e&p applications via web browser? getting comfortable with...

E&P applications via web browser?

Getting comfortable with disaster

P waves, towed streamers andgeomechanics

Supply chains: streamlining yourinventory, simulating demand

Integrating service company andcorporate IT

Associate Member

Published by

April/May 2012 Issue 36

Viewing 3D images using Adobe Reader rather than CAD

April/May 2012 - digital energy journal

Issue 36 April/May 2012

Subscriptions: £250 for personal subscription, £795 forcorporate subscription. E-mail [email protected] manager Uday Raghwan

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Consultant editorDavid Bamford

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Rock changes during production

David Bamford is non-executive director of Tullow Oil, and a past head of exploration, West Africa and geophysics with BP

1

DDavid BamfordConsultant Editor, Digital Energy Journal

Cover: 3D images, previously only viewable using expensive computer design

software (below), can now be viewed using free Adobe reader, using

technology developed by EOS Solutions (see p21)

New reservoir engineering observationslead to the conclusion that time-lapse geo-physics – indeed any observations of anyreservoirs over time - must be based onthe understanding of the physics of fluid-filled, parallel, compliant, fractures/mi-cro-cracks, dilating or compacting as thereservoir is produced.

Why do I say this?When a reservoir, any reservoir, is put un-der production, fluid compositionschange, for example oil may be partiallyreplaced by water or gas, gas may be ex-pelled from oil, and so on.

However, what is also well-docu-mented and of significance is the fact thatfluid pressures drop, changing the inter-nal stresses on the reservoir rock.

Tempting as it may be, however, it isnot possible to understand the (time-vary-ing) geophysics of reservoir rocks by the-orising an isotropic pore space (uniformin all directions) responding to fluidchanges and changing ‘internal stress’.Several studies have shown that the hy-draulic conductivities of faults and frac-tures in reservoirs can be influenced bygeomechanical perturbations due to pro-duction operations.

It is reasonable to anticipate thatsuch dynamic permeabilities will be man-ifest as changes in flow-rates at produc-tion and injection wells.

Heffer & co-workers (EdinburghUniversity) have shown that statisticalcorrelations in flow-rate fluctuations be-tween wells from fields in the North Seaappear to bear out this expectation.

They are characterised by high cor-relations over very large separation dis-tances between wells, and appear to bestress-related and fault related.

Heffer has proposed that the mostlikely geomechanical mechanism to ex-plain such orientational characteristics ofcorrelations relative to stress state is di-latation or compaction of aligned compli-ant fractures in “en echelon” patterns andat critical densities, also previously pro-

posed by others as active in the nucleationof shear failure.

This mechanism is also consistentwith an independent empirical feature ofproduction data: the observed frequenciesof directionalities in flooding schemes.

These reservoir engineering obser-vations lead to the conclusion that time-lapse geophysics (observations of anyreservoirs over time) must be based on theunderstanding of the physics of fluid-filled, parallel, compliant, fractures/mi-cro-cracks, dilating or compacting as thereservoir is produced.

This physics has been documentedover many years by Crampin, based onunderstanding and observing the effectsof closely-spaced stress-aligned fluid-sat-urated microcracks on seismic shear-wavesplitting (SWS) in the crust and uppermantle.

Critically, seismic observations of P-wave propagation and P-waves are rela-tively insensitive to fluid-saturated micro-cracks, whereas SWS is wholly deter-mined by parallel microcracks and can bemeasured with first-order accuracy.

Thus SWS is a second-order quanti-ty (small changes in shear-wave veloci-ties) that can be read with first-order ac-curacy- thus there is tremendous resolu-tion.Consequently, there are significant impli-cations for geophysical, especially seis-mic, monitoring of reservoir dynamics.

First of all, we can say that conven-tional 4D seismics, towed streamer sur-veys for example, only discern changes inP-wave reflectivity and thus offer at bestan incomplete view of reservoir dynam-ics, one that is unquantifiable, allowingonly empirical comparisons.

Secondly, a complete, quantifiable,view of reservoir dynamics requires 3Cseismic acquisition (and strengthens thecase for permanent installations).

Time for a New Geophysics?

Printed by Printo, spol. s r.o., 708 00 Ostrava-Poruba,Czech Republic. www.printo.cz

To understand how a reservoir is being drained, you need to look at the rocks –and can towed streamer seismic, recording only P waves, help?

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Want to manage logistics like Caterpillar?Heavy machinery manufacturer Caterpillar believes that its internal logistics processes, which manage supplies of620,000 spare parts, are so good that it is offering them as a service to oil and gas companies.

3D PDF Technology for the supply chain3D CAD models of spare parts, embedded into PDFs, can be used to improve purchasing and maintenance, saysU.S.company EOS Solutions

Analytics on your inventoryBy doing an automated analysis of your inventory levels, you can work out ways to increase your chances of havingthe part you need readily available, whilst reducing the amount of money tied up in inventory, says ASCI

A shortage of cargo aircraft? The oil and gas industry uses a lot of cargo aircraft, many of which were built by the Russians during the Cold War andare not being built any more, said Lesley Cripps of aircraft charterers Chapman Freeborn. This could mean problems inthe future

SafeKick – understanding your drillingPeople involved in drilling a well should be able to see sophisticated information telling them exactly what ishappening downhole and how close they are to the margins, not a stream of well logs, believes Helio Santos from Safe-Kick.

Getting comfortable with disasters fasterAfter a disaster, senior executives can usually figure out what to do and what to say eventually – but it helps if they getthere faster, says UK consultancy Link Associates.

BusinessPort – helping you streamline your processesBusinessPort of Aberdeen grew 33 per cent last year and doubled staff head count, helping companies integrateProcess, Risk and Compliance through the use of its agility intelligent Business Management System.

Does your IT department work well with operations?Is IT staying with the demands and requirements of an operations department in developing new ways to do businessbetter? Perhaps not, says Dutch Holland .

Service company IT and corporate ITWho is responsible for fitting together IT from service companies and the corporate IT department? The business unitmanagers. Are they the best people to do it? By Mark Reynolds, staff drilling analyst, Southwestern Energy (Houston).

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Subsurface

Oracle – raising the game for oil and gas dataThe oil and gas industry’s IT systems could be better at working with real time data, managing new data types andproviding analytics, says Jay Hollingsworth, director of oil and gas with Oracle.

Can we run the E&P workflow through a browser?Oil and gas IT could be much easier if all data and application functionality was on a centralised database and computingplatform accessed via a web browser, instead of using multiple PC software tools. Dr Duncan Irving of Teradata asks if itcan be done.

Developments with subsurface imagingThe most interesting developments with subsurface imaging are time lapse (reservoir monitoring) and advances in seismicimaging with full wavefield inversion and electromagnetics, said participants in an SPE subsurface imaging webinar.

High growth companies employ more female technical professionals - Schlumberger High production growth companies typically have 27 per cent of their geoscience petrotechnical professionals who arewomen, compared to 18 per cent for low growth companies, according to respondents to Schlumberger's 2011 HR survey.

Contents

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David BamfordRock changes during production 1

Drilling and Production

Supply chains

April/May 2012 - digital energy journal 3

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The oil and gas indus-try’s IT systems are notable to handle manynew data types, don’tconnect real time andstatic data well, anddon’t allow very goodreal time analytics ofdrilling data, said JayHollingsworth, directorof oil and gas with Or-acle, speaking at theDigital Energy Journal

March 13th conference in Aberdeen on de-velopments with subsurface data.

“When you talk about industry chal-lenges with IT people, they are all surprisedthat we have some of these problems,” hesaid.

Mr Hollingsworth joined Oracle in au-tumn 2011, having previously worked atExxonMobil, Landmark and Schlumberger.

Data typesIT systems cannot yet manage many of thedata types the industry is now using, he said.

“People are taking all this microseis-mic data with shale plays. What's the indus-try standard for holding microseismic data?There isn't one.”

“What’s the industry standard for Con-trolled Source electromagnetic (CSEM) da-ta, distributed temperature surveys? There is-n’t one.”

“There's a lot of new data types peopleare really excited about using, but the indus-try has got ahead of our ability to handle thatinformation.”

“The [subsurface] databases people aremost familiar with are a year or two behind[being able to hold it].”

There are similar challenges in the pro-duction arena, with lots of new data types,such as continuous temperature readings, butno standards for how the data should be man-aged, he said.

Static and real timeA major challenge with subsurface data is in-corporating static models together with realtime data.

This challenge goes in two directions –with drillers wanting to use the subsurfacedata models together with their streams ofdrilling data, and subsurface modellers want-ing to incorporate real time field data into

their models. When it comes to bringing real time da-

ta into earth models, the current subsurfaceinterpretation tools can take an input of realtime data, but “That's opening a WITSMLchannel into your earth model, not reallymanaging that real time data together withyour earth model data,” he said.

“The geoscientists want to bring the fullsuite of real time information back into theearth model. That's something the industryisn't doing very well.”

Locked inAnother problem with subsurface data is thatmuch of the software is provided by compa-nies which also provide oilfield services.

“Whether it’s true or not, there's a per-ception that if I rely on one [subsurface soft-ware provider], I'm going to have to use theirdirectional drilling services or wireline log-ging services,” he said.

“There is a desire to have a kind of neu-tral party.”

DrillingPerhaps the biggest area where IT systemsare letting the industry down is in how realtime drilling data is managed and analysed.

Some drilling companies send real timedata from the drilling rig to a shore office,where someone watches it.

But these real time data centres, as theyare currently set up, often provide such littlevalue that oil and gas companies are startingto question whether the cost of them isworthwhile, he said.

