#14 digital energy journal - september 2008

September / October 2008 Issue 14

™

Associate Member

Red Spiders -technology to cut thecost of intelligentwells

What if we could chooseour own assignments?

Tuning an oil and gascompany

A shortage of satcom capacity?

Using simulators for training

Managing human resources better

DEJaugsept08:Layout 1 21/08/2008 14:55

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DEJaugsept08:Layout 1 21/08/2008 14:57

Contents

Intelligent wells – slashing the costs by 75 per centRed Spider Technology says it will be launching a new intelligent well system which has thepotential to cut 75 per cent off the cost of systems currently on the market

Collaborative well planningGary Schottle, drilling and completions director for Landmark, sheds light on how collaborativewell planning can help clients efficiently develop the most productive reservoirs in complexdrilling environments such as Colorado’s Piceance Basin

Rowing across the Indian OceanIn April 2009, Michelle de Groot, daughter of the president of Dutch geoscientific softwarecompany dGB Earth Sciences Paul de Groot, is planning a charity row across the Indian Ocean

Lowering the cost of high performance computingA new microchip from NVDIA promises to let you have high performance computing in yourdesktop PC for under $10,000

Texas Instruments - new projector chipTexas Instruments has launched a new projector chip, which can create much clearer andbrighter projections than others on the market, the company claims

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September / October 2008 Issue 14

September/October 2008 - digital energy journal

Digital Energy Journal is a magazine for people

in the upstream oil and gas industry who would

like to keep up to date with the latest industry

IT and communications technology, services,

opinion, practise and lessons learned.

Each issue of Digital Energy Journal print maga-

zine is mailed to 2,000 oil and gas executives,

with a further 500-1000 copies distributed at

trade shows, as well as being downloaded ap-

prox 2,000 times as pdf.

Subscriptions: £195 a year for 6 issues. To sub-

scribe, please contact Karl Jeffery on jeffery@d-

e-j.com. Alternatively you can subscribe online

at www.d-e-j.com

Printed by Printo, spol. s r.o., 708 00 Ostrava-Poruba,

Czech Republic. www.printo.cz

Digital Energy Journal213 Marsh Wall, London, E14 9FJ, UKwww.digitalenergyjournal.comTel +44 (0)207 510 4935Fax +44 (0)207 510 2344

Editor Karl [email protected]

Technical editorKeith [email protected]

SubscriptionsKarl [email protected]

Advertising salesAlec EganTel +44 (0)207 510 [email protected]

14

Caesar Systems – helps you makedecisionsHouston software company Caesar Systems hassoftware to help oil and gas exploration andproduction companies solve their toughestchallenge – good decision making

Splitting up the allocationsWorking out who should get what out of thereturns on an oilfield can get very complex,EnergySys has developed software whichshould make it easier to manage

Jindal Drilling to use SpecTec’smaintenance and purchasing softwareJindal Drilling of India has signed a contract withSpecTec Asia Pacific to install its AMOSmaintenance and purchasing software ontwo new jack-up drilling rigs being built atKeppel Yard in Singapore

Invensys simulators for safetyInvensys is pioneering the use of simulators,combining human factors and virtual reality, forimproved safety, integrated operator trainingand as an aid in the design of oil and gasfacilities

Offshore simulationFeaturing the Offshore Simulator Center inÅlesund, Norway and a new offshoresimulation focus at Kongsberg

Making digital energy workHouston change management consultantsDr Dutch Holland and Bob Bobst give theiradvice

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Exploration and drilling

Oil and gas production

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Front cover: Testing out thenew eRed devicewhich can blockor unblockdownholetubing afterspecific timeintervals, or when certain pressures arereached. From left to right: Michael Christie,Stuart Gordon and Mike Reid (see page 6).

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LeaderWhat if people could choose their assignments?People can be extremely motivated when they have the freedom to choose which projects towork on based on how they feel they can add value, and unexpected innovation happens whenyou allow open collaboration to achieve a goal, says John Gibson, CEO of Paradigm

PIDX – first Aberdeen meetingPIDX, the e-commerce committee of theAmerican Petroleum Institute, held its firstmeeting in Aberdeen on July 9th, with 50participants including representatives ofChevron, ENI and Shell

Tuning E&P companies like aprocess manufacturing plantCan you imagine your oil and gas companybeing as finely tuned as a process plant?

Chesapeake and Oracle PeopleSoftUS oil and gas company Chesapeake Energyrecently started using Oracle's PeopleSoftsoftware to help manage people aspects ofthe business, including human resources,payroll and benefits administration

BP and Crystal BallBP uses Oracle’s Crystal Ball software onnearly 90 per cent of its new wells, to helpkeep its costs and schedules on track

Shipdex – a new standard for dataA standard has been developed for technicaldata for ships, drilling rigs and offshoreplatforms, which should enable technicalinformation to be supplied electronically

Communicating oil and gas assetvalueUK software company Palantir Solutions hasdeveloped a standard way for oil and gascompanies and their lenders to put a valueon their assets, even if they disagree on whatthe oil price will do

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Warning – possible satcom shortageIncreased demand for satellite capacity,particularly for cellular backhaul, means thatoil and gas companies can no longer take itsavailability for granted in West Africa, SouthAmerica and the Middle East, warns JamesTrevelyan, head of enterprise sales at Arqiva

Satcom technologies must evolveIn order to provide effective satellitecommunications services to oil and gascompanies, you need to have an in-depthunderstanding of their increasingly complexand comprehensive needs, says Broadpoint’snew President and CEO, Errol Olivier

Communications

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IO 08 Science and Practice – the technologies to integrate people and work processesWhere Science and Practice meetThis conference is about the methods and tools for integrated operations, today and in the future. The place where science and practice meet.

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Topics and sessions IO 08 will highlight aspects of the technologies that integrate people and work processes.

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7. IO and HSE – Risk exposure and solutions for improved safety solutions

4TH INTERNATIONAL CONFERENCE ON INTEGRATED OPERATIONS IN THE PETROLEUM INDUSTRYTRONDHEIM, NORWAY, 21–22 OCTOBER 2008 AND SME INNOVATION FORUM 23 OCTOBER 2008

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In his concluding keynote speech at theDigital Energy conference in Houston,Texas on May 20th, John Gibson, CEO ofoil and gas software company, Paradigm,raised an interesting question.

What kind of unexpected innovationcould occur, he asked, if people in oil andgas companies could choose their projectsbased on their own interests and wherethey thought they can add the most value?It works for Wikipedia and Linux, Mr Gib-son noted.

In his speech, Mr Gibson suggestedthat staff would be much more motivatedand feel that they were making a real con-tribution if this were the case, and teamsand individual competencies would be al-located more effectively, as well.

The talent pool could be expanded,allowing retired experts to also get in-volved in projects. Students and postgrad-uates could respond to a company’s invi-tation and apply their skills to solve diffi-cult industry problems.

To make his case, Mr Gibson pointedto the vast amount of available data our in-dustry collects, noting that only a fractionof it is currently used to make decisions toefficiently identify, develop and producereserves.

“For a simple 3D offshore wide az-imuth survey, there are often two hundredterabytes of data,” he said. “We drop itdown to a couple hundred gigabytes to dothe interpretation. It’s the standard ap-proach and method.

“I think within the next five yearsyou’re going to see us take advantage ofall two hundred terabytes of captured da-ta. To do this, it means we will have to fun-damentally change our approach. I thinkthere are some real breakthroughs re-quired, and that are imminent.”

Mr Gibson admits that opening inno-vation to a broad self-selecting communi-ty of talent wouldn’t be the easiest thingto organize in a company with 20,000 peo-ple.

But, he suggests, since the currentsystem is hardly perfect, perhaps a differ-

ent method of organization is in order. When you consider that managers of-

ten don’t have a deep understanding of theproblem—and certainly don’t know whatthe solution is—Mr Gibson’s suggestionthat people self-select based on what theyhave a passion for, and where their capa-bilities lie, rather than being assigned tojobs based on what managers feel is bestfor them, seems to make sense.

GoldCorp.In his speech, Mr. Gibson told the story ofGoldcorp, the Vancouver company thatfound gold by publishing its informationon the Internet1.

Goldcorp had a 55,000 acre asset inRed Lake, Ontario, and a $100M marketcapitalization. The company was taking aconventional ‘proprietary’ approach totheir data—drilling core holes, bringingcore data back to the office, analysing itwith a team of geologists, and then identi-fying prospects where they needed moredata. It would have taken them a couple ofyears, or more, to determine where to en-gineer shafts to mine the gold.

Rob McEwen, the company’s newCEO, had no background in mining. Hehad, however, recently attended a confer-ence and heard about how the computeroperating system Linux is created andmaintained by people collaborating andself-selecting which projects they work on,based on their interest and expertise.

Mr McEwen asked Goldcorp’s geo-physicists to put their data on the web.Goldcorp put up $575,000 in cash rewardsto people who could come up with goodprospects. Within weeks, more than 1,400people were working to locate prospectson the company’s 55,000 acres.

“That included ex-military people,engineers, college professors, grad stu-dents, retired mining professionals, schoolteachers. Anybody that could get on, theysigned up and attempted to solve this prob-lem,” Mr Gibson said.

“People worked on it part-time; theyplayed with their grandchildren, they did a

little fishing, then they went in and prospect-ed for Goldcorp over the Internet.”

As a result of implementing thismethod of organization, McEwen had 110prospects submitted that were not previ-ously identified by his personnel. 50turned out to be major producers for Gold-corp.

As a result of using this approach, thecorporation produced eight million addi-tional ounces of gold, and the company’smarket capitalisation went from $100m to$20bn.

But Mr Gibson points out that MrMcEwen had to overcome cultural issuesin order to implement his plan.

“We often see our data as propri-etary,” Mr Gibson said. “He broke throughthere to say that the data is not what’s pro-prietary.

“I think, in some ways, the more sen-ior someone is, in an organisation, you re-alize that the only thing that matters is per-formance.

“As an industry, we’re not definingour companies in terms of performance,but instead, and perhaps incorrectly, we

What if people could choose theirassignments?Linux and Wikipedia have taught us two valuable lessons. First, that people can be extremely motivatedwhen they have the freedom to choose which projects to work on based on how they feel they can addvalue. And second, that unexpected innovation happens when you allow open collaboration to achieve agoal. Are these lessons that the oil and gas industry should take to heart? John Gibson, CEO of Paradigm,thinks they might be.

Leader

3September /October 2008 - digital energy journal

“I think, in some ways, the more seniorsomeone is, in an organisation, you realizethat the only thing that matters isperformance.” - John Gibson, CEO ofParadigm


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are defining terms of intangible things likeproprietary data.”

Mr Gibson emphasises that what isreally important is how a company per-forms at producing properties efficientlyand effectively and getting the product tomarket at the lowest possible cost.

“Thinking in terms of Goldcorp,” hesays, “[Does the oil and gas industry] havethe right models in place to deliver afford-able energy that the world is demandingtoday, or is there a different way of doingit?”

EncyclopediasMr. Gibson also shared another story ofhow collaborative innovation works in thecase of Wikipedia’s competition with En-cyclopedia Britannica2.

At one point, said Mr Gibson, Ency-clopedia Britannica was stating publiclythat it was better than Wikipedia.

A university decided to test this state-ment. They began by comparing articles,and determined that there was only a fourto five percent difference in the quality ofthe material. There had to be some otherdynamic differentiator, so they introducederror into Wikipedia by inserting obsceni-ties into a large number of Wikipedia arti-cles, and in less than 90 seconds, all of theobscenities had been removed.

“So now you’re Britannica, and

you’re trying to publish once a year, some-thing that takes a dolly to move back andforth to your home, and that’s the process-es that you put in place and the legacy thatyou have,” Mr Gibson said.

“Then you have a network of unpaidpeople that have a passion and have self-selected to do this kind of work. So, with-in 90 seconds of you goofing up an article,they’ve got it fixed because they have ac-countability for it.”

InnoCentiveThe final example of a collaborative prob-lem-solving model that Mr. Gibson citedis that of InnoCentive, an Eli Lilly spinofffounded in 2001.

InnoCentive connects companies, ac-ademic institutions, and public sector andnon-profit organizations with a global net-work of more than 145,000 registered“Solvers” from 175 countries.

”Seeker” organizations post chal-lenges on the InnoCentive website, offer-ing awards of between $5,000 and $1M fora successful solution provided by a mem-ber of the Solver community3.

InnoCentive has categories for manydifferent disciplines, from medicine tomanufacturing to the oil and gas industry.Thousands of problems are presently post-ed on its website.

“InnoCentive allows a company that

can only afford 2,000 researchers to in-crease the talent pool and deploy 20,000researchers on a problem,” Gibson said.

When it comes to delivering the en-ergy that the world is demanding today,Gibson concluded, we need to ask, “Do wehave the right process and organizationalmodels in place? Is there a different wayof doing it?”

If the examples he referred to in hisspeech are any indication, it’s clear that hemight know the answer.

September /October 2008 - digital energy journal

Leader

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References1 Wahl, Andrew: Most innovative CEO2006: Rob McEwen, US Gold Corp.;Canadian Business Magazine,http://www.canadianbusiness.com/innovation/article.jsp?content=20061009_81416_81416

2 Tapscott, Don and Williams, AnthonyD. (December 2006): Wikinomics:How Mass Collaboration ChangesEverything, Portfolio

3 Wikipedia: InnoCentive;http://en.wikipedia.org/wiki/InnoCentive

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Intelligent wells – slashing the costs by75 per centRed Spider Technology, a well technology company founded in Aberdeen in 2003, says it will be launchinga new intelligent well system which has the potential to cut 75 per cent off the cost of systems currentlyon the market.

It will achieve these savings by removingwhat the company feels is superfluous fea-tures provided on the intelligent well sys-tems currently on the market, taking theproduct to its bare bones and making instal-lation simpler and quicker – a sort of plugand play concept.

However it will still perform the mostimportant function of an intelligent well: theability to control the flow from different lat-erals into the main well bore, and to be pow-ered and controlled from the surface.

Red Spider has managed to do this bydesigning the equipment to have only the es-sential features. “We’ve taken out all thebells and whistles and shrunk it down,” saysGary Smith who heads up International Mar-keting and Technology at Red Spider. “Thiscan shave an enormous amount off the man-ufacturing cost.”

“You get feature creep as these toolsevolve,” he says. “We said, let’s take out allthe features which might only be requiredonce in ten years.”

Having a simpler product also means itis much simpler and quicker to install, hesays.

Reducing the cost of intelligent welltechnology should make it much more ac-cessible.

Many oil companies have avoided in-stalling intelligent well systems on some oftheir wells, due to the high CAPEX cost,which is driving them to think much morecarefully about whether they actually wantthe systems. If the upfront cost is lower, the

decision will be easier to make.“There are many wells producing 100-

1000 barrels a day –they can’t sustain thecapital expenditure associated with an intel-ligent well installation,” he says. “But theycould benefit from flow control. That’swhere we see there’s a sizeable market.”

“As soon as the equipment gets cheap-er, people can start putting it in every wellthat would benefit from it,” he says. “Youthen get to a situation where reservoir andcompletion engineers have to justify whythey wouldn’t put it in the well.”

As well as its cost effective intelligentisolation and control valve called ‘Simplus’,Red Spider will launch a higher end intelli-gent well offering equivalent to those cur-rently on the market by other manufacturerscalled ‘Optimus’.

Going wirelessRed Spider has started work to crack the nutwhich nobody has managed to crack yet –creating an intelligent well system which canwork wirelessly.

Having wireless intelligent wells wouldbe very attractive, because there would be,in effect, no limit to the number of zones orlaterals that can be controlled and run froma single well head; with hydraulic lines,there is a firm limit, because of the numberthat can fit through the well head. The linestransmit hydraulic power to the flow con-trol valves in order to open and close them.

Its first step along that road is the de-velopment of a valve called eRED which canbe set to open and shut, by applied pressure,after a certain time, or when the pressurearound it reaches a certain level. eREDdraws power from a battery, and has an op-erating life of 3-6 months.

Red Spider is looking into utilising oth-er technologies which would avoid the needfor a hydraulic lines such as batteries whichcan charge themselves up by flowing liquidsover a turbine.

Sending wireless data communicationsthrough a long well full of fluid is also noteasy.

“There’s high pressure and high tem-perature,” says Mr Smith. “You’ve got oneof the most hostile environments in the

world.”“You’ve got a well flowing which caus-

es a lot of noise – it’s not like a wireless ormobile phone when you’ve just got air andambient temperature to worry about,” hesays. “It’s pretty fraught with problems.”

“If you can communicate then ultimate-ly, you could end up with flow controlvalves that could receive instructions andeven think for themselves,” he says. “That’sthe direction we’re going in,” he says.“We’ve got to go down that road – and seewhere it takes us.”

The companyRed Spiders currently has 40 staff members,including two people at an office in Dubai,and 6 in Norway, the remainder at head of-fice in Aberdeen. The staff include engi-neers, production, sales and assembly test-ing personnel.

“We’ve got big plans,” says Mr Smith.“We see ourselves becoming a medium sizedplayer in 5 years, with 2, to 300 people.”

The company recently won the Sir IanWood Award for Innovation at the GrampianBusiness Awards, which are given every year

Accepting the 2008 Sir Ian Wood award forinnovation at the Grampian Award forBusiness and Enterprise.

digital energy journal - September/October 2008


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eRED circuit board


for small and medium sized companies inAberdeen district.

Red Spiders does not do any manufac-turing in house; it is all subcontracted to oth-er companies, mainly in Scotland.

“We’ve been in companies wherethey’ve had in house manufacturing facili-ties, and it can become a beast that needs tobe fed,” he said. “It tends to become a busi-ness within a business and something wherethe team have limited experience in running.So we made a conscious decision not to godown that route – leave it to the people whoare experts at it”.

Third party manufacturers can oftenmanufacture tools as fast as they can bemade in house, he says.

The company may start working withlocal manufacturers near its Dubai and Sta-vanger offices as well.

The eREDThe company’s newest product to the mar-ket is eRED, a tool which, when installed,creates a temporary plug to the downholeflow (ie works like a downhole tap),and ismore easily operated than conventional tech-nology such as prong and plug.

