arabe– news.thomasnet.com/IMT/archives/2004/06/oil_gas_forecas.html

• Oil And Gas Industry - Strategies For Profitable Growth – SAP– www.sap.com/industries/oil-gas/pdf/BWP_Strategies_Growth_Oil_Gas.pdf

• Oil & gas photo gallery– www.canadian-wellsite.com/ Gallery/gallery.htm

• The Oil Patch gets Slippery– BusinessWeek, 28 February 2005, p. 52

• Oil Price History and Analysis– www.wtrg.com/prices.htm


Bibliography- 6

• Peak Oil: an Outlook on Crude Oil Depletion– By C.J.Campbell - Revised February 2002– www.mbendi.co.za/indy/oilg/p0070.htm

• Petroleum Industry Perspective briefing - IHS Energy• Risky business - trends and issues in the geophysical business

– Mark Klingbeil - Vigorex Consulting Ltd.– www.cseg.ca/conferences/2002/2002abstracts/Klingbeil_M_Risky_Business_BUS-1.pdf

• Seven factors that drive today’s gas shale business– webcache.googleusercontent.com/search?q=cache:http://warlickenergy.info/oil-gas-

articles/seven-factors-that-drive-todays-gas-shale-business/ • The slumbering giants awake - oil & gas companies will never be the same again

– Feb 8th 2001 - The Economist– www.economist.com/surveys/displayStory.cfm?Story_id=497418

• Statement On New World Trends And The Future Of Oil & Energy– www.hazelhenderson.com/recentPapers/finalVancouverStatement.html


Bibliography- 7

• Trends Driving Advancements In High-Performance Computing, Visualization– www.sgi.com/pdfs/3303.pdf

• UKOOA - Meeting the Challenge - Investment Intentions– www.ukooa.co.uk/issues/economic/econ01/econ01_challenge.htm

• Understanding the strategic value of IT in M&A– Hugo Sarrazin and Andy West , McKinsey 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

– September 2004 - CSEG RECORDER– www-1.ibm.com/industries/cpe/download0/22030/chemical_visualizing.pdf– www-1.ibm.com/industries/cpe/download8/19589/chem_petro_emerg_technol_1.pdf

• What oil & gas Industry Trends will Affect Your Business?– July 21st, 2010 - oil & gas Business Daily– energybusinessdaily.com/power/what-energy-industry-trends-will-affect-your-business/

• Why The CIO Role Is Under Fire– Nov. 22 2010 - Forbes– http://blogs.forbes.com/ciocentral/2010/11/22/why-the-cio-role-is-under-fire/?boxes=techchanneltopstories

• You can't tell the players without a scorecard– By: Ryser, Jeffrey; Mullen, Theo, Platts oil & gas Business & Technology, 1540367X, Sep2003, Vol. 5, Issue 7


Information Technologyis Enabling Technology

• High availability computing infrastructure

• Rich application portfolio

• High quality data• Superior support services• Low cost


IT Alignment with the BusinessPoor Alignment

• “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”

• Unhappy customers• Severe, even ridiculous, cost

pressure• Little or no investment • Inappropriate/excessive

outsourcing

Descriptions Consequences


IT Alignment with the BusinessGood Alignment

• “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”

• Happy customers• Reasonable cost

expectations• Willingness to make

investments• Little outsourcing

Good IT Alignmentis difficult to maintain

Descriptions Consequences


IT Trends

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

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Corvelle Drives Concepts to CompletionCorvelle Drives Concepts to Completion


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Terrific Future for Oil & Gas


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US Importsare good for Canada


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Terrific Future for Oil & GasUSA Imports Heading Up

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