It would be more useful to have the da-ta displays in real time operations centres ac-tually available on the rig. Then the drillercan see what is happening for himself, ratherthan trust what someone is telling him on thephone.

“How many drilling rigs have you beenon where, in the dog house in the drilling rig,they see the same data display that someoneis able to see at the operations centre back inthe office? Not many,” he said.

“The drillers crave having the same in-formation that the college kid in the officehas. For whatever reason, we as an industryaren’t doing this.”

“That driller is not interested in what[someone working onshore] has to say aboutwhat is happening on his rig.”

Another problem is that oil service

companies charge extra if the operator wantsto keep the real time drilling data.

“You pay a service company to drillyour well, you pay a service company to steeryour well to where it needs to be, you pay aservice company to tell you where the wellis in space.

“You can pay the service company to dologging while drilling and tell you if you'restill in the reservoir zone you think you are.You can pay them to send the data, you canpay them again to put a person in front of awall full of monitors.”

“When that data leaves the screen itdribbles off the floor. Operators don't usuallyget a copy of their real time data that they'vepaid someone to drill and monitor.”

“If you want a copy of your data, youget to buy that back from the service compa-ny.”

Mr Hollingsworth said he only realisedhow many people at operators felt aboutservice companies, when he left Schlumberg-er to join Oracle in Autumn 2011. “It wassurprising to me, I didn’t realise how peoplefelt about it,” he said.

Real time drilling data would also ben-efit from more analytics.

“It takes a bit of experience to watchthat on the screen and infer that something ishappening,” he said.

Why don’t companies develop technol-ogy to interpret drilling data and make it eas-ier to work with? “The fact that we haven'tapplied technology to that is a problem,” hesaid.

Banks and supermarkets have workedout how to do analytics on continuousstreams of data, and oil and gas companiescan do the same thing, he said.

“It seems pretty simple but for whatev-er reason we haven't really done this as an in-dustry.”

On the rigs, there have been some ad-vances in drilling data systems. Some com-panies are installing process control systemswhich make constant adjustments to keep theweight on bit constant, to optimise rate ofpenetration. “You no longer have a drillerwith his hand on the brake,” he said. “Whydo we need that anyway?”

Financial benefitsThe financial case for investing in better ITsystems for drilling is quite easy to make.

“Anything that you can do with data to

4 digital energy journal - April/May 2012

Oracle – raising the game for oil and gas dataThe oil and gas industry’s IT systems could be better at working with real time data, managing new datatypes and providing analytics, says Jay Hollingsworth, director of oil and gas with Oracle

Oracle

Some ideas abouthow to do IT better-Jay Hollingsworth,director of oil andgas with Oracle

make it possible to do a drilling operationwith fewer workers on the rig is a goodthing,” he said.

“Anything we can do to help reduce therisk of loss of reputation, on behalf of thecompanies which are conducting the drillingoperation, in those very public environments,that's a big driver in the industry right now.”

This is a particular issue with shale gasoperations in the US, where drillers are find-ing themselves drilling very close to homes,and have people watching continuously withcameras waiting for someone to make a mis-take.

With unconventionals, there is a mas-sive focus on reducing non productive time,with some wells being drilled in under 8days. “We talk about well construction notdrilling,” he said. “They talk about well man-ufacturing.”

Specialist analyticsThere have been people selling data analyt-ics tools saying “just point our analytics atthe seismic data, and you can fire your geo-physicists, our analytical tools are so greatthat we will find all the oil and gas for you,”he said.

You should be wary of such solutions,because the data analytics tool doesn’t knowwhat to look for unless there is an oil and gas

person to explain, he said. As an example, if you are pulling drill

pipe out of a hole, the hook load should re-duce by a certain amount with every pipelength which is taken out.

“Most people’s analytical software iscapable of making an alarm, tell me if I'mabout to collapse the derrick - I’ve exceeded60 per cent of the collapse load of the der-rick - everybody's system can handle that,”he said.

“But most people's systems can't han-dle is - if the curve kicks up slightly, whichshows i'm pulling up through a part of thehole that's collapsing.”

“It requires someone with E&P knowl-edge to say, that's a problem worth lookingfor. A business analytics solution isn't goingto find it by itself.”

“You can tell it what pattern to look for- now you're applying the E&P knowledge tothe tool.”

Big dataBig data is a fairly new technology term,which means a specific type of data, wherethe value is found from the analytics, not in-dividual components of data.

In this way, a list of bank transactions,where every piece is valuable, would not beconsidered ‘big data’, but a database of on-

line purchases used to work out what some-one might like to purchase next, would be.

An example of big data would be astream of temperature data from a well. Eachindividual reading is not worth so much, butby analysing how the temperature changesover a long period, you could get useful in-formation, such as which factors cause thetemperatures to change.

Oil and gas companies often reduce thetemperature data to a reading every hour tomake the data volumes easier to manage, butin doing so lose a lot of the value.

“A surveillance engineer could makeuse of high rate data but he typically doesn'thave that available,” he said.

Big data typically has lots of varieties,including structured data (databases), un-structured data (documents), and somethingin between, for example when a report hasfields in it which contain free text, like “Tool-pusher shot a cow and had to buy the ranch-er a set of tyres to make up for it.”

Oracle

5April/May 2012 - digital energy journal

You can watch the video of JayHollingsworth’s talk athttp://www.findingpetroleum.com/video/383.aspx

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Subsurface

Oil and gas IT could be much easier if all data and application functionality was on a centralised databaseand computing platform accessed via a web browser, instead of using multiple PC software tools. DrDuncan Irving of Teradata asks if it can be done.

Can we run the E&P workflow through abrowser?

6

If the oiland gasindustrywas start-ing its ITfromscratch, itwouldprobablychoose todo it likemany oth-er indus-tries do it,with alldata andsoftwarebeing ac-cessed us-ing web

browsers, and all data running in a centraldatabase, says Duncan Irving, EMEA oil andgas industry consultant for data warehousingcompany Teradata, speaking at the DigitalEnergy Journal March 13th Aberdeen con-ference, ‘Developments with subsurface da-ta’.

No complex PC applications, no sub-surface ‘projects’, just one large databasewhich all the company’s subsurface, surfaceand sensor information was kept in, whichpeople work directly with.

So geoscientists and engineers wouldnever have to move data between systemsand reformat it. There wouldn’t be problemsof multiple data in different places about thesame field.

The database would be run according tostandard computer science tenets of how torun a database, with long term stewardship,good data governance, and records of whichpeople did what, at which time and withwhich version of the data.

“That would be a good place to be,” hesaid.

But the oil and gas industry, and tech-nology itself, have a long way to go beforesomething like this can work.

Data transfer rates have not increasedas fast as other aspects of IT, such has CPUspeed and hard drive space – so you can’tmove the data around fast enough.

A seismic survey was acquired last year

which was 1.7 petabytes; and one oil majorhas noted that a CT scan of 1000 m of corewould generate an Exabyte of data, which istoo large for any current platform to processusefully.

You would need to get all of the oil andgas industry’s existing data in a database,which can cope with the data volumes in-volved, with data in a suitable structure toperform current analytical calculations on it.

But there are technologies and servicesavailable to help do this, including better webtechnologies, faster processers, and data stor-age devices which can serve up the dataquickly, and analytical tools.

“But the challenge is putting all of thattogether,” he said.

Another obstacle to doing this is the or-ganisational tension – including between en-terprise architects who understand a lot aboutIT at the corporate scale, but “are not reallysure what the guy in the heavy metal T-shirtis talking about,” he said.

Some people understand the technolo-gy, but just don’t manage to make it work intheir company.

“No-one as far as I know in oil and gashas put all these pieces together to allow youto do all the computations and get the ques-tions answered in the timeframe you need todo it in,” he said.

“Our vision is that from your webbrowser you perform all of these different an-alytical activities. It doesn't matter where theCPU cycle is, as long as you interact with itin a seamless rapid fashion, that's all you re-ally care about,” he said.

“As long as you're getting the job done,it’s a lot more collaborative if you're usingthe same data.”

IntegratingThe industry benefits of everybody workingon a common database would be much larg-er than the benefits people have got from vi-sualisation systems.

“Collaborative visualisation doesn'tshare the data or insight. It just shares the im-ages, in a very expensive cave.”

Integrating the data would also yieldmuch bigger benefits than are available fromsharing workstation capacity, he said.

Putting workstations in server farms

rather than on people’s desks is “not reallyintegrating data at all, that's just helping outyour local hardware vendor with their annualrevenues,” he said. “It doesn't get away fromthe issue of having all these proprietary fileformats and data types.”

If data is all stored in lots of separatefiles or projects, there is a loss of knowledgeevery time data is transferred from one sys-tem to another, he said.

Working with your dataOil majors vary in how much they want towork with the data they have stored. Somesupermajors have a lot of their decision mak-ing architecture and modelling directly builton their data. Others just store lots of databut don’t do much with it afterwards.

To get to know what value lies in data,Dr Irving suggests using Hadoop program-ming framework to re-purpose incoming da-ta (streaming seismic and well sensor feeds).Hadoop is the open source Apache founda-tion project originally launched as MapRe-duce by Google in 2004.

Hadoop is great for finding patterns inthe data, extracting features and resorting foranother purpose.

Google uses MapReduce in its searchengine, running many different algorithms ondata which is stored in different data stores,to deliver you a list of all the web pages witha certain term in them, structured in an orderso that the page it thinks you are most likelyto want is at the top.

“Parallel systems are very good at this,they have very good indexing systems, theyknow how a database is structure, and theywill present you with an answer very quick-ly,” he said.