Engineers might want to temporarilyplug the well while equipment is installed,tested or changed and the eRED helps themdo that efficiently by removing cost , timeand associated risk.

It was designed to be installed duringa completion or intervention process and re-moved at the end. However several opera-tors now intend to use the device for linerand completion deployment and the leavethe device in situ once it has completed itspurpose. The eRED is powered by a batterywhich can last 3-6 months.

The conventional way of installing aplug is to run the plug body first (with a holethrough the middle) in the one trip, and thendo a second trip to drop a prong (a verticalmetal bar with seals) through the middle ofthe plug, to block flow through the tubing.

With the eRED, all of this can be donein one trip; the device is run on the plug bodyand deployed into the well. open or closed

The eRED can be programmed to openand close after a specific time interval, orwhen the pressure above or below it reachesa certain point. You can also send it com-mands from the surface to open and close,by adjusting the pressure of the fluid in thetubing above it.

So, for example, it can be programmedto open when the pressure applied above thedevice has been between two pressure val-ues for a certain amount of time.

The aim is to help companies cut backon rig time. For example, a normal operation

to install a plug will take 6-12 hours, at ratesof as much as $400,000 per day these opera-tions can become very expensive, and therisk increases with the complexity of the job.

The tool has its own onboard comput-er, which can store well data such as time,temperature and pressure, above and belowthe seal. This data can be downloaded oncethe unit is retrieved.

It has been tested in temperatures of 0-125 degrees, differential pressure of upto10,000 psi, and operating with sand anddebris packed above the seal

“Originally it was just going to be anopen and close device, but people said, canyou do this, can you do that,” says Mr Smith.“We ended up with a dozen different appli-cations that we never thought of and as aconsequence have made the tool multi openand close to accommodate them.”

Tasks which might need a temporaryblock to flow include installing a blow outprotector, setting a production packer, test-ing tubing, isolating zones for testing, firingperforating guns, pressure testing a well be-fore fracing, isolating and opening multilat-eral legs.

Red Spider sees eRED as a first step to-wards making devices for the well which canreceive commands to open and close fromthe surface.

Red Spider aims to eventually integratethe eRED with wireless and acoustic com-munications technologies, which can send acommand to the valve to open and closefrom the surface, or upload the data.

Michael Christie with the eRED

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Stingray fibre-optic monitoring goesdeepwaterwww.stingraygeo.comStingray Geophysical will be conducting adeepwater field test of its fibre-optic reservoirmonitoring solutions during the second half of2008 jointly with Bergen Oilfield Services.

This is part of a project to commercialiseStringray’s seabed fibre optic seismic reser-voir monitoring system, sponsored by BP,ConocoPhillips and StatoilHydro.

Schlumberger’s Carbonate Advisor’analysis servicewww.slb.comSchlumberger has released a new ’CarbonateAdvisor’ analysis service, which provides asystematic analytical framework to deliver acomprehensive petrophysical evaluation ofcarbonate rocks, including a petrophysicsanalysis and a productivity analysis.

The system integrates information frommagnetic resonance and elemental capturespectroscopy, logs and core data, to produce asingle, complete formation evaluation of car-bonate reservoirs.

In field tests in a wide variety of carbon-ate reservoirs, relative permeability and watersaturation measurements from Carbonate Ad-visor matched discrete core analysis data.These continuous measurements permitted amore accurate prediction of fluid flow leadingto better production performance, saidSchlumberger.

Hess to use range of SchlumbergersoftwareHess Corporation of New York has signed anagreement with Schlumberger to use a rangeof its geological, geophysical, reservoir engi-neering, economics, drilling, and productionsoftware.

Hess will deploy GeoFrame reservoircharacterisation, Petrel seismic to simulation,ECLIPSE reservoir simulation, Merak projecteconomics, and OFM and Drilling Office soft-ware.

The agreement includes data manage-ment services and enhanced application andworkflow support worldwide.

Schlumberger acquires IntegratedExploration SystemsSchlumberger has acquired Integrated Explo-ration Systems (IES), a supplier of petroleumsystems modeling software and services for theexploration and production industry.

IES specialises in the modeling of the gen-eration, migration and entrapment of oil and gasusing the industry-leading software PetroMod.

The technology is used to estimate undis-covered hydrocarbons in frontier basins and toenable oil and gas companies to mitigate risk in

exploration prospects.IES employs 40 people, most of whom are

in Aachen, Germany. The Aachen location willbecome a Schlumberger Center of Excellencefor Petroleum Systems Modeling.

IES expertise will be combined with West-ernGeco and Schlumberger technology to givecustomers a fully integrated exploration service.

The company said the combination of sur-face seismic data with Schlumberger measure-ment technologies, integrated with petroleumsystems modeling from IES and other risk man-agement technologies, would lead to reduceduncertainties and enable customers to bettermanage their exploration risk.

Wavefield Inseis to conduct large 3Dseismic survey for BP Libyawww.wavefield-inseis.comWavefield Inseis has received a letter of interimarrangement from BP Exploration Libya Ltd.for one of the world's largest 3D seismic acqui-sition and onboard processing contracts ever tobe awarded.

The survey, which will take place inLibya's offshore Sirt basin, will be acquired withWavefield's latest 3D vessel Geowave Endeav-our and is expected to take approximately 1 yearto complete.

According to the company, the contractwill incorporate the industry's largest ever on-board processing project that includes SRME(surface related multiple elimination) and fullPre-Stack Time Migration.

Paradigm donates software to SouthKorean Universitywww.pdgm.com

Paradigm has donated its SeisEarth and GO-CAD reservoir engineering and seismic inter-pretation applications to the department of geol-ogy at Kyungpook National University (KNU)in South Korea.

The software will be installed on twoworkstations within the department of geology,giving students hands-on experience with Para-digm software.

SeisEarth is a multi-survey seismic inter-pretation solution for volume interpretation,

Paradigm SeisEarth Next GenerationInterpretation

H111 08 DEJ i dd 1 8/14/08 4 06 34 PM

Exploration and drilling news


Our Drill-to-the-Earth Model SM workfl ow does more than help ensure

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H111 08 DEJ i dd 1 8/14/08 4 06 34 PM


Applications which have been updated in-clude DecisionSpace, OpenWorks, PowerView,GeoProbe, OpenWells, Nexus, and FieldPlan.

The R5000 release is the culmination of amulti-year integration effort to bring all Land-mark applications in all exploration and produc-tion disciplines to a common technology plat-form.

The release includes a new Software De-velopment Kit (SDK) to help application ven-dors to create integration between products toR5000 solutions and build custom workflows.

Paradigm releases Interpret 2008 www.pdgm.comOil and gas software company Paradigm haslaunched a new software tool, Interpret2008, for design and analysis of pressuretransients obtained from a variety of tests onexploration, appraisal and production wells.

It includes new functionality for per-forming deconvolution for improved analy-sis clarity, and a new option for fitting gradi-ents in multi-session Wireline FormationTest (WFT) analysis.

The package also offers data compati-bility with Paradigm Geolog formation eval-uation software, enabling the sharing of fieldand analytical data for improved model con-struction and deeper analysis of results.

Paradigm releases Geolog 6.7

Paradigm has released Version 6.7 of its Ge-olog petrophysical analysis, well data man-agement and geological interpretation soft-ware.

The new version focuses on four areasof new development: support for the gener-alist and geologist, improved usabilitythrough newly designed user interface andworkflows, creation of the foundation ele-ments for 3D petrophysics and developmentof additional tools and analysis techniques,the company says.

It has a new module combiner that en-ables users to more easily build, execute,record and play back workflows.

The software strengthens Paradigm Ge-olog's multilog analysis and rapid quality

Geolog 6.7 well module showing newcoherency plot and cross-plot broken downon a per facies basis

reservoir characterisation, reservoir imaging andwell planning.

GOCAD is a solution for reservoir engi-neering and geologic and seismic interpretation.

Shell, Qatar Petroleum and ImperialCollege research carbonate reservoirswww.imperial.ac.ukShell, Qatar Science & Technology Park(QSTP) and Imperial College London have an-nounced plans to collaborate on research intofurther understanding carbonate reservoirs,which constitute the vast majority of hydrocar-bon reservoirs across the Middle East, and CO2storage.

Researchers will characterise carbonatereservoirs in detail and develop computer mod-elling and simulations to establish an in-depthknowledge of rock structures and the way fluidslike oil, water, and natural gas and CO2 movewithin them.

This will improve understanding of howthese rocks trap gas and fluids. With this knowl-edge, researchers will be able to propose newCO2 management plans and processes, andidentify suitable carbonate rock formations topotentially store CO2 emitted from power sta-tions, the group said.

The venture will be funded by Qatar Pe-troleum, the Qatar Science & Technology Park,and Shell, who will contribute together up to$70 million over a 10-year period.

The aim is to provide the foundation fornew CO2 storage technologies that can be ap-plied in Qatar, elsewhere in the Middle East andbeyond.

Hess contract for Paradigm www.ggs-spectrum.comHess Corporation has signed a multiyear con-tract for Paradigm software, training and onsiteconsulting services for its exploration and pro-duction operations worldwide.

Paradigm will provide a its suite of geo-physical and petrophysical applications forworkflows, ranging from seismic data process-ing, imaging and petrophysical analysis to stan-dard and advanced geophysical subsurface datainterpretation and formation evaluation.

Paradigm will provide training, both on-site and from regional Paradigm support cen-ters, as well as onsite application support to HessCorporation employees, and onsite consultingservices, such as data migration and workflowbest practices.

Landmark launches integrated productrelease ’R5000’ www.halliburton.com/landmarkLandmark has made a synchronous software re-lease, dubbed R5000, which includes upgradesto more than 70 products spanning multiple dis-ciplines within the E&P domain.



control (QC) capabilities with multiplecross-plot and histogram views and compos-ite coherency plots and spidergrams, whichare ideal for development fieldwork.

Additionally, Paradigm has extendedthe current geosteering solution with 3Dmodel support and a refresh capability, al-lowing the drilling engineer to evaluate theimpact of real-time updates on the 3D mod-el.

Landmark new AssetObserver version www.halliburton.com/landmarkLandmark has released a new version of its

AssetObserver web-based data monitoringand integration application, which allowsproduction experts to access and integratedata from a range of sources and monitorcomplete workflows and assets in real time.

The new version has been integratedwith the IncuityEMI platform, allowing it toread, update and delete data from almost anythird-party or proprietary data source.

California-based Incuity Software is aleading provider of business intelligencesoftware to the manufacturing industry.

AssetObserver is a component of Land-mark’s DecisionSpace for Production suite,a production solution that offers integrateddata access, data management, workflowconstruction, visualisation, collaboration,and real-time optimisation.

SMT sales manager www.seismicmicro.comSMT, a leading provider of PC-based geo-physical and geological interpretation soft-ware, has appointed of Bill Stephenson asVice President of Sales, Americas. MrStephenson was previously senior directorof sales at Symantec.

GeoMechanics launches 3Dgeomechanics services www.geomi.comGeoMechanics International (GMI) haslaunched a new service that provides 3D me-chanical simulations of the stress fieldaround salt structures.

GeoMechanics says the service avoidspossibly unrealistic assumptions that are of-ten used for wellbore stability analyses, suchas the vertical stress being a principal stress.

It is therefore capable of providing a farmore reliable prediction of safe mud weightsthan a standard analysis, says GeoMechan-ics.

"Recent application of this service inexploration wells in the Gulf of Mexicoshowed that the prediction of the frac gradi-ent was significantly improved and the saltexit location could be optimised from a sta-bility aspect," said the company.

ffA opens new London office www.ffa.co.ukffA, a leading provider of 3D seismic analysissoftware and services to the oil and gas indus-try, has established new office premises in cen-tral London.

The company says the new office will sup-port its planned growth, help it to capitalise onmarket opportunities and strengthen its cover-age and support to clients world-wide.

The new office is located in central Lon-don, just off Trafalgar Square, and will be in fulloperation from the 2nd June 2008.

Spectraseis extends collaboration withStatoilHydro www.spectraseis.comSpectraseis, the Swiss-based low frequencyspectral analysis technology company, hasannounced plans to extend its technical col-laboration with StatoilHydro in the field oflow frequency (LF) passive seismic technol-ogy.

Spectraseis researches and applies tech-nologies to acquire and analyze low frequen-cy (<10 Hz) seismic background waves con-tinuously present in the Earth's subsurface inorder to identify spectral attributes indicat-ing the likely presence or absence of hydro-carbons within a survey area.

The collaboration will include theanalysis of passive seismic surveys.

StatoilHydro has also expressed inter-est in joining a newly formed Joint IndustryProject (JIP) established by Spectraseis andthe Swiss Federal Institute of Technology(ETH Zurich).

The JIP has been set up to further ad-vance the understanding of LF passive seis-mic technology for enhanced applications inthe detection of hydrocarbon reservoirs.

Spec-traseis hasalso ap-pointed Vas-sil Bliz-nakov asChief Fi-nancial Of-ficer. MrBliznakovpreviouslyworked forSchlum-berger,where hewas incharge ofthe compa-ny's business in Continental Europe and partof a management team responsible for abudget of $400 million over 22 legal entitiesin 32 countries, and 1100 employees.

Spectraseis has appointedVassil Bliznakov as ChiefFinancial Officer



12



Colorado, which is also home to large oil-shale deposits, has one of the biggest accu-mulations of natural gas in North America.

Although exact amounts are almost im-possible to gauge, the 6,000-square-milebasin is thought to contain at least 200 to 300trillion cubic feet of natural gas.

Although reserves are enormous, thePiceance Basin’s sandstone has low perme-ability and relatively small drainage area, in-creasing the complexity, difficulty and costof development projects in the area.

However, as hydraulic fracturing tech-nology advances and oil and gas prices rise,E&P companies are starting to develop themore unconventional projects that were notpreviously economically feasible.

Aside from the technical well planningchallenges, the Piceance Basin presents an-other distinct consideration – an incrediblydiverse and abundant wildlife population.

This requires operators to minimizesurface disturbance and environmental im-pacts by limiting the number of pads placedin each field and by carefully selecting eachpad’s location.

Operations may also have to be restrict-ed during certain times of the year to accom-modate breeding or migration patterns.

Optimising field developmentIn this environment, prolonged well-plan-ning cycles or well miscalculations can costoperators millions of dollars. With limitedproduction intervals, forward-thinking op-erators are turning to collaborative wellplanning to enhance production while re-ducing drilling, completions and operatingcosts.

“In order to optimize production in thebasin, operators may need hundreds, eventhousands, of wells, many of which must bedirectionally drilled from existing well padsto minimize surface land disturbance,” MrSchottle explained.

“In our experience in the Piceance andsimilar, complex basins, a more comprehen-sive approach to well planning – one that fo-cuses on collaboration among the geo-science and engineering disciplines – allowsoperators to quickly create and assess mul-tiple development options and make proac-tive decisions during the planning phase,

rather than reactive decisionsafter issues crop up, enablingoperators to avoid the ‘buildfirst and sort out the problemslater’ processes of the past.”

New well-planning tech-nologies can go a long way toimprove proactive decision-making, but operators arefinding that the lack of quali-fied personnel is creating aknowledge gap that consider-ably lengthens the learningcurve.

For those that do nothave the personnel resourcesto plan and drill a large num-ber of wells quickly, Land-mark’s consultants can devel-op comprehensive plans basedon their extensive experiencein complex, unconventionalassets and their knowledge ofthe company’s software.

“Success in the PiceanceBasin is predicated on imple-menting the right processes from the begin-ning. Our experience in similar, unconven-tional assets has allowed us to develop anumber of proven methodologies to help op-erators optimize field development,” MrSchottle said.

“Landmark’s consultants develop com-prehensive, technology-independent plansthat provide solutions to the issues operatorsface and the problems they encounter work-ing in such a complex drilling environment.

For example, we perform detailed sce-nario analyses, identify pay zones, optimizesubsurface and surface facilities, overcomechallenges and reduce risk. It’s more thanjust the software, although our software isstate-of-the-art.”

Schottle has seen collaborative wellplanning lead directly to more informed de-cision-making because it leverages an entireasset team’s expertise.

The approach enables team members tocollaborate using integrated workflows toutilize multidisciplinary data and create saferwell plans, reduce nonproductive time andcompress the field-development planningprocess.

Collaborative well planning

Technology and expertise

In the Piceance Basin, Mr Schottle has seentime and again how understaffed operatorsstruggle to plan large numbers of wells.

“In this industry, there is such a short-age of experienced people, which limits ourclients’ capacities to plan properly.

“Considering the volume of wells someof these operators are planning to drill, youcan see how a poorly planned well canquickly become a liability rather than an as-set,” he said.

“Many of the operators in the Basin arerequired to drill within a certain period oftime to avoid losing their leases, or alternate-ly, they need to keep their rigs busy or risklosing them to someone else.

“Landmark’s institutional knowledge,along with its deep understanding of thetechnology operators are using, enables usto provide end-to-end service by helping ourclients assimilate all relevant data, then planin a collaborative environment to come upwith the optimal systematic approach tosolve these resource issues,” Mr Schottlesaid.

Disparate data and multiple software

A recent conversation with Gary Schottle, drilling and completions director for Landmark, a productservice line of Halliburton, sheds light on how collaborative well planning can help clients efficientlydevelop the most productive reservoirs in complex drilling environments such as Colorado’s PiceanceBasin.

Landmark's AssetPlanner software, which can be used tolook atmultiple planning scenarios quickly on a new well.


13

Exploration and drillingpackages that don’t efficiently talk to eachother have long been issues for operators, butLandmark’s DecisionSpace® infrastructureenables operators to establish cohesiveworkflows using Landmark products, opera-tor-created applications and offerings fromother vendors in an integrated data environ-ment.

The result can lead to improved devel-opment plans and, ultimately, increased op-erational efficiencies.