“It allows you to get all of this and putit in some sort of order, or get all of this andput it somewhere else.”

Dr Irving said that he previously usedMapReduce on seismic data, when he wasworking as a geoscientist before joining Ter-adata.

“It’s something that the community isbuilding, it’s not enterprise grade yet. But ifyou've got some very clever system adminis-trators, computer architects, they could buildyou something like this,” he said.

“You could do a lot of mucking about

April/May 2012- digital energy journal

The foil and gas industry couldhave all of its subsurface datain a single database, saydDuncan Irving, EMEA oil andgas industry consultant

Subsurface

April/May 2012- digital energy journal 7

with your prestack gathers and derive somesort of insight from them that you couldn'tget from the commercial offerings with thesame sort of flexibility.”

In its Aster platform Teradata puts aSQL layer underneath MapReduce, so it candraw data directly out of the databases.

So the computer can look for all kindsof patterns in the data, such as spotting that acertain behaviour is seen in the surface com-pressors, when there is a certain reading fromthe wells, and a certain subsurface rock struc-ture.

“It allows you to have a good level ofinsight from your data, by trying out lots ofthings and excluding some hypotheses.”

“When I'm doing reservoir modelling, Ican put a neural network on it,

It performs all the pattern matching onthe different reservoir models, things mightbe interesting.”

You can search all of your seismic datato look for a trace which has a certain shape.

The analytics can bring in statisticalmeasures. For example, if you want to lookfor something which looks a bit like some-thing else, (for example, find me all the flowsands), the analytics can judge the likelihoodthat a certain formation is a flow sand, andshow you all the areas it thinks are most like-ly to be flow sands.

The same database can also act as thecompany’s master data store.

You can build workflows on it, show-ing what you want people to do every day,and have alerts if something wasn’t done.

“It is not that difficult, it is just datamodelling,” he said.

You can have a single data system withcovers everything from permanent seismicmonitoring, to fraccing, up to hydrocarbonaccounting. “We’ve done this,” he said.

For one oil company, Teradata is de-signing a completely new data model to holdthe data – although the oil and gas industryhas the PPDM data model available to mem-bers of PPDM, and the SchlumbergerSeaBed data model.

Why is it hard?So why does the industry struggle so muchto put all of its data in one place?

“I think the industry has always been abit too conservative and has always been re-liant on vendors that have not been lookingout at what computer science can offer, espe-cially in data management,” Dr Irving said.

“We have brilliant visualisation, bril-liant application development, but we’re notgood at working with large volumes of da-ta.”

“The super crunching data communitygets it, but for everyone else this has beenquite a new thing for the last 10 years or so.”

“There are better ways of storing seis-mic data, instead of storing it in SEG-Y, a

tape format. Is that the way we should bestoring seismic data? It’s an archive andtransfer format – not something for complexanalytics”.

Comparison with retailDr Irving said that the oil and gas industryhas much more complex data and expertisedemands than other industries Teradataworks in.

“We do a lot of business intelligencework in different vertical industry sectors,such as retail,” he said. “Retail is quite sim-ple compared to this.”

But the oil and gas tools are not reallybusiness intelligence tools, because they re-quire domain expertise. “They’re built by ex-perts and driven by experts,” he said.

“The clever bit in the software is the al-gorithms. The graphical interface, buttonsand widgets, that's not so special.”

[Other industries] “don't have the richapplications that we have up here - but theyhave similar levels of sophistication in theworkflow,” he said. “They are probably 2years ahead.”

You can watch the video of DuncanIrving’s talk and downlaod slides athttp://www.findingpetroleum.com/video/385.aspx

Subsurface

8

Developments with subsurface imagingThe most interesting developments with subsurface imaging are time lapse (reservoir monitoring) andadvances in seismic imaging with full wavefield inversion and electromagnetics, said participants in anSPE subsurface imaging webinar

digital energy journal - April/May 2012

The most interesting developments in sub-surface imaging are time lapse (reservoirmonitoring), advances in seismic imagingwith full wavefield inversion and electro-magnetics, said participants in an SPE sub-surface imaging webinar, ranking a choice of6 factors from most to least interesting,

Participants said that they were "leastintrigued" by (lowest first) advances in com-puting technology, the overall challenge andmulticomponent seismic.

The webinar was “Higher-ResolutionSub Surface Imaging,” on March 6 2012,provided by the Society of Petroleum Engi-neers, with speakers Jack E. Neal and Chris-tine E. Krohn of ExxonMobil Upstream Re-search.

Seismic for unconventionalsA interesting point of discussion were thechallenges persuading unconventional gasasset managers to spend more money on seis-mic.

Jack E. Neal, Strategic Technology Ad-visor at ExxonMobil Upstream ResearchCompany, said that for unconventional reser-voirs, there is not widespread acceptance byengineers and asset managers that more seis-mic surveys can improve profits.

Companies compare the costs of doingmore geophysics surveys with the costs ofdrilling.

“In unconventional gas, the value of ex-pensive seismic may not justify its costs,” MrNeal said. “Dense 3D and multicomponent3D may be more expensive than the valueyou get from just drilling.”

Seismic is maybe more beneficial forunconventional plays outside North Ameri-ca.

“When you go to international plays,you need to quickly identify the quality of aplay,” he said. “Seismic is a key tool to mak-ing a quick acceptance, we have more ac-ceptance there.”

“If we can get the seismic at a costwhich demonstrates the value in avoidingbad wells it pays for itself,” he said. Seismicfor unconventionals is an “active area of re-search for sure.”

“We don't understand very well how un-conventionals are producing in the subsur-face - especially shale gas plays,” Mr Nealsaid. “We're very much in a learning modebefore we go into a more efficient produc-tion mode.”

In unconventional production on land,it is hardest for 3D seismic to be financiallyviable, where “it's very cheap to put wellsdown,” said Christine E Krohn, ofExxon Production Research Company, Hous-ton and chair of the SEG research commit-tee.

“But we're making improvements allthe time.”

Ms Krohn noted that the conversationabout whether to use seismic in unconven-tionals is similar to the discussions whichtook place a few decades ago about whatkind of seismic to use for deepwater. “Nowwe've moving to a new world with the samequestions,” she said.

There has not been much with crosswell seismic for unconventional resources ei-ther, Mr Neal said, although it could be veryvaluable.

“With traditional cross well seismic,you need 2 co-planar wells,” Ms Krohn said.“If you have vertical wells it makes it attrac-tive. As you're moving to unconventionals, ifyou can get between different wells at differ-ent depths which are somewhat coplanar thatcan be useful. But if they have different tra-jectories there may not be a plane where youcan do your imaging.”

Modelling fracturesA new area of development is using seismicfor modelling rock fractures, somethingwhich could be very helpful in unconvention-als.

Shear waves have an interesting prop-erty when they pass through a rock bed witha lot of natural fractures, which can be de-tected.

“What happens is the shear wave hits abed with a lot of natural fractures and the en-ergy perpendicular to the fractures is sloweddown,” Ms Krohn said.

This information can be used whenguiding drilling for unconventionals, to getbetter at picking areas for drilling. “We'vedone an experiment like this,” she said.

Ms Krohn was involved in one surveyproject to try to identify natural factures inan unconventional gas region, covering 82square miles in very difficult (mountainous)terrain.

The project used 7 helicopters trans-porting drills which were used to make holesfor dynamite seismic sources, which logged9,000 flights.

330 people and 1500 vehicles were in-volved. There were 900,000 man hours with-out a safety incident, with 12,000 hours ofsafety training. The seismic data was record-ed in 80,000 channels over wide angles.

“It was amazing data quality, eventhough it was difficult terrain,” she said.

The recorded shear wave energy canshow where the natural fractures are, sodrilling can be made in those areas.

“The drilling engineer can decide todrill an area - connect a horizontal well intothese natural fracture sets,” she said.

Microseismic recording can help here.You can get a better understanding of howthe rock is fracturing, with different parts ofthe rock moving up and moving down.

“You can get a much more detailed pic-ture of the fracture network - giving muchmore information to the engineer.”

SEAM projectThe webinar covered the SEAM (SEG Ad-vanced Modelling) projects, set up by the So-ciety of Exploration Geophysicists, aimingto create a massive database describing alarge section of subsurface, which can beused for testing seismic modelling and pro-cessing techniques.

You can send simulated seismic raysthrough the seismic model, and model whatkind of seismic reflections you would get.Then you process this seismic reflection dataand see how the results compare to the actu-al subsurface model you began with.

A number of companies got together tomake SEAM so they could create a datamodel which was larger than any individualcompany could create.

The model covers 1400 km2, 16 Gulfof Mexico blocks. The computer could mod-el 65,000 shots into 400,000 receivers goingthrough it. The data model is 200 terabytes.

“When you're doing research in imag-ing, it’s very useful to have a test data setwhere you know the answer,” Ms Krohn said.It is “just huge. You could subdivide this re-search into 11 different classical data sets. Ithas spurred a lot of research.”

Modelling one shot through the synthet-ic data took a week of computer time whenSEG started a few years ago, but is nowmuch faster.

The research group is modelling wavesgoing around a salt body, to watch how theyare reflected and refracted (bent).

Subsurface

April/May 2012- digital energy journal 9

“They are now working on a new mod-el SEAM 2, working on some land examples,and an unconventional model. Those are go-ing to be very interesting.”

Full wavefield inversionAnother interesting area of development isfull wavefield inversion, where you processthe seismic waves to get a depth model, thendo the same thing backwards to get seismicwaves.

If your velocity model (which you useto convert seismic waves to a depth model)is right, you will end up the same as youstarted with.

If your velocity model is not so good,you can keep improving it until it is good.

Doing this takes enormous amounts ofcomputer processing.

After about 300 iterations “we see apretty good match,” Ms Krohn said.

If you have some well data for the re-gion, you can also use this to see how goodyour velocity model is. You can comparewhere the depth model thinks the well is,with where the well actually is. Then you cankeep improving the velocity model to try toget a narrower gap.

Not so long ago, the company workedout that to compute a 3D model of the sub-surface this way would take the age of theuniverse. “But now we can get it down to amonth or less,” she said.

Permanent reservoir monitoringThere are also advances in using seismic to

help model and manage reservoirs duringproduction.

This can be done with ocean bottomrecording devices left permanently on theseabed in precise locations (which can beclose to the production platforms).

“You're able to get a high degree of re-peatability of your seismic surveys,” Mr Nealsaid.

There have been examples of when acompany got a completely different under-standing of how fluids were flowing in thereservoir as a result of doing repeat seismicsurveys, he said.

You can also track where injected wateris flowing in this way.

The upfront costs can be high but bene-fits can be high over future years, he said.

If you’re using ocean bottom cables, itis important to get the density right. A spars-er system will be less expensive and so justi-fy its costs faster than a denser system.

There have also been trials looking athow gravity above a reservoir changes overtime, including to track the flow of injectedwater.

Mr Neal said that there are many exam-ples of where liquid saturation changes, pre-dicted using 4D seismic, are confirmed fromwell logs (ie confriming that the 4D seismicis providing useful data). This was done in amicrogravity survey in Prudhoe Bay, moni-toring water injection.

ElectromagneticsControlled source electromagnetics (CSEM)

are an interesting area of de-velopment, measuring theresistivity of rock to electro-magnetic (radio) waves, sim-ilar to how it is done in welllogs, using receivers on theseafloor.

Hydrocarbons in thesubsurface, which have a dif-ferent resistivity to rock, willshow up in the survey.

It is possible to identifyroughly the depth of theanomaly and the thicknessusing modelling, Mr Nealsaid.

“It is possible to get anumber of false positives,”where something other thanoil gives a change to resistiv-ity.

“But you don't typical-ly get false negatives” –where an EM survey fails toidentify an actual reservoir.

“This technology doesnot miss reservoirs if proper-

ly processed.”“Taken as a risking tool for multiple ob-

jectives especially after calibration it can bevery useful - but it must be used with cau-tion,” Mr Neal said. “It is always an optionwe bring up - especially if there are multipleobjectives. This technology can help us de-risk a play basis.”

So the challenge is to work out whichof the anomalies are actually hydrocarbons,by using what else you know about the reser-voir.

“Combining it with 3d imaging you canreduce your exploration risk with this tech-nology.”

“There are challenges - it’s not a silverbullet by any means,” he said. “But we aremoving forward and becoming more famil-iar with the technology.”

Electromagnetics are proving very ex-citing when used in cross-well, where youhave a source in one well and receiver in theother, to identify what is between the twowells.

The source well needs to be treated withan electronic conductive casing.

The cross well electromagnetics havebeen used in steam flood, where the injectorwell is also an electromagnetic source, andthe observer well is nearby (maybe the pro-duction well).

“As the steam / condensate boundarymoves through the reservoir, you can see thesteam / condensate boundary - as it passesthe resistivity goes down dramatically - soyou can record where your steam front is,”

Shale gas drilling in the Marcellus field – but do you need seismic to get the most out of it?


Subsurfacehe said. “This is an exciting area of research-which will hopefully be cost effective andgive us more benefit for more efficient pro-duction of hydrocarbons,” he said.

Cross-well seismic works in a similarway, where a source in one well sends datato a receiver in another one to identify whatis between them.

It can be used to highlight bypassed pay,because they have a higher degree of acousticimpedance (hydrocarbons stop seismicwaves getting through).

New technologies

When asked about subsurface imagingfor CO2, Ms Krohn said “it's an ongoingarea, we’re very active. SEG has a subcom-mittee that's very active in the CO2 area.When we look at the effects of CO2 therewill be a lot more work to do.”

When asked about research with perma-nent acoustic sensing in a well bore (distrib-uted acoustic sensing, or DAS), Mr Neal said“We don't have any experience with DAS -it’s something I'm interested in pursuingmore. I'm looking at how industry validates

this technology. It’s a promising option downthe road.”

“Seismic while drilling data is some-thing we played around with - it never wentsomewhere,” Ms Krohn said.

But there is a growing interest, becauseit could be a way to spot drilling hazards be-fore drilling into them. “There is a new ef-fort with a number of people looking intoseismic while drilling,” she said. “Carryingtools on the bit which let us make signalswhich we can detect to the surface.”

High production growth companies typicallyhave 27 per cent of their geosciencepetrotechnical professionals who are women,compared to 18 per cent for low growth com-panies, according to respondents to Schlum-berger's 2011 HR survey.

Among petroleum engineers, the femaleratio was 19% for high-growth companiesversus 11% for lower growth.

The study showed that the companieswith the highest production growth andbiggest technical resources tend to have more"pragmatic" HR policies than low growthcompanies, in terms of the diversity and flex-ibility they show in developing their talentpools.

High growth companies typically em-ploy retired staff on a consultancy basis toserve as mentors, coaches or experts; theytypically have fewer barriers to promotion;and training is more often on the job than inclassrooms.

The survey, by Schlumberger BusinessConsulting, covers issues related to technicalstaffing in the upstream oil and gas industry.

It concludes that the industry is in themidst of a 'major transition' and human re-sources are the 'main driver of productiongrowth'.

Issues studied include changes in demo-graphics, increasing technical complexity ofthe work, and the challenges of developingtalent pools with the required experience andcompetency.

37 upstream companies, accounting for37 per cent global oil and gas production,participated in the study.

High production growth companies

"tend" to have a higher ratio of petrotechni-cal professionals employed (male + female)per unit of operated production, compared tolower growth companies, the survey found.

The developing of unconventional re-sources and deepwater exploration haveraised the complexity of technical chal-lenges, both in geosciences and in petroleumengineering.

The "big crew change" is now well un-derway, with an expected outflow of 22,000key petrotechnical professionals from the be-ginning of 2012 to 2015 due to retirement.

The net loss (outgoing minus incoming)will be 5,500 petrotechnical professionals.

New graduates will make up the num-bers of petrotechnical professionals, but notthe gap in experience.

Up to 70% of national oil companies(NOCs), 60% of major international oil com-panies (IOCs), and 45% of independent com-panies who completed the survey acknowl-edged project delays due to staffing difficul-ties.

Participating companies reported mid-career recruitment targets significantly high-er in 2011 than in 2010 with an increase ofmore than 60% by the majors, which are be-ing severely hit by the retirement of seniorPTPs.

Annual staff turnover (% of staff chang-ing company) is also increasing. In the geo-sciences it is 4-5 per cent compared to 2.6 to4 per cent in 2010; for petroleum engineers,it is 4.5 to 7 per cent in 2011, compared to3.5 to 6 per cent in 2010.

The survey also found that developingcountries are getting more ambitious in their

demands for how much of the workforce offoreign companies working in their countrymust be local.

It is not unusual for regulatory bodiesto set recruitment targets for nationals at 80%to 90% of middle management positions, thesurvey found.

This acceleration of requirements isstretching companies' capabilities, since it re-quires both education and changes in cultureand people management.

The top executives of major internation-al oil companies are still "almost exclusive-ly" from their home country, the surveyfound.

Schlumberger Business Consulting de-veloped a concept of "time to autonomy", thetime taken to get staff to a point where theyare able to make their own (autonomous) de-cisions. This is an indicator that companiesseek to reduce.www.sbc.slb.com.

High growth companies employ more femaletechnical professionals - Schlumberger High production growth companies typically have 27 per cent of their geoscience petrotechnicalprofessionals who are women, compared to 18 per cent for low growth companies, according torespondents to Schlumberger's 2011 HR survey.

Female technicalprofessionals – does yourcompany do better themore of them you have?


11

SafeKick – understanding your drillingPeople involved in drilling a well should be able to see sophisticated information telling them exactlywhat is happening downhole and how close they are to the margins, not a stream of well logs, believesHelio Santos from SafeKick


The state of the art in drilling technology to-day is still for drillers to look at a range ofcomplex logs of different raw data, such aspump pressure, torque, bit depth, weight onbit, rotation per minute and strokes perminute (see image bottom left).

Drillers, often working 12 hour shifts,are expected to continually process these logsto understand what is happening downhole,not an easy task.

The current system relies on the rightindividual looking at the right data at theright time to be able to understand its signif-icance.

UK company SafeKick believes it canimprove this, by providing drillers with farmore useful information instead of just rawdata, allowing them to clearly identify situa-tions that could lead to future problems, suchas well control and stuck pipe.

There is no reason why the displayswhich drillers and mudloggers use can’t bemore sophisticated, but at the same timemuch simpler to understand, believes com-pany founder Helio Santos.

The information can be provided bycombining the mud log data with a powerfulsimulation of what is happening downhole,and intelligent processing. SafeKick is build-ing both.

The simulators SafeKick is building canalso be used for planning the well, trainingand to review what happened during adrilling operation. It is the first integratedsoftware platform for drilling covering thefull cycle of a well: design, train, executionand learning.

This avoids the current scenario wherepeople use different software and models indesign, training and drilling, making it diffi-cult for companies to compare what they

thought would happen with what would ac-tually happen. So it is hard to learn.