Insight to executionLandmark’s well planning applications in-clude AssetPlannerTM software, which looksat multiple planning scenarios quickly;TracPlannerTM directional well planningtechnology, which fine-tunes processes suchas pad orientation and slot allocations; andEngineer’s Data ModelTM project databasesoftware which provides a platform for de-tailed operations and engineering workflowsto plan, drill and service wells.

Collaborative well planning softwareprovides 3-D visualization of the subsurfaceenvironment in a system that can captureand integrate numerous types of data, in-cluding seismic, logging, surface topogra-phy, and offset well data -- including non-productive time and operations data -- thenquickly generate multiple development sce-narios.

“We offer an integrated data model en-abling all of the disparate disciplines to seetheir information in the same 3-D visualiza-tion environment,” Mr Schottle said.

“Having access to that information inone place is critical to communication, col-laboration and the decision-making process.

“By applying a common well-planningworkflow, engineers and geoscientists bet-ter understand each other’s constraints andhow they affect well planning.”

With an unconventional and challeng-ing environment like the Piceance Basin,operators that take advantage of current

technology in conjunction with consultingand infield services to help plan, manageand execute their plays can expect opera-tional and financial performances that sur-pass those who don’t.

“Halliburton Project Management uti-lizes its technology strengths, expertise andinfrastructure to take the notion of collabo-rative well planning a step further by pro-viding differentiated infield services to ourclients.

“We can provide everything from well-site supervision to integrated services to afull range of oilfield management servicessuch as project planning, well constructionand execution, and coordination of procure-ment and logistics,” Mr Schottle said.

“There is an innate fusion between ourConsulting and Project Management groupsthat allows them to work collaborativelywith each other and allows the operator torealize both technical and financial goals.”

Rowing across the Indian Ocean

In April 2009, Michelle de Groot, daughterof the president of Dutch geoscientific soft-ware company dGB Earth Sciences Paul deGroot, is planning a charity row across theIndian Ocean, which will take 70 to 80 days.

Ms de Groot (22 years old) will rowfrom West Australia to Mauritius, togetherwith partner Mark de Vries (27).

The money will be donated to Dutchcharity Aqua for All (www.aquaforall.nl),which sponsors projects to provide safedrinking water and sanitation for the thirdworld, using expertise from the Dutch water

Michelle de Groot, daughter of dGB Earth Sciences president Paul de Groot, is looking for sponsorship fora row across the Indian Ocean, to raise money for Aqua for All, which provides safe drinking water andsanitation for the third world.

industry. Members of the charity recommending

council include Thony Ruys (ex-Vice Presi-dent of the Board of Heineken) and JacquesSchraven (ex-Chairman of the Confederationof Netherlands Industry and Employers).

If you might be interested in providingsponsorship, either through your company asan individual, you can find out more on thewebsite www.roeienvoorwater.nl,click on 'contact' and then send an e-mail us-ing the form provided.



14



Imagine if high performance computing wasso cheap that you could have your own su-per powerful computer sitting on your desk,rather than queue up your high performancecomputing jobs in a data centre.

This is getting closer and closer, thanksto a new microchip being released by Cali-fornian company NVIDIA.

For £4,000 / USD 8,000, you can installfour NVIDIA graphics processing units(GPUs) in your desktop computer, whichgives you about 100 times more processingpower than would have been available in a1990s mainframe computer, which wouldhave cost $80,000 to $100,000, according toNVIDIA’s Andy Keane, general manager ofTesla computing products.

You can even install them in your lap-top (although it is 10 inches by 4 inches insize, there is probably a limit to how manyyou can fit in).

Some users are thinking about switch-ing off their data centres, because peoplehave enough computing power on theirdesks to do what they want now, Mr Keanesays. “The GPU is a room sized computerin one chip.”

Many people in the oil and gas indus-try believe that if they had better access tofaster computers, they could probably findmore oil and gas, according to a recent Mi-crosoft survey; but they haven’t been givenaccess to it, presumably because a decisionwas made that the outcome would not justi-fy the expense.

But if the expense reduces, then the de-cision to provide high performance comput-ing gets much easier.

Steve Purves, technical director of ffA,a company which provides high performanceseismic analysis software, observes thatthere seems to be a psychological bar ataround $10,000 / £5,000 at many oil and gascompanies for a personal high performancecomputer. If the price drops beyond that lev-el, the decision to give someone their ownpowerful computer seems to get much easi-er.

“Not everyone is going to get a$100,000 computer,” says Mr Purves.

By having faster computers, you cansee your results straight away, rather thancreate processing jobs, send them to a cen-tre, and have a look at the results a few hours

later. You can create views of the subsurfacewhich you can walk around and look at fromdifferent angles, rather than wait severalhours for the computer to draw a new view.

And besides, everybody knows what isgoing to happen to the amount of data peo-ple have to deal with in coming years – itwill grow exponentially. That means we willneed faster and faster computers to deal withit.

“Oil companies are trying to scale upexploration – and this means processingmore data and generating more prospects,”says Mr Purves. “That’s where softwaretools come in.”

The amount of information continuesto increase, as resolution of surveys increase.“Interpreters will need to find a way to dealwith it,” he says.

Mr Keane observes that big computingcentres have got bigger and faster over thepast few years, and mobile phone technolo-gy is also racing ahead, but technology forthe humble workstation has not moved so farahead.

Latest chipsThe latest chip to be launched is the Tesla 10series.

The Tesla T10P processor has 1.4 bil-lion transistors, 1 teraflop of processingpower (double the speed of its previous chip,the Tesla 8), and 240 processing cores.

It has 4 GB of memory (compared to1.5 GB on the Tesla 8).

The standard computer package is 1unit in size and contains 4 GPUs, so you get4 teraflops altogether 16 GB of memory, and960 cores. It uses just 700W. A single GPUwill use just 160 W.

The previous chip, the Tesla 8, waslaunched in late 2006.

The chip has been widely used in manydifferent applications, including medical im-aging, astrophysics, weather forecasting,clothing design and finance. The US Nation-al Center of Atmospheric Research believesit can halve the time taken to make a weath-er forecast using the chips.

It can perform many different tasks inparallel, something that can’t be done on astandard central processing unit (CPU) youmight find on your normal desktop.

You have to write code especially for

the chip, but it uses standard coding lan-guages, such as C. “We stick to the languagestandards everyone knows,” says Mr Keane.

It is possible to have a GPU and CPUon the same computer, and then use themseparately – the GPU for special tasks, andCPU for general running of the computer.

Big computing centresIf four GPUs in your desktop is not

enough and you want to build a computingcentre, you will get much more processingfor your dollar, and kilowatt, by using GPUsthan standard CPUs (as found in most PCsand servers).

US financial consultancy Hanweck es-timates that 12 GPUs would have equivalentprocessing power to 600 CPUs, but take upjust 6 units of rack space (compared to 54).The hardware would cost $42,000, insteadof $262,000, and have an annual cost of$140k instead of $1.2m (calculated on a stor-age cost of $1,800 per unit per month, forrack and power charges).

Using its 12 GPUs, Hanweck Associ-ates regularly scans the entire US optionsmarket in under 10 milliseconds, somethingwhich would normally take 60 traditional 1unit servers, the company believes.

If you want to build a 100 teraflop datacentre, you could do it with 1429 CPUservers, each providing 0.07 teraflops, withfour teraflop CPUs in each one (at estimatedcost of $3.1m and power consumption of 571Kw); or you could do it with 25 servers eachwith 4 GPUs, providing 4 teraflops per serv-er, with a total cost of $310,000, and totalpower consumption of 27kW.

There is also a physical limit to howfast you can get using CPUs, because thetime taken for all the communications be-

Lowering the cost of high performancecomputingA new microchip from NVDIA promises to let you have high performance computing in your desktop PCfor under $10,000.

The NVDIA Graphics Processing Unit (GPU):turns your laptop into a supercomputer


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tween the chips weighs things down. WithGPUs you can get much faster.

Computer gamesNVIDIA started life as a manufacturer ofchips for computer games – in 1995 it madethe graphics card for Sega Saturn gamepads.

Computer games and subsurface simu-lation have plenty of things in common.

Both create a simulation of the realworld; both generate images in 3D; and bothhave plenty of real time interactivity.

Many geophysicists and geologistshave spotted that their children have morepowerful computers in their games consolesthan they do at work.

A lot of seismic modelling is still donein 2D slices, to reduce the amount of com-puter power needed. “It’s that mainframementality,” says Mr Purves.

ffAffA, which does 3D seismic analysis soft-ware, is working together with NVIDIA todevelop high performance computing capa-bilities for its seismic volume imaging and3D visualization software SVI Pro.

Oil and gas customers include Hess,Total, CGG / Veritas, Headwave, Acceler-ware, and Seismic City.

ffA believes that the computational per-formance will help improve its workflowsfor seismic volume interpretation.

At ffA, the computer chips are being

used to put to-gether 3D im-ages, workingon data sets asmuch as 200gbat once.

ffA makessoftware whichcan extractfaults and com-plex structuresin the data, so itneeds all thedata processingit can get. Itworks on thepost stack seis-mic data.

Using thenew chips, itcan provide re-al time process-ing – in other words, the user can see the re-sults of what they are doing straight away,rather than send the data to a processing cen-tre and wait a few hours. “We can get the re-sults in front of the user in real time,” saysMr Purves. “We want to hide the comput-ing.”

Or, as NVIDIA’s Mr Keane says, “It’slike the difference between looking at thephoto and looking at a movie.”

ffA has been recommending that itscustomers install NVIDIA chips for 5 years.Mr Purves says that what he likes most about

the chip is its scalability – you can start withone, and then add more and more as yourneeds increase.

He also likes the flexibility- softwarewhich runs on NVIDIA chips can also runon other chips. “We’ve always been cautiousabout locking ourselves into hardware,” hesays.

“We will develop for this quite aggres-sively over the next 18 months,” says MrPurves. “This computing capacity is a wayto design software differently. It will changethe way you do your work,” he says.

Texas Instruments - new projector chipTexas Instruments has launched a new projector chip, which can create much clearer and brighterprojections than others on the market, the company claims.

Texas Instruments has launched a new highresolution projector chip – called WUXGAwith a resolution of 1920 x 1200 which ishigher than full HD, with its 'Digital LightProcessing (DLP) technology, which canprovide much clearer images in oil and gascollaborative working centres, and also headmuch less maintenance than other chips onthe market.

It should help companies create muchmore appealing large displays, which aremore pleasant to look at, and which can con-vey more information, more clearly, andwhich can combine many different imagesand windows on the same screen.

The image is created inside the chip,and then the hardware around it projects theimage onto a display.

The technology is capable of using up

to 6 colours, instead of the standard 3 coloursused on most of projectors - it has yellow,cyan and magenta in addition to the normalred green and blue.

"That lets us do more accurate andmore colourful image," says John Reder ofTexas Instruments. "This is an approachmany of the highest photo printers use."

The projector also has the best contrastratio, he says.

Another advantage is that projectorcooling system does not have any filter, andso no filter cleaning is required; standardprojectors recommend that the filter iscleaned every 100 hours of use, which canbe a hassle.

The projector avoids the need for filtersby sending the cooling air along a differentpath. Light comes in at the top of the chip

and goes out of the top of the chip, so it canbe cooled from the bottom.

"With other display technologies, thelight passes through the chip, so you have toblow air through the chip to cool it," he says.

WUXGA projectors based on DLPtechnology available now are projection de-sign F10 and projectiondesign F30.

A screenshot from ffA’s advanced seismic volume imaging and 3Dvisualisation software SVI Pro, which will use NVIDIA CUDA to deliverenhanced performance



18 digital energy journal - September/October 2008

Oil and gas production newsHalliburton acquires remaining sharesin WellDynamicswww.halliburton.comHalliburton has reached an agreement withShell Technology Ventures Fund 1 B.V. toacquire its 49 per cent interest in intelligentwell company WellDynamics.

This means that Halliburton, instead ofowning 51 per cent of WellDynamics, willown the company outright.

WellDynamics has approximately 510employees with principal offices in Houston,Texas, and Aberdeen, U.K. Its SmartWelltechnology has been deployed in over 300wells worldwide.

WellDynamics has already combinedSmartWell with the WellSolver software de-veloped by Halliburton’s software divisionLandmark, which can be used for modelingthe reservoir. By using SmartWell and Well-Solver together, you can model and optimisethe well continually.

Invensys supplies equipment toUniversity in Kazakhstanwww.invensys.comAutomation company Invensys Process Sys-tems (IPS) has agreed to provide equipmentto the Kazakh-British Technical Universityin Kazakhstan, to help engineers learn howto use automation equipment. It will fullyequip a technical laboratory to use InFusion,its Enterprise Control System.

It will provide twelve personal comput-ers, fifteen large-screen monitors and threeservers, as well as a bank of micro con-trollers for automated systems.

IPS has also agreed to fund a perma-nent Chair of Computing and Software at theuniversity.

IPS now has offices in both Almaty andAtyrau, Kazakhstan, and its goal is to ensurethat by 2010, more than 80 percent of its em-ployees in Kazakhstan will be Kazakh na-tionals.

LIOS Technology 5 Year Shell DTScontractwww.lios-tech.comLIOS Technology has secured a 5 year con-tract from Brunei Shell Petroleum the FarEast to supply its Distributed TemperatureSensing (DTS) systems for downhole wellmonitoring using fibre optics.

The contract was awarded after a 2 yearfield evaluation period.

The technology can be used to continu-ously monitor temperature in the wells, en-abling full coverage of complex and multi-lateral wells with a single optical fibre ca-ble. The data can be sent from the well inWITSML format, so it can integrate easilywith data collection and archiving systems.

Test your data management maturitywith Paraswww.paras-consulting.com

UK oil and gas consultancy Paras haslaunched a free online data management ma-turity assessment tool.

Users are presented with a series ofquestions about how good their data man-agement is. From the answers, Paras will tellyou how good your data management iscompared to the industry average, and whichareas you are particularly strong or weak at.

The tool is part of Paras’ new website,which includes a range of case studies, pa-pers and past presentations.

CriticalControl integrates gasproduction databaseswww.criticalcontrol.comCanadian gas database company Critical-Control Solutions has announced plans to in-tegrate together its three databases of gasproduction information, ScanGas, Netflowand ProTrend, into one database calledProStream.

By the end of 2008, the ProStreamdatabase will contain production data asso-ciated with more than 100,000 measurementpoints making it the largest consolidation ofmeasurement data in Canada, the companyclaims.

ScanGas is a measurement and analy-sis service used by gas producers to deter-mine their gas production from gas wellswhich are monitored using gas chartrecorders;

NetFlow is a web based measurementand control application is used to track gasproduction and manage electronic devices atgas wells which are monitored using elec-tronic flow measurement devices.

ProTrend is validation and analysisservice, is used to manage gas compositiondata associated with gas wells and othermeasurement points.

Merrick releases new eVIN versionwww.merricksystems.comHouston oil and gas technology companyMerrick Systems has launched a new versionof its field data capture system, eVIN 2008,

which is used for capturing daily well infor-mation on approximately 25% of the produc-ing wells in the United States and 15%worldwide.

Pocket PCs are used to capture field da-ta with error checking, data validation andgraphing built in.

Using can link with any external data-base in the office in addition to the core ta-bles associated with production accountingsystems.

eVIN allows field operators to compareon a daily basis actual versus forecasted per-formance of a particular tank battery or gasmeter, validating the forecasting process andallowing for adjustments in order to reachproduction targets.

The new application, eVIN 2008, iscurrently being deployed at Exco Resources(XCO), a Dallas based independent oil andgas production company with approximately15,000 active wells in the United States.

Exco is using a combination of handheld and Tough Book PCs running eVIN forover 300 pumpers on a daily basis.

Absoft sets up oil and gas practicewww.absoft.co.ukAberdeenSAP consul-tancy Ab-soft has es-tablished anew busi-ness prac-tice dedicat-ed to theNorth Seaoil and gasindustry.

Thecompanyhas always done a lot of work with the NorthSea oil and gas industry, but now it will servethe industry with a dedicated team.

The head of oil and gas is Don Valen-tine, who has spent the last 10 years imple-menting SAP in the oil and gas industry.

As part of the move, the company hasset up a dedicated training facility at itspremises in Bridge of Don, Aberdeen.

StatoilHydro uses OSISoft in‘Operation North’www.amitec.noStatoilHydro has agreed to use OSIsoft’s PIinformation management system on its ‘Op-eration North’ area, which includes a num-ber of fields in the Norwegian Sea and Bar-ents Sea, 20 per cent of its total Norwegianproduction.

PI will be installed and implemented inconjunction with the production stop at

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Kristin/Tyrihans in September/ October thisyear, followed by implementations at ÅsgårdA, Åsgård B, Norne and Heidrun fields. Thecontract has an option for two more fields,and the frame agreement is valid for fouryears with an option for a six year extension.

The data from all of the oilfields willbe handled by one large server, instead ofone server per asset, as in previous similarimplementations, in order to reduce the ad-ministrative burden.

The software was supplied by Amitecof Norway.

The software can be used to gather,store, structure, distribute and present the re-al-time information to the various applica-tions and disciplines.

StatoilHydro will use the software toincrease collaboration between different dis-ciplines offshore and onshore, through bet-ter use of real-time data and integrated oper-ations.

Expro acquires CiDRA Corporation www.exprogroup.comExpro International Group has agreed to ac-quire the oil and gas metering business ofCiDRA Corporation, based in Connecticut,for USD $60.5 million.

The new business will be called ExproMeters, and will develop, manufacture andsell a range of flow meters for the oil and gasmarket, in addition to providing productiontesting services on a rental basis.

The non-intrusive, clamp-on design ofthe flow meters enables them to be deployedon new or existing installations, and helps tolower both the technical risks and operatingcosts associated with flow measurement,says the company.

Broadpoint appoints CapRock presi-dent as CEOwww.broadpointinc.comOil and gas communications companyBroadpoint has appointed Errol Olivier as itsnew President and CEO, following his retire-ment from a 17-year career at satellite andtelecommunications provider, CapRockCommunications, where he served as presi-dent and COO.

At CapRock, Mr Olivier led the com-pany’s return to private ownership, leading abuyout from owner McLeodUSA. He wenton to grow the company’s revenues by morethan 400 percent in recent years, leadingbusiness units operating in North America,South America, Asia, Africa, and the UnitedKingdom.