With SafeKick you can use the samesoftware to plan the well, practise drilling it,train the crew in the procedures to be used,monitor the well in real-time following yourplan, and adjust as necessary based on whatis found different from the plan. And, last butnot least, learn and improve for subsequentwells.

Questions to answerIn order to understand what is happeningdownhole, a few questions must be an-swered:- Where is the bit? Inside the casing, openhole or riser?- What is the well configuration? Casings,liners, shoe depths, diameters, top of cement?- Is the BOP open or closed? Is the choke/killline open or closed? -Are they aligned to take returns from thewell or to inject into the well?- Where are and what are the fluids inside thedrill string and annulus?- What is the operation being conducted?- What is the pore/frac pressure and pressurealong the wellbore?- Are we likely to be under or overbalanced?By how much?- Is the well likely to be cleaned (without cut-tings)?- What are the expected conditions (pres-sures) in the next 3 hours?

SafeKick visualisationSafeKick’s visualisations (see screenshotsbelow right) aim to display the right infor-mation needed to understand the situation ofthe wellbore and nothing more, so people arenot overloaded with unnecessary data.

Everything is displayed on one screen,on a clear and intuitive way. And the samesystem can be used before, during and afterthe operation; and the same information canbe available both on and off the rig.

Following the rational of providingvaluable information and not the usual dis-play of raw data, instead of just displayingthe mud weight, pump strokes per minute,and revolutions per minute, the system dis-plays the equivalent circulating density alongthe entire wellbore annulus.

Instead of providing just the rate of pen-etration and strokes per minute, the user seesthe cuttings distribution in the annulus.

Instead of providing mud weight, thesystem shows the trip (pressure) margin.

Instead of providing the block position(height) the system displays the surge/swappressures.

In order to calculate all this informationSafeKick uses powerful hydraulic, thermaland mechanical models, taking into accountthe temperature and pressure effects on mudproperties, the effect of pipe rotation, the ef-fect of pipe movement (surge/swab), and theeffect of cuttings load.

Modules under development includesupporting drilling operations and well con-trol. Future modules will include kick andloss detection, leak off test, BOP and casingtests, tripping and cementing.

Ultimately SafeKick aims to provide anaccurate representation of all drilling steps –drilling, making connections, circulating,tripping and reaming in and out, washingdown, pumping out, displacing pills, runningand cementing liners and casings, and opera-tions with the BOP closed (well control pro-cedures, leak-off, casing and pressure tests).

Version 1The first version of theSafeVision softwarewas launched in Janu-ary 2012. This Stand-alone version does notneed real time data,and can be used forwell design, trainingand simulation of thenext operation. Theversion using real-timedata is under field testsand will be launched inthe next few months.www.safekick.com.

Rather than use well logs to understand your drilling (left) Safekick provides computer images visualising currentdrilling status and how close you are to boundary conditions (right)

Most managers can, eventually, get to a pointwhere they are reasonable competent in a dis-aster situation, says UK emergency responseconsultancy Link Associates.

Most managers understand their busi-ness, understand the dangers, and, with time,can figure out what needs to be done after anaccident happens, and what story to tell.

The problem is that time is not usuallyavailable in a crisis situation. People’s firstinstinct is often to tell journalists ‘no com-ment’, which is one of the worst things to do,because it creates an opening for someoneelse to give a comment instead, so you ‘losecontrol’ of the story, the company says.

So Link Associates runs disaster simu-lator centres, where a company’s manage-ment team can practise dealing with a rangeof different disasters, with professional roleplayers phoning in as journalists, and getpractise getting to ‘own’ the story themselvesas quickly as possible.

The company opened a new centre in StKatherine’s Dock, London, in March 2012,in addition to its centre in Derby, UK.

You can send your executive team sothey sit together in a room, and receive aphone call saying that something has gonevery wrong, based on a real life event, for ex-ample the loss of IT, fraud or an emergency,fires in a chemical plant, an offshore helicop-

ter incident.Then they have to figure out what to do,

and meanwhile the phone is ringing withcalls from (pretend) journalists asking whatis going on.

The simulation suite has a range of au-dio and visual equipment so people can repli-cate the communications and informationflow that would actually take place after adisaster. Professional role players are broughtin.

Link Associates will monitor and recordpeople’s responses so they can be discussedafterwards.

Link Associates also provides trainingon the effects a crisis can have on people, as-sets and reputation, and how to maintainbusiness continuity.

“We try to give people sweaty palms,”says Mike Hogan, senior consultant at LinkAssociates International. “And try to get peo-ple to where they make a reasoned decision.”

Owning the storyHaving a crisis is as inevitable as death andtaxes, Mr Hogan says. But you can learn tominimise the impact of them if you can getback in control of a situation as quickly aspossible.

After an incident, you probably need tohave something to say to a journalist within30 minutes, or they’ll go and find someoneelse to talk to, such as one of your disgrun-tled employees, or an environmental cam-paigner with an objective to make the acci-dent look as bad as possible.

“The worst thing you can say to a jour-nalist is 'no comment’,” he says. “People'sinstinct is to put their head in the sand. Butin the 24 hour news environment, it won'thappen. We teach people to face the fact thatthere's no hiding place.”

The company needs to quickly decideon a message it can put out, so you can “buyyourself time,” he said.

“You want to get quickly to the pointwhere you know your key messages.”

“The ideal is if you have 3 key mes-sages, and something new every few hours,”he said.

This way, you ‘own’ the story, ratherthan someone else ‘owning’ it.

As you shape the message, “you wantpeople who are aware of what the issues areand what the problems might be. A lot of itis about presentation, you have to think, whatwe are trying to put over.”

It is also critical not to lie to journalists,

he said. “We teach people two rules in PR -Rule One don't lie; Rule Two. RememberRule One.”

If your internal discussions don’t fitwith the message you are giving the public,you might end up in trouble. “What you sayinside the company and outside has to bematched,” he says.

Your entire workforce has to be en-gaged with the company’s agenda – becauseif they aren’t, they might be engaged with adifferent agenda.

How to behaveMr Hogan has extensive experience on bothsides of the media fence with crisis public re-lations. After an initial career as a journalistwith the London Financial Times and eco-nomics reporter with the BBC (including ed-iting the famous ‘Panorama’ program), hejoined PriceWaterhouseCoopers as head ofEuropean media relations, then joined Shellas head of global public relations.

During his time at Shell, 1996 to 2003,Shell ended up involved in two very chal-lenging public debates, how to dispose ofBrent Spa, and pollution in the Niger delta,with events leading to the execution of KenSaro-Wiwa by the Nigerian government.

Since working at Shell, Mr Hogan hasalso led a master’s degree in internationalpublic relations and crisis management atCardiff Business School, Wales.

When he was head of global media re-lations at Shell, one approach Mr Hogan tookwas to try to help people make their ownjudgements.

At one stage, the company chartered ahelicopter for five journalists, some accom-panied by film crews, to spend time in theNigerian delta, so they could decide forthemselves whether Shell or local peoplewere responsible for the oil spills there.

As a result, there was a front page storyon the UK Times newspaper saying that Shellwas not at fault, Mr Hogan said. “It turnedthings around.”

“You tell people what has taken placeand leave other people to make the judge-ment,” he said.

“We are never going to be loved be-cause we were big oil,” he said. “But wewanted to be admired for what we did.”

Shell has hired market research organi-sation MORI to do surveys to find out howShell is viewed around the world. Its chair-man has also held meetings with members ofGreenpeace. “We were trying to get across

Getting comfortable with disasters fasterAfter a disaster, senior executives can usually figure out what to do and what to say eventually – but ithelps if they get there faster, says UK consultancy Link Associates

12



Never say ‘no comment’ to a journalist -Mike Hogan, senior consultant at LinkAssociates, and ex head of global PR withShell

that we weren't a secret society,” he said. Mr Hogan says that the way the public

person should behave is illustrated by the be-haviour of the chairman of UK aviation com-pany British Midland, after one of his aircraftcrashed into a busy motorway in the UK inJanuary 1989.

The chairman conducted a radio inter-view whilst driving to the crash site, saying

that he regretted the incident, it would be in-vestigated, and the results would be pub-lished – a code of behaviour with the memo-rable acronyms RIP (regret, investigate, pub-lish).

The success of the initial approach tothe media was reflected in the fact thatBritish Midland shares climbed on the weekof the disaster, Mr Hogan said.

Similar behaviour was shown byRichard Branson, chairman of Virgin Group,after the derailment of one of his trains in theUK in February 2007. “He was on holidayand flew to the site by helicopter, and did thesame thing. He said 'people don’t know youcare until they see you care’”, Mr Hogansaid.

1313April/May 2012- digital energy journal


BusinessPort – helping you streamline yourprocessesBusinessPort of Aberdeen grew 33 per cent last year and doubled staff head count, helping companiesintegrate Process, Risk and Compliance through the use of its agility intelligent Business ManagementSystem.

BusinessPort, a software and consultancybased in Aberdeen, is reporting 33 per centbusiness growth over the past year, helpingcompanies streamline and integrate theirprocesses and procedures. The company hasalso doubled staff over the past year.

Many companies have got into a situa-tion where they have more procedures thanstaff can manage, they keep bolting on moreprocedures without removing any, and peo-ple’s professional judgment is distorted bythe stress of trying to work out which proce-dure they are meant to be following.

The procedures are often stored on dif-ferent systems, and are not up to date, con-flicting with other procedures. Meanwhilethere are certain tasks which don’t have anapproved company-wide means of accom-plishing.

BusinessPort aims to streamline all ofthat.

It starts off by carrying out a DiscoveryExercise whereby members of their Profes-sional Services Division visit a company, un-derstand how its procedures work, help filterout which procedures it needs.