He also previously served as the vicepresident of CapRock’s enterprise businessgroup, managing sales and marketing for allof the company’s strategic markets. During

his tenure he pioneered the first successfulmulti-tenant maritime satellite telecommu-nications business strategy in the Gulf ofMexico and expanded it globally.

Schlumberger acquires exclusiverights to BabelFishwww.slb.comSchlumberger has acquired exclusive distri-bution rights in the upstream oil and gas in-dustry for the BabelFish production integra-tion software from ISS Group, Australia.

BabelFish is a framework that enablesintegration of diverse data from many differ-ent systems, such as production operationsystems, field equipment and managementapplications.

The software displays the data in a use-ful way, to mirror the organisation’s opera-tional environment. This means that produc-tion engineers and managers can monitorand adjust operations systems.

The BabelFish tool works well togeth-er with Schlumberger’s Avocet productiondata management, surveillance, analysis andmodeling solutions, the company says.

Moblize launches WITSML data serverwww.moblize.comMoblize, a Houston company specialising inreal time collaboration services for oil andgas, has launched a new software solution forcollecting and managing data from oil andgas wells, in standadrd formats such asWITSML.

The software, called DARP (decisionand results with Peer), collects and stores re-al time and historic data in variety of formats(like WITSML, WITS, LAS,Modbus, csv,text, OPC) from multiple vendors.

The software runs on a special comput-er in a box unit, which can be located at a rig,on producing wells or in the office. The soft-ware has an analysis tool to assess the quali-ty of the data.

The data can be accessed using anyWITSML compliant data viewer or interpre-tation system whether at rig site or office lo-cation.

WITSML, which stands for Well Infor-mation Transfer Standard Mark-up Lan-guage, is an emerging standard format forcommunicating real time well informationback to company offices and now beingadopted by BP, Statoil, Shell, Total and oth-ers.

Information which can be communicat-ed by WITSML includes SCADA (automa-tion) data; logging while drilling; measuringwhile drilling; mud logging, and data fromfield devices and maintenance systems.

By using this software, it should be eas-ier to enhance interoperability between the

variety of expert interpretation softwarepackages, and to avoid being tied into soft-ware products from a single manufacturer,says Moblize CEO Amit Mehta.

Tundra licenses DO2 Technologies for e-invoicesTundra Oil & Gas Partnership (Tundra) hassigned a multi-year agreement to license so-lutions to automate and streamline its invoic-ing and accounts payable processes fromDO2 Technologies (DO2), a provider of elec-tronic invoicing technology.

Tundra Oil & Gas Limited is a private-ly owned company based in Winnipeg, Cana-da, with oil production in Manitoba andSaskatchewan.

Tundra selected DO2's electronic in-voicing applications to automate its invoic-ing process and provide additional value inthe areas of automated price reconciliationand early payment discounts, the companysaid.

Tundra and DO2 will begin implemen-tation of a broad suite of DO2's products thatprovide functionality for not only electronicinvoicing, but also the management of paperinvoices (scanned invoices) within the elec-tronic invoicing workflow, the managementof early payment discounts, and the reconcil-iation of invoices against contracted prices.

DO2's platform, OpenInvoice, auto-mates the process of invoice generation, re-ceipt, adjudication and approval, and stream-lines traditional labor-intensive paper-basedworkflow processes.

Tundra also licensed OpenInvoice Ear-lyPay, which integrates with OpenInvoice toallow users to identify and manage invoicesthat are subject to earlypayment terms.

Additionally, Tundra also licensedOpenInvoice Pricebook, which automaticallycompares contract terms to every line itemon incoming invoices to ensure proper pric-ing, and OpenInvoice Image, which managesscanned paper invoices and fully electronicinvoices through the same workflow, provid-ing a completely paper-free environment.

Roxar completes four-year softwaredeal with StatoilHydroRoxar has signed a Letter of Intent (LOI) fora four-year global software contract for thefull suite of its reservoir modelling solution,IRAP RMS, with StatoilHydro.

The contract, valued at approximatelyUS$5.9 million (NOK 30 million) per annumis one of the largest ever contracts for Rox-ar's software division.

Roxar has previously held softwareagreements both with Statoil and Hydro, andthe new contract represents an annual rev-enue increase for Roxar of about 10%.



21

Caesar Systems – helps you makedecisionsHouston software company Caesar Systems has software to help oil and gas exploration and productioncompanies solve their toughest challenge – good decision making

Houston company Caesar Systems has re-cently launched a new version of its Petro-leum Ventures and Risk business simula-tion software (PetroVR), which helps staffat oil and gas companies prepare analysisfor decision-making, integrating a widerange of different input data, and involv-ing all of the expertise in the company.

The Caesar Systems software is, thecompany believes, different to other deci-sion assistance software in the market, be-cause of the integration of a wide range ofdata inputs it can do.

For example, the Caesar Systemssoftware can crunch data about the subsur-face, with data about the surface, such asabout facilities, drilling, tax, contracts,deal terms, and also different possiblecauses of downtime, catastrophic events.

Many Digital Energy Journal readerswill have seen software which helps makerelatively simple decisions using proba-bilistic analysis, or ‘what-ifs’ (ie – howyour yearly profits will change if the oilprice drops to $80).

Many companies restrict themselvesby modelling their businesses too narrow-ly, the company believes.

“A lot of the companies approach de-cision making from the perspective of hav-ing a lot of different parts and summingthem up,” says CEO Victor Koosh. “Theproblem with that approach is you don’tsee the interdependencies between theparts.”

“What we’re helping to do with thesoftware is structure that complexity – andgiving ways to visualise and inspect, sopeople can find out and understand the op-tions,” he says.

“We could have a reservoir engineertalking to a facilities engineer, saying if weuse this different design, maybe our pro-duction can be lower, but our metrics aregoing to be better,” he says. “So can wespend the money in this particular way. Bydoing this type of analysis – you are ableto increase your confidence.”

It can be used to plan specific fields,or work out strategies for particular coun-tries, or how to enter new businesses.

Users can plug in data from a rangeof different areas, including the subsur-face, surface infrastructure, and capital, or,as the company puts it, the ‘entire oppor-tunity lifecycle’. Using all of this differ-ent data, users can put together differentscenarios and compare them.

The system integrates with some oth-er software packages including reservoirsimulators.

The first step of using the tool is todecide which questions you want to an-swer.

The software will then help you puttogether different scenarios, of possibleanswers to the question, depending onwhat happens to different variables. Youcan get answers, such as the maximum ca-pacity you can get, and what impact dif-ferent constraints (e.g. a shortage of staff)could lead to.

This will help you plan the system soyou maximize your flexibility.

The software does not necessarilyaim to come up with a single perfect an-swer; instead it aims to help provide infor-mation which people can use to understandthe situation better, and have more confi-dence in their understanding, which theycan then use in their decision -making.

The software is perhaps not the besttool to use for a purely technical decision,but most major decisions in the industrycome to taking a comprehensive view onfuture financial / political / chance factors(e.g. tax, costs, prices, weather, accidents,political problems), as well as estimationsof likely production made on a fairly rudi-mental level.

Managing capital betterMany people believe that the oil and gasindustry could manage its capital muchmore effectively; it just hasn’t had theright tools and methods to do it.

“There’s been a huge pent up demandfor an integrated approach to understand-ing our business,” Mr. Koosh believes.

“The industry hasn’t been a centre ofexcellence around capital management,”he says. “We’ve been beaten up on return

on capital employed and other metrics as-sociated with our investment profile.”

“As we are gearing up because of thehigh energy demand – the pressures on un-derstanding and creating the effectivenessand efficiency are going to continue to in-crease.”

“The total capital spend is signifi-cantly increasingly.”

CompanyCaesar Systems has grown from having tenemployees just 2 years ago to having 30now. The company was also a finalist inthe Platts risk management award lastyear. “We’re taking our business to a newlevel,” says Mr. Koosh.

The software company was foundedin 1996 by a petroleum engineer namedJerry Blinten, who was familiar with manyof the difficult decisions that people at oiland gas companies have to make.

Mr Blinten had been involved in proj-ect evaluations around the world, includ-ing the Permian Basin, Gulf Coast, North

Making software to help with decisionmaking - Victor H. Koosh, Chief ExecutiveOfficer of Caesar Systems





Sea, West Africa, Gulf of Suez, ArabianGulf, and the former Soviet Union, work-ing with Schlumberger and Amoco.

Mr. Blinten had become quite famil-iar with the risks associated with majorprojects, and started developing a softwaretool which could be used to automaticallyanalyse the risks, considering the most im-portant exploration, engineering and finan-cial uncertainties, to enable the evalua-tions to be made faster, better and more ac-curately.

After creating the first software tool,called Petroleum Ventures and Risk(PetroVR), the company went on to createa range of different tools for petroleummanagers, geoscientists, engineers andeconomists.

What he created is, in effect, not onetool, but a range of different tools whichcan be used to perform a wide range of dif-ferent analysis.

Now, most of the world’s oil majorsare using the software, includingAnadarko, BHP Billiton, BP, Chevron,ConocoPhillips, Murphy Oil, OccidentalOil & Gas, PDO, PFCEnergy, Pioneer Nat-ural Resources, Shell, Sonatrach, Total andTransMeridian.

It is currently helping two companiesallocate around $100bn of investment.

Consulting supportCaesar Systems does not pretend, as manyother software companies do, that its soft-ware is so simple you can take it out of thebox and it will immediately give you a bigrange of useful data.

“There’s no question that we have toeducate our customers as to how to use thetool set – it’s only as good as the use youmake of it,” he says.

The company has been recruiting anumber of specialist consultants, who canwork with customers and help them to getthe most out of the software – and this isone of the fastest growing parts of thebusiness.

These consultants “are all top notchE&P professionals who understand thechallenges of the industry- people whohave worked in O&G solving these prob-lems and trying to come up with solu-tions.”

The consultants help train the cus-tomers “in how to use the tool set most ef-fectively,” he says. “They work with themto understand their problems and chal-lenges – to help them come up with cre-ative solutions.”

“It gives us the ability to then trans-form our client companies and implement

the best practises that we’ve all been de-veloping.

Version 6.1The company launched version 6.1 of itsPetroleum Ventures and Risk business sim-ulation software in February 2008, with anumber of new features.

The new version has functionality forusers to do Monte Carlo simulations on itsscenarios, so it can work out the probabil-ity of different outcomes.

There is a new ‘simple rig mode’ thatcan do a quick ‘first pass’ assessment of arig scenario without complete definitions.

There is a way to display decisiontrees, which show the path the decisionshould make.

Improved communicationMany customers find that by using thesoftware they can improve internal com-munications.

There are often very complex deci-sions which need to be made in a project,involving competing interests (such as in-creasing potential upside, decreasing risk,decreasing spend).

The Caesar Systems software can dis-play these complex choices as graphswhich people in the company can look attogether; this can be a much better way ofresolving conflicting interests than havinga meeting with the different parties, whenthe person with the best personal commu-

nication skills often wins.“We often have hundreds of users

with a given company,” he says. “Youhave different people working on the dif-ferent tools and they all come together. Oryou can have people from different placesusing the same tool.”

Decisions often tend to come down tocomplex trade-offs (for example over riskand potential return), but using the soft-ware tools can make this much easier tosee clearly.

“You can choose to do many things –whatever you choose to do has conse-quences – understanding how your choic-es impact the consequences is the key tosuccess.”

“You’re then able to put managementin place – to attempt to get the optimal, orget as close as possible to your desiredoutcome.”

“When you come up with the scenariojointly – that’s a much more powerfulmethodology – than individuals coming upwith the pieces,” he says.

Some companies build workflowsaround the software, so a range of differ-ent people involved in a decision makingprocess are given specific tasks to com-plete, questions to answer, or informationto look at, and ‘gates’ which need to be gotpast for the project to progress.

The Caesar Systems software can beadapted to accommodate these work-flows.

The "Monte Carlo on Scenarios" feature, new in PetroVR version 6.1, illustrates comparison ofprobabilistic results from multiple scenarios, ensuring compatibility among the scenarios.Graphical displays show probabilistic differences between scenarios that reveal the statisticaldensity.


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Splitting up the allocationsWorking out who should get what out of the returns on an oilfield can get very complex, when you havelots of wells, lots of investors, and complexities such as gas being used for lift as well as being produced.EnergySys has developed software which should make it easy to manage.

When you have one well and two ownerswith a 50 per cent stake, it is relatively easyto work out how much each one gets – youjust divide the profits by two.

But if there are more wells, more own-ers, stoppages to production, and lots morecomplexity, for example gas being used toprovide lift to the oil production, as well asbeing produced, then it rapidly gets toocomplicated to work it all out manually. Fur-ther, there’s a need to keep all of the histor-ical information and audit trails.

UK company EnergySys has launcheda new version of its software tool, ENER-GYSYS 4, which aims to make it easy tokeep track of and report product ownership.

The software understands who ownswhat percentage of each well, and alsoknows how much each well is producingevery minute of the day, so it can calculatehow much money needs to be paid to in-vestors.

You can get different views on the da-ta, for example see how much productionthere has been from one field incorporatinga number of different wells, or seeing howmuch production should be allocated to in-dividual investors on different days.

The software also has functionality towork out how performance will change inthe future for different partners, based onanticipated decline rates.

Put it on the webThe software is also available on the inter-net, so you can give your partners a loginand they can see at a glance how much prod-uct they’ve been allocated, and how theamount has been calculated, to save youhaving to explain it to them with long tele-phone calls.

You can give your partners rights to see(and edit) whatever parts of the system youwant them to see.

The cost for this service is £500 peruser per month, including support and up-grades, with all of the software hosted on-line and full data backup.

Alternatively users can host the systemthemselves; in which case, EnergySys willprovide an appliance with all software andhardware ready set up, all they have to do isswitch it on and plug it into their network.

EnergySys offers to upgrade to all the

hardware every three years, and can also up-grade the software remotely if the customergives EnergySys permission.

Using it yourselfThe software also has sophisticated report-ing functions, which should be useful for thecompany operating the field.

There are tools to put together a rangeof different graphs. You can also set up reg-ular reports to be sent to you by e-mail.

The software will also put togetherstandard documents for regulators, in exact-ly the right format.

The software can be used for other ap-plications where oil flow needs to be divid-ed between different partners.

It can also be used to play with ideas –see how much money different partnerswould get from a project, according to a cer-tain proposal, with the production decliningat a certain rate.

It can be used for pipelines and tankstorage.

CustomersCompanies that use EnergySys software in-clude BG, Total, ExxonMobil, Atlantic LNG,BTC and SCPC.

The biggest target market is peoplewho are trying to manage their allocationsand reporting using Excel, but it is gettingincreasingly complicated to do. These peo-ple need good tools that support auditingand versioning, but have previously notbeen able to afford the cost of enterprisesystems. ENERGYSYS is designed to de-liver all of the functionality they need at aPC price.

Doing it fasterEnergySys recently built software for oilcompany Baku-Tblisi-Ceyhan pipeline,which links Baku in Azerbaijan on the BlackSea coast, with Ceyhan in Turkey.

The software application was used toforecast and allocate how much producteach of the partners would get, who ownedthe product in which parts of the pipeline,and included tank farm management.

However if the latest version of thesoftware had been available, the job couldhave been done much faster, says EnergySysmanaging director Peter Black.

“Using ENERGYSYS 4, we reckon we

could have done it in a tenth of the time, and20-25 per cent of the cost,” he said.

Easy to set upEnergySys has taken pains to ensure that thesoftware is as easy to set up as possible, witha common complaint about rival softwarepackages being the complexity of settingthem up.

“People say the biggest challenge withhydrocarbon accounting and production re-porting is the cost, configurability, and timeto deploy,” said Peter Black, managing di-rector of EnergySys.

“We've done a lot of work around con-figurability, so it’s faster, simpler and cheap-er. We want to make it as easy as possibleto configure.

Companies can type in their businessrules in a spreadsheet and then upload them.

The software has a ‘personality’ layer,with all the special customisations; thismeans that the software can be updatedwithout affecting people’s settings.

The software has a sophisticated audittracking function on it; if anyone makes achange, they have to fill in a form sayingwhy they made the change, and the softwarerecords who made the change and when.

You can lock down data files from thepast, so people can’t change anything.

Daily production data can be input in-to the software from your company histori-an system, or you can upload the data as atext file.

EnergySys does not offer services toconfigure the software, but it does have part-ners it works with who can set it up for you.

Use Energysys 4 to keep track of theproduction from different fields, and who therevenue should be allocated to


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The rigs, currently being built at KeppelFELS Singapore, will complete construc-tion in early September, and will be char-tered out to India’s Oil and Natural GasCompany (ONGC), and operated offshoreMumbai. $350m is being invested inthem.

Jindal has been running rigs since1988, as part of an exclusive operating al-liance with Noble Drilling Corporation ofthe USA, but this is the first time it hasowned rigs itself.

SpecTec will supply its AMOS main-tenance and purchasing software, and alsodatabase construction, training and imple-mentation. The software will also run onJindal’s office in Mumbai.

The software, originally designed foruse in the maritime industry, is designedto work on low bandwidth data communi-cations between the vessel and the office.

The maritime industry generally hasto make do with very low bandwidth datacommunications (64 kbps is normal), andthe connections are not always on, theyconnect for a few minutes every day.

This means that any software runningon both ship and shore has to be able tomanage without both sites being able tocontinually access the same database.

Instead, parallel databases need to bemaintained on both ship and shore, withupdates sent as required between the two,as highly compressed e-mail attachments.

Most customers on oil platformshave become accustomed to always usingVSAT satellite communications, but evenso, as bandwidth gets tight and more peo-ple fight over it, the ability to run softwarewhich does not need high bandwidth issomething oil companies are starting toappreciate.

This is not the first project SpecTechas done for the oil and gas industry; it al-so builds databases for a number of USdrilling rigs, and provides software forItalian oil and gas contractor Saipem, aswell as providing software for FPSOs inAsia and Europe.