Then it puts together an online systemwhich can by run stand alone or via Mi-crosoft SharePoint Portal, which all compa-ny employees can access, so they can under-stand as clearly as possible what they needto do at what stage.

BusinessPort has around 50 majorclients, and most of them have between 1,000and 10,000 employees accessing the systemregularly, so it has around 250,000 users.

Clients include Nexen (oil and gas com-pany based in Calgary); oil major Total (us-ing the system in its bases in Aberdeen andNigeria); Canrig (a drilling company basedin Houston and Calgary); Clough (an Aus-tralian engineering and construction compa-ny); the Saudi Arabian National Guard (aSaudi Arabian military force); Petrofac (a

UK engineering company); Centrica (a UKoil and gas company); Babcock Marine (aUK engineering support company); BibbyOffshore (a UK offshore shipping company);Lloyd’s Register, a UK risk consultancy; andAhlstrom, a Finnish wood processing com-pany.

The system can also be used offshore –Bibby Offshore uses it in this way, with pro-cedures being updated in head office, and thelatest procedures being sent out to the ves-sels.

The company is targeting all kinds ofbusinesses which are highly regulated andhave operational risks which need managedprocesses.

In March 2012, BusinessPort launchedthe second version of its Agility software.The new version, which is already being usedby construction giant Petrofac, has improvedtools to work with the process documenta-tion, both for administrators and users.

On Agility 2.0, users see informationwhich is more tailored to them. There is amore advanced user interface both for usersand for administrators. There is a module tomanage risks.

Company backgroundBusinessPort was founded by Peter Shieldsin 1996, who had just completed putting to-gether a maintenance management systemfor oil company Conoco (now Cono-coPhillips) in Aberdeen, working for a com-pany called Brown and Root (now part ofKellogg, Brown and Root, or KBR). Hecould see the benefit of process maps replac-ing text based procedural documents, andthought it should be possible to build a busi-ness around that.

Despite being based in Aberdeen, thecompany’s first client was an umbilicalsmanufacturer in Florida and the second clientwas based in Denmark.

Lloyd’s Register, when assessing engi-neering giant Siemens’ use of the system in aquality audit, wrote:

"The structure, content and usability ofthis system was excellent. The structure isprocess based and allows the user to quicklyidentify their role within the system. Change,control and archiving of records is good andthe company should be congratulated on theireffort with the development o this system.This electronic system is one of the best ex-amples of its type."

UsersUsers can access the system as often as re-quired, according to marketing executiveNicola Smith.

If they aren’t sure exactly what process-es they need to follow to complete a task,they can look it up on the system. They cansearch for a procedure, see who is involvedand what they have to do.

Most of the information is provided indiagrams – there is an emphasis away fromproviding lengthy text based documents,which are expensive to produce and hard toget people to read. “It is presented visuallyin a way that's easy to understand,” Ms Smithsays.

The individuals who have to do thework can log in and see clearly what proce-dures they have to follow in a certain task,because of what job title they have.

When there are updates to procedures,the relevant individuals can see when theylog on next that something has been changed,so they can read it.

In future, the information might be ac-cessed more using tablet PCs rather thandesktop PCs, particularly when an expectedgeneration of indestructible tablet PCs comesonto the market, she says. This way peoplecan see what procedures they should be fol-lowing when they are doing the work.

14


AdministratorsFrom the administrators’ side:

Administrators can design a process,with specific instructions for people in spe-cific roles, which they should follow.

There is a tool for sending processes outto people in specific roles so they can ap-prove the text, and check that this has

been done.The software is geared around process-

es – short chunks of instructions, not lengthytext documents.

There is a special agility mapping toolfor putting this process together, showingwho does what, where and when. Using Vi-sio, Microsoft’s organizational diagrammaticprogramming system, overview diagrams

can be designed to help further simplify anoverall process, which link in seamlesslywith agility

You can map the way tasks are complet-ed in the company, and which person inwhich specific role performs which task atwhich point, and how the task should bedone.

The new process mapping tool is up to3 times faster than the old one, Ms Smithsays.

Training administrators to use the sys-tem usually takes 2 days, in a training coursewhich BusinessPort provides.

ConsultingThe consultancy provided by BusinessPort isperhaps the most important part. Business-Port specialists visit a company and lookthrough its existing procedures in depth, andtry to work out areas they can be simplifiedor streamlined.

Duplicate procedures can be merged,redundant procedures removed, duplicate jobtitles (such as co-ordinator and supervisor)can be merged.

If the company has a merger, BusinessPort will identify common processes acrossdifferent business areas and harmonizethem.

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16



How closely does most companies’ IT func-tion work with operations personnel? Or viceversa?

Is IT staying with the demands and re-quirements of an operations department indeveloping new ways to do business better?

In short, is the business aligned with ITand “Does your IT department work effec-tively in the Digital Oilfield?”

How important are those questions? Googling “Business/IT alignment” pro-

duces millions of hits, easily exceeding anyother alignment search terms, such as for Fi-nance, Engineering, or Marketing, for exam-ple.

So, what about re-inventing the connec-tion between IT and the business?

Let’s examine the wide-ranging “sevendimensions of re-invention for business-IT,”comprised of: � Language: speak the language when in

Rome� Organization Structure: structures must

match the business� Competence: getting “professional”� Program Management: herding cats to the

vision� Process Management: drink the water of� “Process”Corporate Responsibility: will

ing to take “full responsibility?”� Operations Integration: taking it all the

way to the bank

LanguageListening to a conversation between businessand IT management can be both interestingand entertaining.

Imagine an IT professional using thefollowing terms in a discussion with a busi-ness team that needs support: applications,servers, data bases, vendors, operating sys-tems, DBMS, infrastructure and data archi-tecture, network components, and on and on.Imagine where this conversation is going.

IT management and support personnel

must do two things: learn to speak oil patchwith some degree of authority and limit theirIT vocabulary to (1) business goals and ob-jectives (2) work processes and (3) names ofapplications.

An IT audience member asked: “Areyou saying I have to learn their business lan-guage but they don’t have to learn mine?”“Yes” was the reply. She defiantly said,“That’s not fair.” True, but it is what it is.

Organization StructureIf change is the rule for the business today(and it is), IT must be formally organized toplay in an environment of continuouschange.

Business organizations are more andmore being organized along the lines of “Runthe Business” and “Change the Business.”

In a typical modern upstream organiza-tion one will find departments ginning out aworkstream today just like they did yester-day.

Look around, however, and one is like-ly to find a medley of “projects” or taskforces focused on “Changing the Business.”Projects might be focused on streamliningsome aspect of supply chain or developingrules and protocols for intra company collab-oration.

While at one time such ad hoc groupsor teams were likely to be comprised of “peo-ple who aren’t busy right now,” the tide hasturned. Taskforces and projects are nowstaffed with the “best and the brightest.”

So, what is the problem? Almost allchange-the-business projects today involveinformation technology, so there should bean interface between business and IT. Fre-quently, the interfaces are not funny — ormaybe they are funny.

An IT organization’s structure mustmatch the business structure and in someways it usually does, such as IT operationsinterfacing with the run-the-business side ofoperations. However, many IT organizationshave no strong and robust analysis function(or section) that can square off with best andbrightest team members from the businessside.

Try making progress in a team populat-ed with business-side pros and a couple ofrecent graduates of a ranking business schoolattempting to fill the shoes of an experiencedIT analyst. Maybe it’s time to return to main-

frames’ heyday when just about every ITshop had a first rate business analysis sectionmade up of pros who could stand with onefoot in the business and the other foot in IT.

CompetenceGiven today’s taxing environment with need-ed interplay between IT and the business,something more than programming and mod-eling skills are called for in the interface.

In fact, in an effective IT interface,players look more like “professional serviceguys,” accountants, lawyers, and even con-sultants from the big companies. Such pro-fessionals spend the better part of their livesworking with parts of their client’s businessthat need professional advice and services.

Thus, the suggestion for re-invention isnot to stage a raid on a big name consultinghouse, but to begin cultivating professionalservice competence in IT. For example, look-ing into a typical IT organization today mayreveal those who could perform very well inthe business/IT interface.

Conversely, others who might not havewhat it takes to play that critical interfacerole are typically easily spotted.

A more complicated way of saying itmay be: IT can no longer send its best andbrightest into the bowels of IT where contactwith operation people is limited to a collisionin a hallway.

Today’s world calls for the best andbrightest IT talents to take their place on theIT organization’s boundaries where they reg-ularly interact and innovate with the best andthe brightest from the operations side. Whatgoes around, comes around.

Program ManagementProgram management is coming to the foreas a needed discipline for handling the pro-liferation of changes, upgrades and modifi-cations IT faces every day. The phrase “herd-ing cats” is common parlance around manyof today’s IT departments.

Program management is not new to

Does your IT department work well withoperations?Is IT staying with the demands and requirements of an operations department in developing new waysto do business better? Perhaps not, says Dutch Holland

Today’s new executive standard is “torun the business well all the time, and tochange the business well every time.”Both sides of the standard will beimpossible to meet without business-ITalignment.

Is your business and IT aligned?

many IT organ-izations, butthere is goodnews and badnews. The goodnews is thatprogram man-agement as adiscipline isgaining afoothold, on theIT side at least.The bad news isthat program

management has become a creature of IT, notthe enterprise.

Program Management to guide multipletechnical projects in IT to a safe conclusionexcept for a collision or two with other proj-ects clearly works.

But the real need is for program man-agement to be used at the enterprise level, notjust inside IT. The reason is simple. Those on

the operations side just do not do programmanagement or Project Management. Theirskills are in running the business to hit tar-gets, something they do well. But, in today’schanging world, running the business welljust isn’t enough.