Aniruddha Patnaik, senior drilling

engineer at Jindal Drilling, and projectmanager for evaluation of the SpecTecsoftware, says that one of the main rea-sons he chose SpecTec was because of thecompany´s reputation and because it knewthe software was proven.

“AMOS and SpecTec are well knownin the industry and I’m sure that we couldnot be wrong in selecting AMOS,” hesays.

“We have high hopes that AMOS willhelp to take Jindal to the next level in theoperation and management of our rigs”.

ImplementationThe project kick-off took place on March2008, with discussions between Jindal andSpecTec about the maintenance and pur-chasing procedures and processes to be in-corporated into the AMOS database.

The two companies also discussed

workflows, design and development ofcustomized purchase forms and templates,building databases for the two rigs, deliv-ery and commissioning of the software in-cluding AMOS Replication, and providingtraining to both rigs and base office per-sonnel.

SpecTec runs database building cen-tres in Manila and Shanghai, where staffcreate databases from the technical infor-mation supplied by the shipyard andequipment suppliers (nearly always on pa-per).

A common mistake when implement-ing software is that people forget that thequality of the database is often a lot moreimportant than the quality of the software.The database is a much more critical fac-tor in whether or not the customer gets thevalue from the software that they are look-ing for.

Jindal Drilling to use SpecTec’smaintenance and purchasing softwareJindal Drilling of India has signed a contract with SpecTec Asia Pacific to install its AMOS maintenanceand purchasing software on two new jack-up drilling rigs being built at Keppel Yard in Singapore.

AMOS project kick-off meeting. From right to left: Narayan Ramaswamy (deputy projectmanager-operations with Jindal Drilling); P. Bhat (chief engineer, Jindal Drilling), P.V.George(chief engineer, Jindal Drilling), V.K.Nagpaul (director and projects head jack-up rigs, JindalDrilling), Chinta Srinivasan (Project Manager, SpecTec), and P.B. Kumar (deputy projectmanager-operations, Jindal Drilling).



27September/October 2008 - digital energy journal

“The database is a total key for thewhole project,” says SpecTec’s projectmanager Chinta Srinivasan.

SpecTec is putting effort into under-standing Jindal’s workflows, “We need tounderstand their current flow of work andhow their hierarchies are there, so we canincorporate a similar flow in the system,”he says.

The systems and databases should bedelivered to Jindal by August / September2008.

Once the database has been made,SpecTec will commission and install thesoftware. “There are a lot of intricacies –making all the connections work,” he says.

Discussions are underway about con-necting the software to Jindal’s financial

www.csiro.auThe drilling was into a coal seam inQueensland, to produce coal seam gas.Coal seam drilling needs to be very pre-cise, and it is not unusual for the drill bitto miss the target, CSIRO says.

But by using geophones on theearth's surface to pick up the sound waves(seismic) created by the drill bit, calcula-tions could be made of the drill bit's exactlocation, enabling it to be steered moreprecisely into the gas.

CSIRO believes that the technologycould be used in other exploration andmining operations.

Minerals Down Under MicroseismicTeam leader, Dr Xun Luo, said the drillstring and bit were navigated sub-horizon-tally towards the target gas productionwell situated approximately 1200m fromthe test drilling site.

Getting a usable signal to noise ratiowas a challenge, even with a number ofgeophones being used.

"The seismic data was still rather

noisy and contaminated by periodic elec-trical noise signals," said Minerals DownUnder Microseismic Team leader, Dr XunLuo. “However, we applied a sophisticat-ed filtering and cancelling algorithm wtihthe result that we could successfully iden-

CSIRO uses microseismics to trackdrilling

system, a Microsoft Navision ERP system.The main reason Jindal chose

SpecTec, Mr Srinivasan says, is that it isproven and very stable, with many cus-tomers using it, particularly in the maritimeindustry.

Purchasing softwareFor purchasing, Jindal will be able to raiserequisitions on the rigs, and send data backto the AMOS system in the office. The pur-chasing department will be able to exam-ine them, approve them, and send requisi-tions out to the right vendors.

The expected delivery dates can beautomatically put in the system, so the rigpersonnel know when to expect delivery.

Once the quotes come back from the

supplier, office staff can do a quick com-parision of pricing and delivery terms, andthen an approval can be issued to the sup-plier.

The suppliers deliver the goods to atransit warehouse in Mumbai, and fromthere they can be put on the next boat go-ing out to the rig. However they are notcounted as ‘received’ in the software untilthey arrive on the rig.

Once the goods arrive onboard, thestaff on the rig let the computer systemknow what has arrived, so staff on shorecan check it. There is no paper transferredbetween the rig and the office.

Invoices can be sent by the supplier tothe shore office, and then issued for pay-ment.

Researchers at Australia's Commonwealth Scientific and Industrial Research Organisation (CSIRO) havesuccessfully tracked the location of a drill bit at 300m depth (984 ft) and 1200m (3900 ft) horizontaldistance from the drill site using microseismics.

tify the drill bit location and were able tointercept the target borehole at the first at-tempt.”

The initial trial and future research isbeing supported by one of the leading pro-ducers of coal seam gas in Australia.

Tracking the location of a drillbit using microseismics




Invensys - virtual reality simulators for plantdesign and safety

Invensys has developed an integrated approachto simulating a virtual plant which combines aninteractive 3D virtual environment with processand control system simulators that mimic howa real plant operates.

Wearing stereoscopic headgear, and usinga control device similar to the ‘Wii’ handheldwand, an operator can move around the virtualplant and interact with equipment.

This means that the plant can be tested outbefore it is built, and scenarios for safety andoperator training purposes can be performed ina safe environment in order to learn the bestway of dealing with events, expected or unex-pected.

Integration with the DCSVirtual simulators can be linked so that a teamof operators in the control and in the field canwork together to perform a task exactly as theywould in the real world.

Crucially, as the virtual simulation islinked to Invensys Process Systems' DYNSIMdynamic simulation tool, changes made in thevirtual environment will affect the running ofthe plant in a realistic way.

Simulators for all major DCS (distributedcontrol system) and PLC (programmable logiccontroller) systems are supported, includingEmerson DeltaV, Honeywell TDC and Yoko-gawa Centum.

For example, if an operator in the fieldsimulation closes a valve somewhere in theplant, the control room simulator will show thereduction in flow rate, pressure increase etc.

The control room staff can then interactwith the process control simulator to take someaction, or they can contact the operator to openthe valve again.

In a more complex scenario, teams cantrain to respond to normal or abnormal events,some of which would not be possible to simu-late in real life, and the different plant behav-iours and operator interactions can be better un-derstood.

Situations can also be pushed further untila disaster happens, and the sequence of eventsthat led up to it can be factored into the risk as-sessment.

“In practice, this means that all those ab-normal situations that an operator feared andnever dared to test in reality can be tested andthat different plant behaviours and operator in-

teractions can be understood,” explained Maur-izio Rovaglio from Invensys Process Systems.

Facilities designThe virtual environment is also a useful tool fordesign; being able to experience the layout andoperation of a facility such as an oil platformbefore it is built can lead to improvements inefficiency.

It is a relatively simple process to create arealistic virtual representation from the 3D de-sign, with much of the procedure automated.

In just a few weeks, the virtual model canbe created with realistic textures and sounds asthe virtual operator moves about.

As operators perform common tasks in atraining scenario, it then becomes much easierto spot where efficiency gains can be made.

For example, two valves that are oftenused in conjunction may be sited a large dis-tance away from each other; having to movebackwards and forwards in the virtual environ-ment makes it clear that this would slow downa procedure.

This experience can be fed back to the de-sign team who can make changes if possible,moving the two valves next to each other.

“As VE technology grows and devel-ops, more and more process expertise will

be embedded within it, improving the entirelifecycle of production plants and storagesites,” said Mr Rovaglio.

Design for safetyRecent studies have shown that more than 90%of major accidents in high-risk sectors such aschemical and petrochemical production can beattributed to human error and poor training.

Invensys believes that it is necessary toimprove the way in which such plants are oper-ated throughout the entire lifecycle.

“The strength of VE is that all aspects ofplant safety can now be tested and experiment-ed with, not just for the sake of training, but tohelp risk assessors better identify hazardousscenarios and, above all, to ensure that decision-makers make the right decisions at the righttime,” said Mr Rovaglio.

VithualisInvensys is the lead simulation technologyprovider for an EU project calledVIRTHUALIS, which is focussed on combin-ing human factors and virtual reality to improvesafety and operator training.

The VIRTHUALIS project is due to com-plete in May 2009. www.virthualis.org

Simulating plant design and operation - an operator can walk around the virtual plant andinteract with equipment such as control valves; the changes will be reflected in the controlroom simulator.

Invensys is pioneering the use of simulators, combining human factors and virtual reality, for improvedsafety, integrated operator training and as an aid in the design of oil and gas facilities.



29September/October 2008 - digital energy journal

on the deck so that the seamen felt like theywere really on a vessel and had good train-ing possibilities,” said Mr Andersen.

Some of the features available are anadvanced weather system modelling differ-ent sea conditions, PSV (Platform SupplyVessel) and subsea ROV (Remote OperatedVehicle) under water operation capabilitiesand a heavy lift crane simualtor.

FarstadFarstad recently announced a new NOK 30million simulator centre in Perth, Australia,which it will use to recruit and train crew forits global operations.

Farstad was concerned about its safetyrecord, and wanted to reduce the number ofmajor incidents that caused loss of time and

The Offshore Simulator Center (OSC) ispart of the Møre cluster, a group of offshorecompanies including shipowners, ship de-signers, shipyards, equipment suppliers andÅlesund University College that turned overNOK 31 billion in 2006.

The cluster forms a tightknit communi-ty, taking a co-operative approach which itbelieves will make it the world’s leading andmost innovative cluster, with a choice of thebest suppliers around.

The Norwegian government gave thearea the status of Norwegian Centre of Ex-pertise Maritime, and it has ambitious plansto expand, aiming to increase its turnover tomore than NOK 100 billion by 2016.

The OSC was founded by Rolls-RoyceMarine, Farstad Shipping, the NorwegianMarine Technology Research Institute (Mar-intek) and Ålesund University College in2004 and each organisation takes a 25%stake.

The center was born out of problemswith safety and efficiency of operations thatseveral members of the Møre cluster werehaving to deal with.

“Farstad was having accidents duringanchor handling operations where seamenwere injured,” said Øyvind Andersen, man-aging director of the OSC.

“Rolls Royce was concerned about itswinches breaking down, possibly because oflack of training. It was having complaintsfrom customers.”

Simulator training was seen as an ef-fective way to improve safety and test equip-ment in ‘real’ situations.

The OSC simulator was developed as anon-proprietary system, with the core func-tionality available to anyone who wants tobuy it, although specific functionality is de-

veloped on request and available only to thecustomer.

The simulator is able to integrate thevarious aspects of anchor handling opera-tions, so that the bridge crew, deck crew, rigwinch and rig crane operators and ROV op-erators can work together in an unified train-ing scenario.

“This means entire crews may therebybe trained in a wide variety of incidents andemergency situations and their performanceand commitment to safety improved,“ saidMr Andersen.

The simulator realistically models shipbehaviour, from propulsion systems to sta-bility and deck layout.

“One of the major challenges we hadwas to get the physics right for equipment

Offshore simulation - special featureThe Offshore Simulator Center in Ålesund, Norway has developed a non-proprietary simulator thatintegrates bridge, deck and rig simulations to improve safety in offshore operations such as anchorhandling.

The bridge operator station at the Offshore Simulator Center (OSC) in Ålesund, Norway. Asimulation of the deck of an offshore support vessel and a rig in light seas can be seen.

Simulating manual or automatic hoseconnection on a platform supply vessel.

Anchor handling simulation on the deck ofan offshore support vessel.

Simulating the deck stations with a realisticjoystick controller.


30



Kongsberg is a major supplier of dynamicpositioning systems, automation and surveil-lance systems, process automation, satellitenavigation and hydroacoustics.

“This gives us a valuable advantage fordevelopment of maritime simulators,” saysKongsberg.

The company believes its experience inmaritime electronics allows it to build moreaccurate and realistic simulators, and to un-derstand the needs of maritime training.

“The need for personnel training in theoffshore sector today is significant. Simula-tion for training, procedure and missionplanning and desicion support represent theneeds of the industry and are therefore inte-grated parts of the training.”

“Due to the escalating costs, many pos-sible risks and difficult access to offshoremarine assets for “live” training with realequipment in real environments, simulation

under realistic circumstances is a safer andmore cost-efficient training solution.”

Kongsberg’s simulator software is fullyscalable; it can be supplied as full missionor part task trainers as well as desktop appli-cations and web-enabled solutions.

“The flexibility of the system enablesself-study on or off training facilities, in-creases the quality and reduces the cost oftraining.”

A comprehensive software library ofvessel models, propulsion plants, cargo sys-tems, navigation instruments and applicationspecific functionality allows solutions tomeet a broad variety of teaching objectives.

Offshore simulation focusKongsberg has brought all its simulator ex-perience together in a new Offshore Simula-tion Department.

The offshore simulation portfolio will

offer a coherent simulation package to cus-tomers, with increased collaboration.

“We place real value on collaboratingwith our customers. The implementation ofour Maritime Offshore Simulation strategywill enable us to concentrate solely on theoften specialised training requirements of the

Kongsberg Offshore SimulatorsKongsberg has announced a new focus on offshore simulation and launched new anchor handling anddynamic positioning simulators at Offshore Northern Seas 2008.

injuries in operations.Human resources is one of Farstad’s

biggest challenges, and the simulator hasimproved training, resulting in one of thebest safety records in the industry. This helpsto attract crew to the company.

BourbonBourbon Offshore has an ambitious plan toexpand its fleet and double its workforce by2010.

It needed a solution to standardisetraining across its fleet and has two anchorhandling simulator training centres with theOSC.

The first, in Marseille, France openedin 2004 with a DP (dynamic positioning)simulator accessible to all seafarers and ship-builders.

This was then extended with the Bour-bon-Hydro Offshore Oil Training Centerwith a simulator for anchor handling tug sup-ply (AHTS) vessels and helicopter landingofficer training.

Another identical centre will open laterthis year in Manila in the Philippines.

Attracting quality officers is a problemfor all vessel operators with the current crewshortages, and Bourbon sees the simulator asa way to enhance its training and operationalsafety therefore making it a more attractive

employer.

Rolls Royce portable simulator The OSC has also developed a PC-basedportable simulator for Rolls Royce whichcan be used to train on its Safer Deck Oper-ations (SDO) system.

The SDO uses rail mounted cranes thatcan assist with heavy lifting during anchorhandling operations anywhere on deck,while the operator stands safely out of theway.

The simulator uses the same joystickcontrol unit as the real thing and realisticallysimulates the movement of the cranes andequipment on deck.

Since it is on the vessel, it is much eas-ier for crew to find the time to train, and it isoften used as a video game, with crew com-peting to perform a task safely in the fastesttime.

The system was first installed on theOlympic Octopus and has now been deliv-ered to more than 20 vessels.

Anchor handling operations are some of the most dangerous at sea

Anchor handling operations at night in roughseas - the Kongsberg simulator features morerealistic wave patterns and more detailedgraphics


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Oil and gas productionoffshore industry,” says Lars Erik Hilsen,Vice President, Simulation and Training,Kongsberg Maritime.

New anchor handling simulatorKongsberg has developed a new anchor han-dling simulator (AHS) which meets thetraining needs of both the navigator and thewinch operator.

Kongsberg says it has achieved newlevels of realism with detailed object modelsof vessels and equipment, more accuratephysical interaction equations and high res-olution graphics.

The AHS uses a new ‘line’ model torepresent wires, ropes and chains more real-istically and a new hydrodynamic model formore accurate vessel stability calculations.

The graphical engine now includes re-flections from objects and more realisticwave patterns.

“For the anchor handling simulation wehave had a close cooperation with Maersk,one of the biggest Anchor Handling compa-nies in the world,” says Kongsberg Mar-itime’s Product Advisor, Geir Lilje.

“They have described possible scenar-ios with respect to big and small accidents,which has helped us ensure that the simula-tor caters for every possible scenario andeventuality.”

Kongsberg’s anchor handling simulatorfeatures:

• Ship manoeuvring

• Operation of different types of AHequipment

• AH operations with offshore drillingunits and other anchored floaters

• Retrieve and run anchors using allcommon types of equipment

• Find the optimal positions/designs ofhandles and instruments

• Towing and accurate positioning ofsemisubmeribles and jackups

• Deck operations and procedures

New Dynamic Positioning simulatorKongsberg has also launched a new range of

basic and advanced DP simulators.“There is a clear and growing need for

high quality DP Operator training as errorsduring DP operations often lead to expensivedowntime, or incidents resulting in damage,pollution, injury or even fatalities,” com-ments Soren Einar Veierland, Business Man-ager, Offshore Simulation and Training,Kongsberg Maritime.

The simulators provide training formost types of DP vessels and configurationsincluding supply vessels, shuttle tankers,drillship and semi-submersible platforms.

Subscribe to Digital EnergyJournal - just £195 per year

The simulator instrumentation looks, functions and feels like the real equipment used in theoffshore industry. All relevant controls and functions are included making the simulation ofanchor handling operations highly realistic.




Making digital energy workHow should you set about making sure you new digital technology implementation works and getsused? Houston change management consultants Dr Dutch Holland and Bob Bobst give their advice.By Dr Dutch Holland and Bob Bobst from Holland & Davis of Houston.

Not only is digital energy’s potential huge, it iscoming of age and maturing.

However many management processesneeded for realising digital energy’s potentialare not as mature as the technologies.

Companies should re-focus on maturingtheir key digital energy-related processes.

As digital energy gets increasingly “hot-ter,” and IT and R&D shops virtually overflowwith new project possibilities, saying “no” or“not now” to the business user becomes moredifficult.

The solution is Portfolio Management asa mature business concept.

Stages to make it workWhile Project Management is a critical busi-ness discipline, other success factors must bepresent internally before digital energy proj-ects can be completed with the expected busi-ness results: value delivered on-time and on-budget.

Let’s examine each of the phases and fac-tors.

First, an oil company needs a vision anda supporting business strategy that acknowl-edges and commits to the importance of digitalenergy innovation and provides a context fordigital energy innovation planning.

Without such a vision, innovation advo-cates will not have the credibility they need toget good digital energy technology into play.

Second, tying in with No. 1, is that thecompany needs a technology strategy whichsupports the business strategy and vision andprovides a framework for prioritizing and se-lecting digital energy innovation projects. Al-though it’s common for companies to have anIT strategy, they frequently do not have anover-arching vision for what the technologycan do for the business.

Third, the company needs a methodolo-gy for collecting and screening digital energyinnovation ideas to harvest the best prospectsfor future development. That includes having aspecific methodology for viewing the data,looking both at new ideas and the potentialusers.

Not only should there be a methodologyfor identifying the technology for develop-ment, but the alternatives as well. Then, in thecontext of the business vision, the companymust delineate operational advantages for eachnew technology.

Fourth, the company must have amethodology for ranking/prioritizing digitalenergy innovation projects. The purpose is (a)to provide a balance across the cost, risks andrewards spectrum and (b) to incorporate con-sideration of resource availability (e.g., budg-et, personnel, facilities) for development andimplementation.

In this context, business users are the“customers” and they need support to helpthem understand what it is reasonable to wantor expect from new technology or what it ispossible to get.

Fifth, the company needs project selec-tion criteria for innovation that ensure one oftwo situations. One, business/asset customers(i.e., users) are committed and ready to imple-ment each successful digital energy innovationproject. Two, the potential for rapid accept-ance of a new technology by asset managers issubstantial.

Regardless of a technology’s potential, itcannot succeed without a user willing to putforth a clear implementation plan. In terms oftime, people and money, what will be required?And that “commitment to implement” must bea critical determinant of whether or not theproject commences.

Sixth, for each digital energy innovationproject, the company must have formally iden-tified and charged a Sponsor – or business Ex-ecutive in Charge (EIC) -- who sets compre-hensive objectives for the project, explainingthe project rationale and clearly establishingboth measures of success, and sensible con-straints and boundary conditions.

The EIC should be on the asset side, rep-resenting the one who owns the incentive toimplement the digital energy innovation.

Meanwhile, the asset management con-cept has changed globally, from central owner-ship of all producing assets to today’s decen-tralization and motivation of regional assetmanagement.

However, instead of organized deploy-ment of very expensive digital energy systems,local asset managers are being given tacit per-mission to “adopt the digital energy innova-tion” or to “opt out” if they wish, resulting inan uncertain value proposition as well as alengthy adoption cycle that extends over years.

Development phaseFor openers, the company should vest account-

ability for each digital energy innovation proj-ect in a project manager.

This manager will lead the multi-func-tional team, establish plans, track progress,costs and schedule and keep management ineach business unit informed of project statusthrough successful implementation.

That means all the way through technicalimplementation and continuing until the newtechnology is in day -to-day operation in theasset - not “stopping early.”

Two, the company should utilize multi-functional teams (project management, assetoperations, IT development, IT maintenance,et al) for managing and tracking digital ener-gy innovation projects to ensure that all stake-holders provide input, participate in reviewsand understand/accept decisions made.

In particular, users and developers mustjointly understand such factors as: basic func-tionality and benefits, user interface require-ments, hardware and operating system com-patibility, and interfaces with other programs.

But, since there are likely to be multipleuser locations and because having numerous

Commitment RequiredBusiness user “commitment to implement”a digital energy application, as evidenced bya written implementation plan, is an ab-solute threshold requirement for commenc-ing a project.

“Technology cannot succeed without a clearimplementation plan” - Dr Dutch Holland,Holland & Davis


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users on the team is impractical, one personwith a good interpersonal network and highcredibility in the user community should rep-resent user interests in general, not just his/herown personal perspective.

Three, the company should utilize a“stage and gate” process for managing andtracking innovation projects. From a projectmanagement point of view, is the project onbudget and on schedule and is the progress todate sufficient to warrant moving on to the nextstage of development? From the business per-spective, is the original innovation still perti-nent or have the users’ needs and prioritiesshifted and the intended value vanished? Thus,does the digital energy project still make senseand is everyone ready to move on?

This process on the one hand reduces re-visions and recycles and ensures appropriateprogress. On the other hand, it expeditiouslykills projects that no longer deserve businesssupport.

Effective Gatekeepers are integral to thesuccess of stage and gate processes. Thereshould be at least two types of Gatekeepers:technical and commercial.

They must establish clear expectationsfor issues to be judged during the Gate Re-views (e.g., budget, schedule, technical viabili-ty, commercial viability, commitment to im-plement, user readiness, forward plan). And theGatekeepers must be held accountable formaking good decisions.

Implementation StageThe Implementation Stage includes five as-pects.

One is that the company’s top manage-ment should take two specific actions. Theyshould set clear usage expectations and state“out loud” several times during project imple-mentation that all affected managers and em-

ployees are expected to support and utilize thedigital energy innovation.

It is not necessary that all potential usersadopt the new digital energy innovation; how-ever, it is necessary that sufficient users “signup” to be consistent with the original projectjustification.

Two, an ongoing problem with digital in-novations is that development people are work-ing in a back room, not really visible. Theycould be making progress but successes wouldnot be known to others as progress in buildinga new platform or a plant that everyone sees.

The company needs to keep personnel in-formed about digital energy innovation proj-ects that may affect their business/functionalunits, their roles/duties and their interactionswith other units.

Three, the company needs to keep affect-ed personnel informed about, and mobilizedaround, a new innovation’s implementationschedule including milestones, required train-ing, support systems and deadlines.

Four, the company should insist that allaffected personnel participate in awareness,system use, and work process training as rele-vant to their various roles, learning how to usethe new application and how to make moneywith it

Five, the company should holdbusiness/functional unit managers accountablefor effective implementation and deploymentof new digital energy innovations and for de-livering the benefits expected. Unfortunatelyaccountability for harvesting business resultsfrom IT innovation projects is too frequentlynot assigned to these managers the way it is fora refinery technology innovation.

And, six, the company needs to measureoutcomes of digital energy innovation projectsin terms of both results and the effectivenessof the portfolio/project management system it-

self. Again, the real test is whether or not theinnovation makes money -- a technical successbut a business failure?

Special considerationsThere are three special considerations for digi-tal energy.

One, when a new and exciting technolo-gy emerges, usually a flurry of project requestsand people appears. So, there must be an ef-fective way to sort through these.

Two, there must be a clear implementa-tion and deployment strategy that identifiesusers and gets their commitment. It is particu-larly important in the Digital Oilfield (DOF)that, as part of user project requests, the usersubmits an implementation plan.

That plan should show management’scommitment and allow gatekeepers to under-stand the resource impact. If not, that projectshould receive a lower score than projects thatcan.

Three, decide whether process or politicswill rule and proceed accordingly.

Call to actionDigital energy is exploding with promise, butmature business processes like portfolio man-agement are needed to leverage the huge op-portunities. Otherwise, companies are left withmushy projects that actually decrease businessresults and limit careers.

Therefore, companies must invest now inwork processes for getting good business re-sults with minimum employee exposure.

About the authorsDutch Holland, PhD, & Bob Bobst arewith Houston-based Holland & Davis www.hdinc.com

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Sahari A AzizTechnical Support Team Leader - SubsurfaceCARIGALI HESS

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PIDX – first Aberdeenmeeting

PIDX, whichstands for Pe-troleum Indus-try Data Ex-change, wasformed to de-velop and pro-mote the im-plementationof electronicstandards forthe oil andnatural gas in-dustry.

Themeeting in-cluded presen-tations anddiscussionabout electronic invoicing, implementa-tions of a ‘procurement to pay’ end to ende-commerce system, internal change man-agement improving visibility of spending(ie knowing what you are spending), re-ducing transaction costs, gaining greaterpurchasing efficiency, expanding the useof e-commerce, and using standard PIDXtransactional documents.

Chevron presented a case study abouthow it managed to handle an increased

number of invoices with very little humanintervention.

A panel discussion with representa-tives from Chevron, sparesFinder, ENI,Shell and Hubwoo talked about how to getthe most benefit from e-commerce imple-mentations.

“We invite all to attend our meetingsor contact us,” said Chris Welsh, Chair-man of PIDX Europe and managing direc-tor of Eirô Consulting. “

From left to right: Robert Cody, Chevron Corporation; Paul Mayer, sparesFinder Ltd; TerryThomas, Schlumberger; Cristina Lastaria, ENI; Ekaterina Mazanova, Shell International andJohn Boardman, Hubwoo


At the PIDX launch in Aberdeen: From left to right, Jean-Pierre Foehn,Amalto Technologies; Kreg Anderson, Smith International; and Robert Cody,Chevron Corporation

PIDX, the e-commerce committee of the American PetroleumInstitute, held its first meeting in Aberdeen on July 9th, with 50participants including representatives of Chevron, ENI and Shell.

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Tuning E&P companies like a processmanufacturing plantCan you imagine your oil and gas company being as finely tuned as a process plant (e.g. refinery, chemicaletc.), with all inputs finely optimized, all operations continuously monitored, and an output which ispredictable, stable, safe and profitable?

Many readers might think that their oil andgas company is fairly well optimised.

But many other readers will have hadexperience of morale shattering inefficiencyat their oil and gas company.

You know the kind of thing – headquar-ters taking months to make simple decisions,good opportunities not being taken up be-cause of the difficulty in making decisions,and unexpected edicts being issued fromhead office saying that the company mustchange its operations to meet a new target.

But if oil and gas companies used asoftware simulation approach to model theirbusiness similar to the way process simula-tors are used to model chemical plants, soft-ware company 3esi believes, they could tuneand optimise their operations in a similarway.

Management would always have reallygood information about what is going on, sothey can make fast decisions, and carry themout smoothly, and never miss any opportuni-ty due to poor decision making processes.

And what if some of the people who de-veloped simulators for process manufactur-ing plants also developed business simula-tors for oil and gas?

With 3esi, this is exactly what has hap-pened.

The CEO of 3esi, Wayne Sim, co-founded the company which made the mostwidely used software for simulating and tun-ing process manufacturing plants, calledHyprotech, in 1979.

Hyprotech grew to become the 10thlargest software company in Canada in termsof revenue, and the biggest in terms of prof-it. Its Hysys software is “used by just aboutevery chemical engineer in the world, and ison the curriculums of 7,000 universities,”Mr. Sim says. Hyprotech was sold to AspenTechnology in 2002.

Chemical plants and refineries use so-phisticated software to build a simulation ofthe plant and the business, which can thanbe used to optimize everything, and informoperators and managers if something isstraying from the optimum parameters, so itcan be adjusted.

The input variables for a process plantare capital (capital costs / operating costs);

execution capacity (the plant you alreadyhave, the people you have); resources(equipment, feedstock, energy, water, cata-lyst, spare parts, maintenance); constraints(land, feedstock, plant capacity, inventorycosts, product and feedstock prices, regula-tion), and output (product, safety, pre-dictability).

Similarly, the input variables for explo-ration and production are capital (capitalcosts and operating costs); reserves (the oiland gas you have access to), your executioncapacity, resources (staff, equipment, ener-gy); constraints (limited helicopters, bedspace on platforms, gas lift capacity, regula-tory, politics etc.) and output (production,safety, predictability).

The primary goal in either business isto maximize capital efficiency (return oncapital employed) given fixed execution ca-pacity, fixed resources and time within anenvironment of constantly changing con-straints.

Fine-tuning an exploration and produc-tion company can be a lot more complexthan fine-tuning a chemical plant. “It’s a loteasier to convince a plant to do somethingthan convince a person,” Mr Sim jokes.

But oil and gas companies should prob-ably be thinking more about ways to be bet-ter organised and co-coordinated.

In past, having a successful oil and gascompany might have depended more thananything on picking the right spot to drill,and having the right relationships with localpoliticians.

But in today’s more complex businessenvironment, success is more likely to comefrom optimising your allocation of capitaland resources, to get output which is stableand predictable, staff which are happy, andan operation which keeps clear of con-straints.

Getting a clear pictureSome of the biggest problems oil and gascompanies experience is getting the right in-formation so they can make decisions, andthen carrying those decisions out.

To quote an unnamed oil executivefrom Western Canada, “A forecast update inour industry is like counting children in a

playground – they move so quickly that itmakes the task almost impossible.”

Typically, says 3esi’s CEO Wayne Sim,companies do their planning using spread-sheets exported out of the main softwarepackages used by different departments (forexample, the accounting software, reservoirengineering software, and production man-agement software).

They then link these spreadsheets to-gether in a complex way, to get an overallview of the business.

The whole system is “high mainte-nance, unscaleable and unwieldy – a brittleinconsistent solution,” he says.

It gets more complex when the head of-fice is setting targets and trying to get its as-sets to meet them, as the focus goes from(say) reducing costs to improving produc-tion.

Individual asset managers are expectedto manage their portfolio against these con-tinually changing targets set by head office,and people at head office are expected to re-port to senior management about how ontrack the company is.

Meanwhile, reserves decline at differ-ent rates than expected, there are rig sched-uling problems, staff shortages, politicalproblems, terrorist attacks, and pricechanges; and decisions need to be madequickly. How can a company possibly keep

Can you use software to 'tune' an oil and gascompany, the same way as you 'tune' apetrochemicals plant? 3esi CEO Wayne Simthinks you can




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an accurate real time picture of where it is,just using spreadsheets?

The problem is not getting access to thedata, but finding ways to rationalise and un-derstand the data and converting it into in-formation to support the decision makingprocess. “That’s where I think they needhelp,” says Mr Sim.

If the company has a computer modelwith a clear and accurate understanding ofwhere the company is, it is easier to find theanswer to questions.

For example, should companies reserve(and commit to) a rig 12 months before theyneed it, and get a better rate when they arenot 100 per cent sure they are going to needit? Or should they try to find a rig 3 monthsbefore they need it, when they are sure theywill need it, but there might not be one avail-able, and if there is one available, will theyhave to pay through the nose for it?

Or, if a rig is delayed, what impact willthat have on the rest of the business, and howwell is the company using its available re-sources?

esi.manage3esi’s flagship software tool is calledesi.manage, which builds a computer modelof everything which is going on in the com-pany, capital, operating costs, production, re-serves and resources, which people can useto make business decisions.

esi.manage integrates with the softwaretools which people in different departments/ disciplines use in their daily jobs (e.g. SAPfor accounting, AFE systems, production ac-counting systems, field data capture systems,procurement software and so on).

But instead of outputting the data inspreadsheets, all of these software packagesintegrate with 3esi’s software, which puts to-gether the business simulation model.

esi.manage has different tools whichwork with the same model to enable peoplefrom various departments to work with thedata including modules for inventory man-agement, planning, budgeting, programmanagement, forecasting and reserves man-agement.

So, for example, users can see theirbudget for 1 month, 1 quarter, 1year plan, 2years, and 5 years. They can see how muchcapital expenditure they have made, andwhat their regular operating expendituresare.

They can see immediately what impactdifferent changes will have on their futureproduction profile as well as operating andcapital costs.

They can also see what impact differ-ent options would have on their targets, forexample, if they acquired a certain compa-

ny, how that would impact their reserves,capex / opex, production, and if there wouldbe constraints from availability of other re-sources (e.g. rigs, helicopters or staff).

Then they can manage and prioritisetheir different projects, seeing them rankedin terms of various key performance indica-tors, such as f&d, capital efficiency, cashflow, capital costs, operating costs, and risk.

The software can handle all of the revi-sions and changes which need to be made tothe models, showing how they affect theoverall required capital expenditure and op-erating cost profiles, as well as its reservesand production rate.

The planning tools use probabilities –you can estimate a probability of a certainevent occurring, and the software will calcu-late the probability of different output eventsoccurring.

.The complexity is in making the inte-grations between different software pack-ages, and putting together workflow toolswhich take people through the different stepsthey need to make; and of course, persuad-ing people to buy the software and to use it.

BenefitsThe benefits of all of this is that the compa-ny can plan better – this leads to improve-ments in all areas of the business – job satis-faction, safety, environmental performanceand of course profitability.

You can easily see how changes, or po-tential changes, will impact on your most im-portant key performance indicators: produc-tion, reserves, capex and opex. You can alsoget a much better understanding of your riskposition.

Users can find the data they need tomake crucial decisions much faster, and theirtime (as a company resource) can be muchbetter managed.

And of course, the more informationthat is captured in standard formats in thesoftware, the less headache it is when peo-ple leave the company, because more of theirknowledge stays behind.

Success to date3esi serves customers around the world, andits software is used to manage numerous dif-ferent assets. Customers include ENI (Italy),Enerplus (Canada), Addax Petroleum (Nige-ria), RWE (Germany), Wintershall (Ger-many), Continental Resources (USA) andRepsol (Spain) and another super-major.

As an example, Calgary oil and gascompany Delphi Energy Corp uses it to se-lect which projects it wants to pursue, withan aim of selecting around 50 projects froma choice of 150.

ENI is using the software at a number

of different assets around the world; withproduction of between 60,000 and 230,000barrels per day and presently 3esi is in con-versations with them to deploy it withinmany more of their asset teams.

3esi has close to 40 employees at thismoment with offices in North America, Eu-rope and Latin America. Mr. Sim expects thecompany to be cash flow positive this year,just three years after it was founded.

So far, Mr. Sim says that the companyhas never lost a sale, on the basis that it hasbeen competing against another softwarecompany, and the other company has wonthe business.

In fact, the biggest competitor the com-pany has is Excel – companies who are ad-dicted to their spreadsheets and don’t realisehow much easier things could be.

Sales process3esi’s sales process is to try to find the per-son in the company who has the headache ofgathering together all the different spread-sheets.

“Typically if you sell to the right per-son, the person with the pain, it’s a one meet-ing sale,” says Mr Sim. “They say I wantthis. We have very few problems when wetalk to the right person.”

Sometimes, people understand the val-ue proposition of the software so readily;they don’t feel the need to calculate the re-turn on investment.