Today’s new executive standard is “torun the business well all the time and changethe business well every time.” IT’s compe-tence in program management can even beused outside of IT. Business managementwith multiple task forces and initiatives go-ing all at once could use strong programmanagement skills and discipline. Today’s ITorganization must have the skills and thewillingness to re-invent their role to includehelping the enterprise “change the businesswell every time.”

Conclusion One might make a case that changing busi-ness practices require Information Technolo-gy to “reinvent” itself for Business IT Align-

ment. Yet, reinvention is not a simple linearoperation; reinvention must happen on mul-tiple fronts or dimensions. It may not be fair,it may not be easy, but alignment is there toget done. “Lead, follow, or get out of theway.”

Starting with seven dimensions was agood idea, but perhaps too bold an attemptto cover everything in a brief overview. Fortunately, there is a next time and, in thenext edition, expect to hear “the rest of thestory.”

Is your IT functionaligned with the rest ofthe business?


About the Author: Dutch Holland is amulti-decade veteran of the businesswars, in the trenches long enough toknow that the real excitement comesfrom taking the high ground to seetoday’s big picture and to envisiontomorrow’s “Upstream Business ofthe Future.” Dutch can be reached athttp://www.hollandmanagementcoaching.com/digitaloilfield/.

Why do compa-nies buy comput-ers? Such is thequestion present-ed to my fresh-man computerscience classes.

After muchprodding and dis-cussion, the stu-dents get it – tomake money.

Paraphrased,why do oil and

gas E&P managers invest in technology?Again, to make money.

Sometimes making money may resultfrom reduction of injuries, reduction of spills,or reduction of NPT.

Other times, monetary value is realizedthrough boreholes which are straighter, drillfaster, and stay in-zone. In other cases, tech-nology improves communication and assetmanagement.

One thing is clear: managers invest intechnology which is operations-centric andbottom-line focused.

Operations-centric systems and tech-nologies (specifically software and data sys-tems) are not financial systems and are notaccounting systems; they provide explicitfunctional benefit to the operations side of

the enterprise. Drilling systems and drilling technolo-

gies are distinctly focused on keeping the bitturning – reduced HSE incidents, reducedNPT, increased wellbore quality and in-creased ROP.

Business unit challengesDevelopment, implementation, and manage-ment of operations-centric [software and da-ta] technologies is not well understood eitherwithin or without of the business unit.

And the business units must locate so-lutions: service companies, corporate IT, orbusiness unit (in-house, in-group) solutions.

Service companies provide many solu-tions, often a systems-wide solution.

Corporate IT departments develop therequisite application to custom specifica-tions, often integrating in-house data and ap-plications.

Business units solve problems – quick-ly, internally, and with differing degrees ofsuccess – system solutions and integrated da-ta solutions.

Industry standards have helped smooththe dissimilar edges of diverse subsystems.WITS, WITSML, and PPDM (most especial-ly WITSML) contribute to a level of interop-erability.

Furthermore, these standards form theglue between the subsystems far superior to

emailed spreadsheets and 24-hour reports. But, in many cases, the advantage has

been lost due to the non-standard nature ofthe standards as well as the increased com-plexity of the drilling problem.

Service companies offer many timelyand out-of-the-box solutions. And these so-lutions are typically designed with a level offorethought, planning, and agility but theymust meet expectations from a range of po-tential clients. Thus they are seldom a singlesolution with a great fit.

Systems which provide a high degree ofcustomization will achieve a degree of agili-ty, but with the cost of a level of complexity.

Nevertheless, solutions provided byservice companies are critical to the drillingchallenge. Drilling engineers have grownadept at shoehorning diverse, yet synergistic,service companies into a functioning unit.

Rig / PVT sensors and subsystems,downhole equipment and subsystems, mudlogging subsystems, and geologic subsys-tems can be brought together to produce asystem of values – a system of visualizations– which can be assimilated by the engineer.

And this has been successfully achievedby all successful E&P managers.

Traditional IT departmentsTraditional IT departments want to take over,manage, audit, and control systems.


Service company IT and corporate ITWho is responsible for fitting together IT from service companies and the corporate IT department? The business unitmanagers. Are they the best people to do it? By Mark Reynolds, staff drilling analyst, Southwestern Energy (Houston)

18



They approach the problem from theviewpoint of a technologist – a technologistbound by a decade of regulations and audits:Sarbanes Oxley, ISO-9000, and various SECregulations.

IT departments understand analysis, de-velopment, scalability, and roll-out but prod-uct development cycles are seldom nimbleand responsive. Agile and Scrum develop-ment techniques have improved the situation,but not sufficiently improved to keep the bitturning in today’s systems.

Ad hoc fitting these solutions together– solutions from the service company andfrom the IT department – has become thechallenge of the business unit expert.

Immersion within the drilling environ-ment promotes an agile and responsive mind-set, but discourages robust designs.

SpreadsheetsThus the business unit operations andprocesses tend to spring from spreadsheet so-lutions designed to address 1) immediatechallenges and 2) interconnecting dissimilarsystems. Thus, business unit solutions arefrequently non-integrated technologies.

But spreadsheets have accomplishedunbelievable feats; but they are inherently adhoc solutions and normally require hands-onnurturing to keep running.

Move to closed loopAs the industry moves away from hand-on-the-brake drilling mentalities into closed-loop automated drilling, look ahead predic-tive analysis, and nearby well comparisons,the ability to consume and process ever in-creasing datasets becomes the driving factor.

Support-center based performance vi-sualization is becoming more common placethus raising the bar in regards to monitoring.Specifically, traditional threshold basedalarms are giving way to knowledge systems,case-based reasoning, and closed loop sys-tems.

Business unit based teams of data ana-lysts, data engineers, and systems architectsbecome central to the new drilling paradigm.

This Business Unit IT may exist as abusiness unit organization with connectionsto IT or may exist as an IT extension tightlycoupled to the business unit. Either way, rap-id-reaction operations-centric solutions arerequired.

Regardless, Business Unit Develop-ment teams create intrinsic value in thedrilling datasets by moving away from 24-hour morning reports and into the real-timedata streaming environment.

And drilling challenges may force thereal-time streaming systems to move from10-second update rates down to 5-second, 2-

second, 1-second, or even sub-second up-dates.

System and subsystem interplay cannotbe understood when the sampling granulari-ty is too large. The ability to watch and ana-lyze trip speed, vibration, and most transientevents is non-existent with updates slowerthan 10-second rates; 2-second or even 1-sec-ond updates are preferable in many scenar-ios.

Service companies and solutionproviders are rapidly developing new inte-grated solutions. Case-based reasoning, com-plex event processing, and closed-loop con-trol provide new levels of centralized direc-tion, steering, and control. But bringing thesenew services (internally or externally devel-oped) requires a new level of industrial andsoftware management expertise.

Management oversight is asking formore complex analysis of more data. Big da-ta systems, business intelligence, and tradi-tional data mining become the ingrained min-imum expectation.

When coupled with increased assetscheduling and mobilization expectations,with the increased governmental permittingand reporting expectations, and with in-creased management oversight, the integra-tion of current drilling parameters with assetmanagement becomes its own challenge –and this challenge can only be understoodand solved by the ingrained / integrated busi-ness unit team of data analysts, data engi-neers, and systems architects.

Increasing ROIBut technology must increase the ROI; itmust increase the generated revenue or de-crease the capital expenditure. And the busi-ness unit team must, themselves, produce anet increase in company value.

Quantification of the ROI benefit is dif-ficult at best and unwieldy in most scenarios.

For example, asset management andscheduling ROI can be inferred by idle rig-days and reduced governmental penalties.Operations-centric borehole control ROI canbe assumed and quantified based on 1) re-duced sidetrack counts in known areas, 2)borehole straightness, in zone-ness, andachieved lateral length, and 3) higher produc-tion volumes.

Quantifiable justification of the busi-ness unit embedded team of data analysts,data engineers, and system architects whencompared to internal IT organizations as wellas service companies is no less challenging.

Comparison of raw estimates to per-form a project (time and head count) is mean-ingless unless a demonstrable accurate taskestimation system is in place – but this fre-quently precludes agile and nimble develop-

ment teams.

The business unit development team,when properly formulated, must address thedrilling challenge in an embedded and inte-grate fashion and must consist of data ana-lysts, data engineers, system architects, anda management layer adept at creating the op-erations-centric, agile and nimble, servicegroup.

The business unit development teamcan, when properly constituted, equipped,and encouraged, become the E&P manager’sgo-to asset.

So the case for business unit develop-ment teams becomes a management approxi-mation of the team strengths, the business ex-pectations, and the cross-discipline need forresults.

The expectation for success of the busi-ness unit team must be compared to internalIT teams and to service company turn-keysupplied solutions.

When expectation for business unitteams to respond to ever tight tolerances totime, production, and HSE, the case for thebusiness unit, operations-focused, develop-ment team becomes more readily apparent.

Business unit software and data systemsdevelopment teams can, and will, make mon-ey for the organization through improved andfaster drilling, improved production, and re-duced HSE, NPT, and asset downtime.

Mark Reynolds is currently atSouthwestern Energy (Houston), wherehe works in the Fayetteville ShaleDrilling group as a Staff Drilling DataAnalyst. In this position, he pulls hisexperiences in data processing, dataanalysis, and data presentation toimprove Southwestern Energy’s work inthe natural gas production and mid-stream market.