“I went to one company and talked to aCFO and VP of Operations, I said how willyou know the value you got out of it,” hesaid. “They replied, they can see the valueclearly, they don’t need to quantify it.”

The software does not need to be im-plemented for the whole company all in onego; it can be implemented asset by asset.

3esi conducts workshops with staff, toexplain what the software does, and the ben-efits of it, and how to use it, so they will startusing it more readily – this is the changemanagement process.

Who uses the software?3esi envisages that the software will be usedcontinually for people who have to plan andrun the business, making decisions and allo-cating resources, from asset managers up-wards.

It could also be used by engineers, whospend a lot of their time working out how toallocate different resources to get the desiredresults.

Accountants and geologists would stillspend most of their time in their disciplinesoftware (accounting or subsurface) but theycould use the 3esi software if they wanted tosee the bigger picture.




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Chesapeakeneeds manycomplexthings fromits function-ality, for ex-ample theability toautomati-cally in-crease thepay scalesof rig work-ers accord-ing to howlong theyhave beenthere, ac-cording toan agreedscale.

It has helped the company reduce pro-cessing time for stock awards from threedays to 2 hours.

“Our goal is to stay on the cutting edgein benefits and compensation,” says LorrieJacobs, Chesapeake’s vice president of com-pensation and benefits.

“We are constantly analyzing andbenchmarking data against other companiesin our industry in order to offer the best com-pensation package to attract top recruits.”

As a result of using the software,"we’re much more comfortable with the in-tegrity of the data,” she says.

Leading Software Company 3esi’s goal is to be the leading company to usefor managing upstream processes.

Mr. Sim believes that there is a gap in themarket for a dominant player. There are othersoftware companies being used for differentaspects of engineering and geology, but noother company internationally leads the up-stream management software market.

There are many niche companies, serv-ing the needs of different discipline groups, indifferent geographical sectors of the marketwith companies of different sizes, Mr. Sim ob-serves; for example, there are companieswhich have carved out a market providing ac-counting software to mid sized companies inHouston. But the international top spot is stillavailable.

“There are a lot of niche companies fo-cused on a domain problem,” he says.“There’s very little standardisation.”

“We’ve got clients on 4 continents andwe’re going to grow that,” he says.

Cultural issuesThe reason why oil and gas is not as well co-ordinated as it can be is relatively easy to guessat. Oil and gas people, predominantly, are in-dividuals, used to developing their own skills,building their own reputation and workingquietly but confidently at their own desk ontheir own project.

It has been relatively easy to sell thesepeople tools to do their own jobs better, suchas accounting software for accountants, geo-physics software for geophysicists, and reser-

voir engineering software for reservoir engi-neers. But co-ordinating projects is somethingelse entirely.

Hyprotech was one of the first compa-nies to introduce interactive computing in the1980s – the idea that you could ask your com-puter something and get the answer immedi-ately, rather than send your computing jobs offto batch computing centres, as people did backthen was unheard of.

Now, you don’t think twice to work outwhat interactive computing is as many of ushave never worked with any other type ofcomputing.

In a similar way, in 10 years time, peo-ple will be so used to using computer planningtools to help run and manage their companiesthat they won’t think twice about it, he says.

Chesapeake and Oracle PeopleSoft

The company started using the Oracle sys-tem in late 2006, to replace five HR systems,being used across different business units.

The software is used both by all com-pany employees to manage their own HR re-lated services (employee self service), aswell as by HR personnel. Employees canchange their addresses, set up direct de-posits, view pay stubs and sign up for bene-fits, which all means less work for the HRstaff.

Chesapeake is the 3rd largest naturalgas producer in the US, with annual revenueof USD 7.8bn. The company added 1,300employees in 2007, bringing the total work-force to 6,300.

It takes pride in how well it treats itsemployees, being named by Fortune Maga-zine on its list of “100 Best Companies toWork For” this year.

“First and foremost, Chesapeake is apeople company,” says Aubrey McClendon,the company’s cofounder and chief execu-tive officer. “Talent creates value and ourcompany has an abundance of talented peo-ple.”

Chesapeake uses PeopleSoft to consol-idate and streamline its payroll and benefits.It can automate the core HR processes, re-ducing paperwork and manual data entry.

It also uses it to track how well it is do-ing, and assess its resources.

Analysts can easily mine the system forbusiness intelligence, such as turnover rates,employee performance metrics and resourceassessments.

“PeopleSoft has been a catalyst forbreaking down functional silos and expos-ing new ways that we can work more close-ly across business units,” says Jeff Gardner,director of IT with Chesapeake's BusinessSystems Group.

In future, Chesapeake plans to use thesoftware to help its expand its enterpriselearning program, where employees to en-roll in training courses and track theirprogress online.

It also plans to use the software morein future to enhance and str eamline its re-cruiting process.

Mr Gardner says the move to People-Soft “eliminated a lot of paper and handoffs,and numerous Excel spreadsheets we had totrack, manage and report.”

“Information technology will play a bigrole in Chesapeake’s evolving workplace,”Mr Gardner says. Beyond streamlining andautomating business processes, Mr Gardnerbelieves technology can be a stimulus for re-thinking the way people work together.

“PeopleSoft has been a catalyst forbreaking down functional silos and expos-ing new ways that we can work more close-ly across business units,” Mr Gardner says.“It supports our wonderfully talented peoplewho we believe are the source of our com-petitive advantage.”

Calculating payAn important use for the software is work-ing out how much to pay people, includingadditional benefits.

US oil and gas company Chesapeake Energy recently started using Oracle's PeopleSoft software to helpmanage people aspects of the business, including human resources, payroll, benefits administration andenterprise learning.



Chesapeake Energy - usingOracle's PeopleSoft softwareto help manage peopleaspects of the business


BP and Crystal BallBP is using Oracle’s Crystal Ball software on nearly 90 per cent of its new wells, to help keep its costs andschedules on track.

Over 500 BP engineers in over 20 countriesare using the software, to forecast time andcosts for most of its big oil projects - approx90 per cent of all new wells.

The software is used in the early andmiddle phases of an oil field’s development,helping with financial planning, projectscheduling and risk management.

The software aims to look at all the dif-ferent variables which oil projects face, in-cluding bad weather, equipment malfunc-tions, geological surprises, and the numberof wells the company finds that it needs.

The software has a ‘sensitivity’ func-tion to identify the major risk areas, to helpidentify which factors could lead to cost andtime overruns, so staff can focus more at-tention on them.

“Crystal Ball is involved in every ma-jor investment decision that we make forwells,” says Hugh Williamson, risk and costadvisor, Drilling and Completions, BP.

“It identifies which risks add the mostuncertainty in outcome,” says MrWilliamson. “These are the ones we shouldpay the most attention to.”

“It increases our ability to deliver proj-ects on time and on budget – a big plus whenpartnering with governments of oil-produc-ing countries or with other operators.”

The software stimulates productive di-alogues among engineers and other experts,by requiring estimators to gauge the likeli-hood and range of outcomes.

“We want those conversations to hap-pen,” says Mr Williamson. “The results ofthose conversations can be input directly in-to the front end of Crystal Ball.”

SpreadsheetsThe software runs behind spreadsheets,something which increases the appeal of thesoftware to engineers who are building theforecasts, Mr Williamson says.

“Engineers love spreadsheets. Crystalball is intuitive and engineers can pick it upquickly. I can teach people the fundamen-tals in less than 20 minutes.”

However, “one of the challenges is tonot let the spreadsheet template get too com-plicated, making it unusable by most engi-neers,” he says.

It is also important not to automate theforecasting process too much. “Outputs areworthless if the inputs haven’t been proper-

ly thought through,” says Mr Williamson.

ProbabilityThe software uses Monte Carlo probabilis-tic techniques to make predictions of howlong something will take, or how much itwill cost.

Users input data about what they thinkis going to happen with certain input vari-ables (eg, how likely they think the oil pricewill drop to $50 a barrel).

The software runs the calculation manytimes, each with different input variablesalong the probability distribution specified;then from the range of different outputs, youcan work out how likely certain outputs willbe.

“If we think there’s a 20% chance of adrilling operation being hit by a hurricane –which might cost us between 10 and 50 daysper well – we can put this information di-rectly into the estimate," says MrWilliamson.

Business processBP has a standard forecasting spreadsheet,which all engineers can use when managinga project.

BP engineers often perform several es-timates in the course of an oil field develop-ment project: an early forecast that neces-sarily contains higher degrees of uncertain-ty; and several follow-ups that are more ac-curate as engineers eliminate many of theunknowns, such as daily rates for rigs andboats.

It may be possible to use data fromsimilar projects in the past, if there havebeen any.

When the time-and-cost estimates havebeen finalized, they are typically incorpo-rated into a management report known as a“decision support package” which is scruti-nized by key decision-makers in the compa-ny.

On the basis of the report, the compa-ny may order more studies on the field, orgreen light further drilling and development.

“Senior management want to knowhow much projects are going to cost andhow soon they’re going to get their moneyback,” he says.

Complex business environmentAs oil and gas companies chase smaller and

smaller reserves, the complexity of the busi-ness increases, and the necessity to keep astrong check on cost and time overruns in-creases.

"There’s not much easy oil left, and toget at it, we need to develop some prettycomplex, pretty risky projects, and our goalis to execute them better than the competi-tion,” says Mr Williamson.

Risks can emerge from places that arehard to predict. “It’ll be hurricanes in oneplace, steel prices in another place, and achange of scope in a third place.”

With oil and gas only getting tougherto find, Williamson sees continued robustdemand for sophisticated estimation solu-tions like Crystal Ball.

“Projects are going to continue gettingmore complex and more expensive andmore challenging,” he says, “and we haveto be up for that challenge and find ways ofunderstanding and communicating that riskand complexity up front.”

Use Crystal Ball to get an understanding ofthe variabilities involved - this graph showsthe different net present values (NPV) aproject might end up with and the probabilityof each

This chart shows an estimation of howreliable different materialswill be - and howlikely the reliability will be a certain amount

September/October 2008 - digital energy journal 45





Shipdex - a new standard for technicaldata for vessels and platformsDigital Energy Journal’s sister magazine, Digital Ship, held a conference in Hamburg, Germany, on astandard has been developed for technical data for ships, drilling rigs and offshore platforms, whichshould enable technical information to be supplied electronically, rather than on paper.

A new data exchange protocol has been devel-oped for ship, drilling rig and offshore platformequipment information, which aims to lead tothe end of paper manuals and drawings, and allother tehnical information normally suppliedon paper, including maintenance procedures,and lists of spare parts.

Shipdex arose out of the frustration whichtwo large dry bulk shipping companies, Grimal-di Naples and Intership Navigation, were hav-ing with paper manuals, and their decision todo something about it.

"We get 1.5 tons of paper with a new ves-sel, including technical manuals, drawings andspecifications," said Grimaldi’s purchasing di-rector Giancarlo Coletta. "It is very hard to ac-cept that, when EDI and communication is stateof art, the shipping industry should have thishuge amount of paper.”

Grimaldi Naples and Intership contractedtheir software company, SpecTec, to develop astandard for electronic technical information,which is a simplified version of the S1000Dstandard, used almost universally in the avia-tion and defence industry.

By having all of the data for a new vesselprovided electronically, Mr Coletta estimatesthat he might be able to save as much as 8 percent on the total costs of maintenance, becauseit will be much easier to manage efficiently.

“Having the right data at the right time canlead to savings in cost,” he said. “All the infor-mation you need, you can pick up from yourdatabase exactly. We can have access immedi-ately to the information and supply faster an-swers.”

“With so much paper onboard, "it’s veryhard to have rapid and quick access to informa-tion when it’s needed," he said. “Sometimestechnical manuals are a photocopy of an oldmanual they got somewhere, and not really con-sistent with the equipment they are delivering.”

"One vessel has 80 to 100 different equip-ment manufacturers, with 700 to 900 compo-nents, up to 1000 parts per component, and33,000 different general stores", he said.

With data provided in Shipdex format,seafarers will be able to get much faster answersto critical questions. “People ask – we have 25tonnes of cargo. Can we load this on the ves-sel? Instead of searching through your manu-als, you can answer immediately. It will be great

advantage in my opinion.” As well as its planned maintenance sys-

tems, Grimaldi anticipates using Shipdex datain its quality management systems, technical li-brary and computer based training systems, hesaid.

There are plenty more benefits.By receiving all the electronic data in

Shipdex format, you can also reduce the enor-mous amount of cost associated with manuallybuilding an electronic maintenance system fora new vessel – currently as much as $20,000per ship, if you want a database that works.

You can manage your spare parts muchbetter – so you are more likely to have the spareparts onboard which you need, and not havespare parts onboard you don’t need – and smallpercentage improvements in spare parts man-agement lead to big financial savings.

You can also keep your technical data upto date easier – if a supplier sends out an up-date to a manual, it can be automatically incor-porated in the shipboard electronic manual – noposting out pieces of paper and wondering ifthey made it to the right ship.

And if a shipping company has better da-ta, it is much easier to manage the whole com-pany – compare how different vessels are per-forming, manage costs, and make sure that thefleet is in good condition.

In future, Shipdex do many wonderfulthings – for example, to pass on information toshipyards about what equipment is onboard theship, and store this data in a standard format, aswill be required under IMO’s forthcoming shiprecycling legislation.

It could be used to communicate data withregulators, surveyors and suppliers, about ex-actly what is on the ship, and any problemswhich are happening with the equipment.

All of these things, of course, lead to bigpotential to improve safety – if it is easier tomanage maintenance on the vessel, and shipstaff can find the right answers to their ques-tions much faster they can with paper.

Will people use it?So will Shipdex be embraced by the maritimeand oil and gas industry?

Till Braun, head of department - salesprojects, Germanischer Lloyd, and chair of theconference on ShipDex organised by Digital

Ship magazinein Hamburg inApril, notedthat there wererepresentativesof major ship-ping / oil andgas companies,including BPShipping andMaersk, presentat the confer-ence, “withtheir eyes wideopen,” he said.

MacGRE-GOR, one ofthe world's largest suppliers of hatch covers,cranes, equipment for RoRo ships and ports,has already decided to wholeheartedly committo providing technical information in Shipdexformat. It will also use Shipdex to manage thedata about its manuals internally, so it can easi-ly make updates and make sure new equipmentis provided with the right manual, even if it isin paper format.

Alfa Laval, a major supplier of separatorsfor ships, is also embracing Shipdex, startingby making its manuals for separators availablein Shipdex format, and then its manuals forfreshwater systems. MAN Diesel is also part ofthe working group.

Grimaldi Naples and Intership Navigationare currently making orders for 90 new vesselsbetween them, and will use their purchasingleverage as far as possible, to try to cajole theirsuppliers and shipyards to provide the manualselectronically.

One delegate from BP Shipping said thathe would consider trying to get OCIMF (the OilCompanies International Marine Forum) in-volved in Shipdex, using the purchasing cloutof oil companies to encourage tanker compa-nies to encourage shipyards and equipment sup-pliers to provide equipment manuals inShipdex, because it can potentially lead to im-proved safety.

S1000D – following aviationIt helps that Shipdex is based on a standardcalled S1000D™, which is used internationallyin aviation and defence (including naval ves-

“Expecting to save 8 percent of total maintenancecosts from having betterdata” - Grimaldi’spurchasing directorGiancarlo Coletta


Oil and gas productionsels). All docu-mentation in theaviation and de-fence industrymust (it is sug-gested but it is notmandatory. It de-pends on con-tracts) be writtenin the same stan-dardised way, soit can be easilyimported into dif-ferent softwaresystems.

S1000D issponsored by theAir Transport As-sociation of America (ATA), the Aerospace andDefence Association of Europe (ASD), and theAerospace Industries Association of America(AIA). The document describing the standardis more than 2600 pages long.

By using a standard developed for avia-tion, it means the maritime industry can takeadvantage of all of the software and services al-ready developed for S1000D. It also means thatmany maritime equipment suppliers are alreadyproviding manuals in S1000D format, if theyalso supply to the defence industry. Shipdexwill also ultimately be an official part of theS1000D organisation.

It won’t be the first time the maritime in-dustry has followed aviation; vessel traffic sys-tems, voyage data recorders, automatic identifi-cation systems, and using English as a standardlanguage, were all first done in the aviation in-dustry and subsequently adopted by shipping.

Safety benefitsWhen you realise what enormous safety bene-fits there could be from having manuals sup-plied electronically, you might expect the Inter-national Maritime Organisation and oil and gasregulators to make it mandatory.

The primary safety benefit will be fromships and rigs being better maintained – be-cause they have better maintenance manage-ment systems, with data directly input from themanufacturer’s procedures. A better maintainedship is probably a safer ship.

A secondary safety benefit is that if thereis ever any problem, seafarers can find out whatto do about it much faster from an electronicmanual, than having to look for the right pagein 1.5 tons of paper.

“By having the information very wellstructured and searchable, you can quickly findthe correct information for the specific equip-ment,” says Eva-Lisa Martinsson, manager,Technical Documentations Services, Compe-tence Centre Cranes, MacGREGOR, “You canhave the correct safety instructions for particu-

lar equipment. If something happens, it’s easyto find the right page in our manuals.”

“If you have a question, how do I fix thepump, it takes 1 minute instead of 10 mins tofind the answer,” said Kay-Michael Goertz,head of logistic procedures and IT at HDW -ThyssenKrupp Marine Systems.

Managing sparesIf equipment information is supplied in Shipdexformat, shipowners can also load the data abouttheir spare parts automatically into their pur-chasing systems – and with better data in theirpurchasing system, they can make sure theyhave the right spare parts onboard and alwaysorder the right spare parts.

Even if only a small percentage of yourspare parts are wrong, it is very expensive andpotentially dangerous.

There are many stories in the industryabout vessels carrying completely the wrongparts for years, and nobody knew they werethere – tying up large amounts of capital use-lessly.

There are also many stories in the indus-try of shipowners forced to airlift critical parts,or charts, to a vessel by helicopter, because theywill get detained if they don’t have them.

By having a better database of your spareparts, it is possible to do many new things. Forexample, you might determine that a supplier istrying to get you to buy a spare part, which isonly needed for one procedure, and that proce-dure can only be done by a dry dock – so there’sno point in buying it.

Benchmarking and dashboards"We have one

customer with 23vessels, each data-base is built by dif-ferent people,"said SpecTec’s MrSoncini. "So theyare completely dif-ferent databases.It’s impossible tocompare one shipwith another."

Bob Kesslerof ABS NauticalSystems recalled aDilbert cartoon,which showed amanager askingfor executive sum-mary information, or 'dashboards', but not car-ing whether the underlying data is any good ornot, a scenario many in the maritime industrywill be familiar with.

“Everybody wants ‘dashboards’,” he said.“But if you have bad data, you won’t get anyuseful dashboards.”

Everyone wantsmanagement‘dashboards’ but theyare only any use if theunderlying data is ofgood quality, pointedout Bob Kessler, head ofEurope, Middle East andAfrica with ABS NauticalSystems

You just need two lines inyour contract with theshipyards to force them toprovide the technicalinformation in Shipdexformat, said MarcoVatteroni, SpecTec ILSmanager and Shipdextechnical manager

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UK oil and gas company Palantir Solutionsis developing software which provides astandard way of communicating the value ofan oil and gas asset between oil companiesand their investment banks, even if the par-ties disagree on their predictions of differentcosts and indexes, such as future inflation.

The software can be used to make aquick estimation of the value of an asset, orthe range of the value of the asset, using thelimited information available (eg estimatedsize of the reserves, the estimated cost of theinfrastructure, production rate decline).

The output of the software is providedin Microsoft Excel, so it is easy to use.

But if two parties discussing sales ofthe asset both have the Palantir software,then the parties can get an estimation of thevalue of the asset based on their own predic-tions of future costs and prices, and then usethe software as a basis for their discussions.

In May this year, Palantir appointedAmy Williams-Allden, as sales and market-ing executive for the financial sector (andpreviously a consultant with IBM), to buildthe business with investment banks and bro-kers.

Palantir’s vision is that it could offer a

‘gold standard’ way of enabling people tosee how much different assets are worth.

“We want to provide a bridge betweenborrower and lender,” says CEO Jason Am-brose. “We want to be the currency that theytrade economic data in. It should help createmore transparency.”

The is proposing to the DTI and theLondon Alternative Investment Market(AIM) with a view to formally incorporatingthe software in oil and gas company evalua-tions, before floats.

The software could also be used bygovernments conducting a leasing round.They could use the Palantir method to pres-ent their calculation of what the field isworth. Other people can then test the calcu-lation, putting in their own data (for exam-ple, if they think the estimate of infrastruc-ture costs has been too low).

Fast evaluationThe software also enables the assets to bevalued very quickly, to give a snapshot of thecompany in its current condition.

“There is a strong competitive advan-tage available to people who can get a fastanalysis of the value of a company,” says MrAmbrose.

For example, when evaluating assetswhich have been put on the market, it is pos-sible to get an estimate within a few hoursof what the range that the value of the assetmight lie between, using your own estimatesof future key indices.

This should enable users to make a de-cision quickly about whether or not theywant to bid for the asset, and at which price.

A rangeThe calculation method does not try to pro-vide a precise answer, but give a range whichthe right answer might be in.

“Say you have one company whichcould be worth anything between 0 and$15bn,” he says. “And you have anothercompany worth between $3bn and $7bn. Youmight prefer the second one because there issubstantially less risk.”

“People have different appetites forrisk. But if you can measure the risk you cando calculated risk taking.”

“If you have two portfolios with equalrisk, but one is more valuable, you would gofor that one.”

The companyCompanies working with Palantir includeBG Group, Chevron Upstream Europe (Ab-erdeen), Talisman, Dana Petroleum, VITOL,Premier Oil, ITHACA, Jeffries InvestmentBank and Anardarko Texas.

It was set up in London in 2002, origi-nally as an asset evaluation consultancy.

Jason Ambrose, the founder, has abackground as a wireline engineer withSchlumberger. He later moved to Merak, aCanadian financial modelling company,which was itself bought by Schlumberger in1999.

After the acquisition, Mr Ambrose left,because he relished the challenge of runninghis own company.

Palantir has 44 employees, two thirdsof which are in London. It also has officesin Aberdeen, Houston, Singapore and Cal-gary.

It has 20 full time consultants. It has itsown software development centre in Banga-lore, India, with 8 full time staff; altogetherthe company has 12 programmers.

Mr Ambrose is very proud of the geo-graphical diversity of his staff; only a smallpercentage are from the UK.

“Having a diversity of staff means wecan be much better at solving people’s prob-lems,” he says.

Communicating oil and gas asset valueUK software company Palantir Solutions has developed a standard way for oil and gas companies andtheir lenders to put a value on their assets, even if they disagree on what the oil price will do.

“Promoting Palantir's solutions for workingoutoil and gas company value in the financialsector” - Amy Williams-Allden, Palantir’s salesand marketing executive for the financialsector

“People have different appetites for risk. But ifyou can measure the risk you can docalculated risk taking.” - Palantir CEO JasonAmbrose.




Warning - possible satcom shortageIncreased demand for satellite capacity, particularly for cellular backhaul, means that oil and gascompanies can no longer take its availability for granted in West Africa, South America and the MiddleEast, warns James Trevelyan, head of enterprise sales at Arqiva's Satellite Media Solutions division.

“In many parts of the world, particularlyWest Africa, the Middle East and SouthAmerica, there is a shortage of availablesatellite capacity, which means oil and gascompanies can no longer take it for grantedthat they will have the satcom bandwidththey need”, says James Trevelyan, head ofenterprise sales at Arqiva's Satellite MediaSolutions division.

Arqiva is one of the world’s largestpurchasers of satellite bandwidth, negotiat-ing between the satellite owners, and theusers of satellite capacity to provide connec-tivity services. It leases around $240m ayear of space segment and works directlywith companies in the oil and gas industryas well as indirectly through oilfield servic-es companies and telecoms companies.

Part of the increase in demand for thesatellite bandwidth is due to massive expan-sion in cellular phone use in recent years;“if there are no fibre optic cables to carrythe calls internationally, they are routedthrough satellites”, he says.

“In some parts of the world, countrieshave only just brought in mobile phone net-works,” he says. “They bypassed telecominfrastructure and went straight to cellular.It has led to huge sucking up of capacity forbackhauling voice around.” Across Africathe number of mobile phone users hasgrown to 65m in the last 6 years. Growthshows no sign of abating.

There have also been at least two ma-jor satellite failures in the last 18 months,which have led to a panic buying of avail-able capacity.

“One satellite that was going to coverAfrica and Asia, one of the largest satellitesof its kind, failed at launch 12 months ago –that’s caused a bit of a panic buy across allthe vertical markets,” he says.

Meanwhile, the oil and gas industry isengaged in a great deal of new projects inthe same parts of the world, and its satellitecommunication requirements are going up.

“Oil and gas companies have been his-torically very stable users – and they are be-ing penalised because of a shortage of ca-pacity,” he says.

“What that means for oil and gas com-panies is, if they want to bring on a new rigand they want their 256k duplex connection,there isn’t always capacity at hand.”

One solution is of course is for the

satellite operators to launch more satellites,but it is not easy to launch more of themstraight away.

“It takes 3 years to plan and build asatellite,” he says. “It’s not a decision thatcan be made lightly. While we can seelaunches ahead of us, there may not be suf-ficient capacity ahead of us to support cur-rent output.”

“Operators are looking at repositioningsome underused satellites to different orbitalslots in an attempt to bolster supply in areaswhere demand is greatest.”

Careful planningMr Trevelyan advises oil and gas companiesto plan carefully to make sure they have thebandwidth they need; they also need tomake sure they are using the bandwidthwhich they have already acquired as effec-tively as possible.

Arqiva typically purchases satellitebandwidths in ‘transponders’ – which basi-cally means that they purchase a chunk ofthe entire satellite. This is carved up intosmaller chunks and sold to service providersand companies. A satellite typically lasts 15years which means that users pay for thebandwidth whether or not they are using it.

An alternative is to share a pool ofbandwidth between users. Bandwidth canbe shared privately by one company acrossits network. Alternatively bandwidth can beshared publically between a number of com-panies. If both companies want it at oncethen they get half the speed, but otherwisethey get the same speed, but pay half theprice. With today’s technology the pool ofbandwidth can be shared securely which isimportant given the value of the data.

“Take a long term view and talk toyour service provider about what you expectyour activities to require,” he suggests.“Have a look at the applications that supportyour activities on the oilfield – start to pri-oritise the types of data which really are crit-ical.”

“A lot of the time – often we hear peo-ple say – we have so many different datastreams – and we’re not entirely sure if theparts of the business that request them stilluse them.”

“Talk to your service provider – abouthow you might have some traffic on dedi-cated streams and some on shared streams,”

he suggests. “We’re trying to find out which appli-

cations are mission critical and which onesaren’t. When the data is not mission critical,we can offer privately shared or publicallyshared bandwidth which can reduce band-width and costs without compromisingspeed.”

There are sophisticated technologiesavailable which can help companies shareand reduce bandwidth, such as iDirect andComtech.

The skill is in designing the networkand profiling its traffic patterns carefullytaking into account bandwidth hungry ap-plications and users. “If you size those net-works correctly it works very well,” he says.

On the other side, there are several ap-plications where communications are mis-sion critical or real time, such as monitoringdrilling and subsea equipment from shore.“For that, we recommend a nailed up pipe,”he says.

An alternative solution is to find waysto reconfigure the satellites themselves sothey can offer more capacity in the areaswith the shortage.

“Recently we reconfigured sometransponders over Africa used for video toenable them to carry 2 way traffic,” he says.“We were able to feed 260 to 280 mbps ofcapacity into the market.

“But that’s been sucked up almost in-stantly by wholesale users concerned about

With increasing demand for satelliteresources, oil and gas companies might notbe so sure of getting the satcom power theyneed, says Arqiva

September /October 2008 - digital energy journal

Communications

49


CONNECTINGTHE OFFSHORE OIL & GAS AND

MARITIME INDUSTRIESWITH THE LATEST

COMMUNICATIONS TECHNOLOGIES

the future – and oil companies who havetheir road map set out and know they haveto commit now.”

Another option is to consider In-marsat’s range of portable satellite solu-tions. These are popular in the maritimesector for narrowband applications butstruggle to achieve broadband speeds due tothe terminal size and are often better backup solutions due to their prohibitive runningcosts.

“Inmarsat is part of the communica-tions mix in the E+P market,” he says. “Butits more of a backup and insurance policyfor the main satellite communications link –it is also useful for engineers who are goingto go and set up these satellite links so they

have some way of communicating.”“It’s generally not as cost effective for

a dedicated connection that’s on full time.”“One of Arqiva’s great strengths is that

it has scale – it can access over 100 satel-lites from its global teleport infrastructureacross all the satellite operators fleets. If asatellite is repositioned – we immediatelyhave the earth stations to access the satel-lites – for smaller operators in the industry– they may not have the finance to make thecapital investment required to access multi-ple satellites.”

Price increaseIf there is increasing competition for satel-lite capacity, one expected impact would be

an increase in prices, something which oiland gas companies might be better preparedfor than other industries given their under-standing of commodity markets.

However Mr Trevelyan warns againstgetting into a bidding war. “We’ve got to beresponsible when it comes to maintaininglong term relationships with our customers,”he says. “Our base costs have increased dra-matically but we have tried to reflect thiswith moderate stable price increases. If wesuddenly hiked the price up, it’s clearly notgood for long term business.”

“There are other players in the marketwho have some bandwidth and took a shortterm view and doubled, or in some casestripled, the price.”

Satcom – as customer needs change,technologies and services must evolveIn order to provide effective satellite communications services to oil and gas companies, you need to havean in-depth understanding of their increasingly complex and comprehensive needs, says Broadpoint’snew President and CEO, Errol Olivier.

There was a time when all an offshore com-munications company had to do to meet itscustomers’ needs was install a satellite dishto connect remote employees to the corpo-rate office. However, in today’s increasing-ly competitive and complex oil and gas en-vironment, companies are asking for muchmore from their communicationsproviders.

“As major oil and gas companies con-tinue to expand their operations to very re-mote areas around the world, they wantcomplete end-to-end solutions,” says ErrolOlivier, president and CEO of Houstontelecommunications and network solutionscompany Broadpoint.

“Our customers are now looking to usto provide more value added solutions thanthe basic installation, commissioning,maintenance and operations. They now re-ly on us to provide support further downthe value chain like protecting these net-works with firewall protection and contentscreening.”

These new customer demands meanthat providers must gain a deeper under-standing of what customers are actually do-ing with their communications infrastruc-ture, and they can no longer focus on sim-ply selling the latest gadgets. Customized

network solutions reign supreme in today’soffshore communications age.

“As communications providers, weneed to truly understand how the customerwill use their applications, which will en-able us to provide the technology platformthat best suits their individual needs,” MrOlivier says.

“There’s no use selling customersdedicated bandwidth when they don’t needit.”

Reliable Crew Communications Leadsto Enhanced ProductivityOne area where Mr Olivier believes Broad-point can support oil and gas companies isin increasing the productivity and efficien-cy of offshore operations.

“Our focus is identifying how we canhelp our customers be more effective in do-ing their work,” he says.

That means providing them with acustomized communication system thatstreamlines their operations. Broadpoint,formed last year from a private equity buy-out of PetroCom, SOLA Communicationsand Coastel Communications, has unitedand improved upon the offerings of itspredecessor companies to offer a variety ofplatform and technology options including

satellite and cellular offerings. WiFi is becoming increasingly desir-

able offshore, Mr Olivier says, because itprovides the mobile and flexible data con-nectivity that is required by the many con-sultants and engineers who service the off-

"Satcom providers must gain a deeperunderstanding of what customers areactually doing with the communicationsinfrastructure" - Errol Olivier, president andCEO, Broadpoint

digital energy journal - September /October 200850

Communications


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shore industry. Also, as the industry facesa shortage of professionals that is often re-ferred to as the “knowledge gap” the abili-ty to easily transfer data or view remoteconditions via video in real time over anykind of network is becoming increasinglyimportant. With these capabilities, opera-tors can maximize the use of their expertsby allowing them to consult on projectsworldwide while never leaving the homeoffice.

Beyond these benefits to a company’sproductivity, Olivier notes that implement-ing the right communications network canalso have a significant impact on employeemorale.

“What’s really important to our cus-tomers right now is maintaining positivemorale of their staff,” Mr Olivier says. “Theoil and gas industry must be competitivewith the rest of the world in providing goodquality of life offshore if they want to at-tract and retain talented employees.

“It is extremely important that theseemployees have a way of checking in withfamily and friends and the ability to handlepersonal business through on-line accessduring their off-time offshore. Imagine be-ing offshore for six weeks or longer and notbeing able to access your mortgage, utilityor banking accounts.”

Many companies are choosing dualcommunication systems—one for corpo-rate access and the other for employeecommunication. For example, Broadpointhas seen a rise in popularity in oil compa-nies asking for a network specifically ded-icated to employee use that will not inter-fere with the corporate network.

“Separate communication systemsgive companies the best of both worlds—the ability to have a fast-running corporatecommunication line, as well as a way toprovide employees access to personal com-munication methods and a bit of redundan-cy, is a great value to those working inharsh environments,” says Mr Olivier.

Limited space segmentIn many parts of the world, namely regionslike the Middle East and Africa, space seg-ment is running thin. With the recent fail-ures of satellite spacecraft over the pastfew years, service providers are finding itmore difficult to buy and hold space seg-ment, due to market uncertainty.

“The shortage of bandwidth in manyremote locations leads us to ask the ques-tion, ‘How can you best provide the rightsolution with a very limited amount ofbandwidth?” says Mr Olivier.

Some satellite service providers aresetting up shared bandwidth systems—

where companies share the same band-width in order to cut costs. While this maybe a good option for some, the decrease ineffective throughput could lead to de-creased productivity.

“On the surface, shared bandwidthsystems appear to offer customers the samelevel of service as private bandwidth, butthey often result in much lower throughputthan customers expect,” he says. “Whenthe amount of data you need to transmit ishigh and the time you have to transmit islow, a shared system may not allocate thebandwidth you need to support the appli-cation, especially when it requires real-time functionality.”

When working with Broadpoint, cus-tomers are ensured a committed informa-tion rate (CIR)—meaning that they knowexactly the amount of minimum bandwidthavailable to them at all times. Even thoughthere is no industry standard on providinga committed versus a burstable informationrate, Broadpoint holds itself to the highestregard of availability and throughput.

“When Broadpoint says you’re goingto receive 512 kbps CIR, it means you willget 512 kbps all the time—not just in a‘best case’ scenario,” says Olivier. “Wedon’t provide solutions that only get thejob done sometimes—we provide a net-work that allows our customers to do theirwork efficiently at all times, that’s the val-ue we bring to their operations.”

But sometimes shared bandwidth isexactly what a company needs. For com-panies that don’t require massive amountsof data transfer, real time information, crit-ical and timely monitoring and control orlive video feeds, shared bandwidth is agreat option for communications at a re-duced cost.

“The key is to assess each client’s in-dividual needs,” he says. “While some maysay that utilizing a very dynamic band-width sharing system to lower the cus-tomer’s cost is an upgrade, I consider it asignificant downgrade when productivityis compromised for price.”

And there’s no end in sight—Olivierpredicts that the demand for bandwidth willonly increase as companies’ needs expandand diversify.

“In the office, we are spoiled and nev-er satisfied with the speed of the internetthat supports all of the new applications re-leased every year. When employees travelto these remote sites, they expect no lessthan what they get in the office, and the ap-plications deployed to improve the effi-ciency of their operations are rapidly in-creasing the need for even more band-width.”

Communications


Satlynx is a leading global provider of satellite communications services with over 12,000 VSATs in more than 130 countries and offers pioneering satellite solutions to the oil & gas industry.

We serve both upstream and downstream business from dispersed and hard to reach offshore rigs or maritime fl eets through large networks of gasoline stations, pipelines and production plants.

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#14 digital energy journal - september 2008

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