Mark began developing militaryavionics systems for General Dynamicsand Sikorsky Aircraft. Since 1990, hehas been developing Systems and Appli-cations for the Energy Industry includ-ing integrated information systems, sys-tems analytics, real-time processing, andoperations management.

Any opinions expressed in this articleare personal opinions of MarkReynolds, and are not related to anybusiness activities of SouthwesternEnergy

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Supply chains

Want to manage logistics like Caterpillar?Heavy machinery manufacturer Caterpillar believes that its internal logistics processes, which managesupplies of 620,000 spare parts, are so good that it is offering them as a service to oil and gas companies


Caterpillar Inc, the fa-mous machinery and en-gine manufacturer, hasto manage 620,000 dif-ferent spare parts.

The company be-lieves that its expertisein managing the deliveryand inventory of spareparts is something the oiland gas industry couldfind useful.

CAT’s expertise,making sure critical spares for heavy, expen-sive equipment are quickly available, issomething very relevant to the oil and gas in-dustry. “If the $4m truck is down, the guyloses his sense of humour very quickly,” hesaid. “It’s kind of within our DNA, we knowhow to manage that.”

Cat Logistics’s service offering for oiland gas companies is to try to understandtheir strategy for supplies of items, under-standing the current supply chain in depth,looking at the accuracy of records, and put-ting together a proposal which will includean opportunity to improve the current set-up.

“This assessment we do is pretty accu-rate,” said Moe Iverson, Commercial VP forCat Logistics, speaking at the Digital EnergyJournal Feb 28th conference in Stavanger onOptimising supply chains.

“It allows the client to understand thebenefits and what the benefits might be.”

To make sure people in the field can getfast access to the spare parts they need, youneed to look at your system as an entire net-work. “It’s one thing to run the warehouse,it’s another thing to run the network efficient-

ly. That's kind of what we do.”“We play very well in the industrial,

mining, oil and gas capital asset area.” Since 2002, Caterpillar has offered lo-

gistics services to outside companies, follow-

ing a deal to manage global parts distributionwith Land Rover.

Now Cat Logistics serves 65 compa-nies, in the automotive, heavy industrial,mining and oil and gas sectors, employingaround 12,000 people. Other external cus-tomers include Ford Motor Company,Harley-Davidson, Mazda, Cadillac Europe,Mosaic Fertilizer, Newmont Mining Corpo-ration.

In 2005 Caterpillar acquired the logis-tics business RelayStar NV, which was pre-viously an affiliate of ChevronTexaco Tech-nology Ventures LLC.

The company does not operate anytransportation vehicles itself but purchases alarge amount of transportation servicesaround the world.

InventoryInventory “drives pretty much everything,”Mr Iversen said.“It drives the store size, realestate, buildings. It has an influence on oper-ations, how many people you have, what arethe processes you've employed, all of theequipment you have in place to manage it.”“You have to make sure you have the rightpart, right place, right time to maximise yourbusiness. It helps create a competitive advan-tage for your operations.”

A good inventory management systemwill also help you manage business changes,such as new regulation, natural disasters,business cycles, new competition, increas-ingly complex sourcing networks, he said.

SimulatorsCaterpillar has to make as many of its spareparts as possible available at short noticeanywhere in the world.

It approaches this task using sophisti-cated computer simulation, to make an opti-mum statregy for stocking for each item, anddecide how to play off the need to reducecapital tied up in inventory, against the needto have parts quickly available, stored closeto where they might be needed.

The computer simulation tool can alsoadjust spare part inventory very quickly ifthere are changes, for example when the re-cession forced customers to postpone acqui-sition of new machinery, so they kept oldermachinery in action for longer (needing morespare parts).

The simulators forecast what CATterms “independent demand”, ie the demandwhich cannot be easily predicted.

This is the same as the type of predic-

tions your local supermarket makes. It doesnot know exactly what your neighbor willpurchase tomorrow, but can make a fairlygood guess of its overall sales based on pastoverall purchasing history.

“A simulator is a tool that allows you tounderstand and model the changes in your in-ventory profile before you pull the trigger, soyou're able to simulate the actual results pri-or to implementation and execution,” he said.

CAT’s simulator model works with 3years of demand history for certain items,and studies the transactions that were made.

You can model different routing strate-gies for spare parts, whether to store all itemsin one central location or in distributed ware-houses.

“We create a profile of the inventory in-vestment and a profile of your service,” hesaid.

CAT Logistics is so confident in the re-sults of its simulation process, that it can signcontracts with customers where it guaranteesthat specific items will be available whereneeded, otherwise the client doesn’t pay.

When doing simulations, getting cleandata can be much harder than running the ac-tual simulation, he said.

“It’s a bit of an arduous task - you spenda lot of time in making sure that the data isnot in any way a problem. It is a lot of hardwork - but that is kind of what we do.”

Capital and service availabilityA useful task with the simulator is to testwhat is possible by either reducing capitaltied up in inventory, or improving serviceavailability times.

For example, say you currently have$18m of items in inventory, and a serviceavailability of 85 per cent (the part you wantis available 85 per cent of the time).

After running the data through the sim-ulator, you might get an improved inventoryset-up, which will mean you still have 85 percent service availability, but only $11m tiedup in spares.

Of you could keep $18m in spares, butget a 95 per cent service availability.

Or go for something mid-way, with say$13m in spares and 90 per cent service avail-ability.

Caterpillar has to manage620,000 spare parts for all of itsproducts

Caterpillarmanages manyspare parts for itsown heavyequipment -could it do thesame for yours?

You can watch the video of MoeIversen’s talk and download slides athttp://www.findingpetroleum.com/video/379.aspx

EOS Solutions(www.3eos.com) ofRochester, Michigan,is helping oil and gascompanies create sig-nificant improve-ments in the supplychain of replacementparts through the useof 3D PDF technolo-gy. The dynamic new3D visualization andcollaboration tool al-lows users to embed

3D CAD models, from virtually any format,directly into a PDF document that is univer-sally accessible throughout the supply chain.As such, oil and gas operations are using itto help maintenance teams more accuratelyidentify the correct parts that need to be or-dered.

In tests, companies using it “saw signif-icant results in improved accuracy in order-ing from their offshore units,” said StevePrast, managing director of EOS Solutions,speaking at the Feb 28 Digital Energy Jour-nal Stavanger conference ‘optimising supplychains’.

It is possible to embed animated 3Dmodels in PDFs and view them in free AdobeReader software, so anyone in the companycan view an item in 3D without having to buyexpensive design software.

The system can work on its own or beembedded within a maintenance or enterpriseresource planning (ERP) system.

EOS developed the technology to use3D PDFs for supply chains in a research proj-ect with funding from the US Army, whichwanted to find ways to re-use its 3D data toimprove the supply chain.

Being able to view 3D models “doesn'thave a direct impact on the supply chain but

it had an ancillary impact by improving com-munication across disciplines,” commentedMr Prast.

According to Mr Prast, generating 3DPDFs of items can be done affordablyenough for companies to choose to install iton every piece of critical equipment.

The 3D data can be generated directlyfrom 3D CAD data, laser scans of the actualequipment, such as offshore oil rigs, or evenfrom 2D drawings.

Drawing accuracy is not so critical. “Wedon't actually have to have engineering pre-cision in the models, it has to be visually cor-rect, it has to fit up correctly, but you don'tneed the same accuracy you would have ifyou were going to manufacture this thing,”said Mr Prast.

EOS Solutions is based in Rochester,near Detroit, Michigan, and works togetherwith a Norwegian partner called Norisol tooffer 3D PDF as part of its Model Based En-terprise solutions in Europe. Additionally,EOS Solutions specializes in 4D Simulation,which can provide a variety of benefits forclients operating complex systems with largecapital investments. Most notably, 4D Simu-lation gives clients the ability to improve riskmitigation strategies, planning optimizationand create an accurate total cost analysis.

EOS Solutions works in the aerospaceand defence industry, and has been workingin the oil and gas industry since 2007. Itsclients include: Aera Energy, a joint venturebetween Shell and Exxon Mobil, Boeing,Lockheed Martin, GE Energy, General Dy-namics Land Systems, BAE Systems and theU.S. Army and Navy.

Plan maintenance tasks3D PDF technology can be used to plan andrecord results of maintenance tasks.

You can animate complex 3D CADmodels within a PDF, whichcan include an audio voiceover,to explain how the repair shouldbe done. Because the 3D PDFtechnology exponentially re-duces the size of the originaldesign file, the 3D PDF docu-ment can be easily distributedthroughout the supply chain viae-mail or download.

Once a 3D PDF is openedusing FREE Adobe Reader,which is installed on 98% of theworld’s computers, you can col-laborate by making comments,

design mark-ups and even draw measure-ments. For example, maintenance teamscould make the following comments, “in thisparticular attempt we found this part does notfit this configuration.” The lesson will bestored in the PDF for and eliminate furtherinefficiencies in the maintenance process.

Construction ModelingYou can use EOS’ 4D Simulation to assessthe viability of operational plans prior tomaking major capital investments. EOS 4Dsimulations can help you understand anynumber of issues that may affect the prof-itability of a construction project during itslife cycle, including: new technology,staffing levels, weather, equipment failureand delivery schedules.

In one example, a project involved dig-ging and filling trenches. The operator want-ed to work out if it would be better to havetwo vehicles working simultaneously, onefilling a trench while the other was diggingthe next trench. The 4D Simulation showedthat the additional truck traffic would actual-ly slow everything down.

The technology can be extended inter-nationally, to model and visualise your sup-ply chain around the world. Using a secureweb-based user interface that allows key de-cision makers to access the data gleaned fromthe simulation and change certain variablethat test “what-if” scenarios.

EOS 4D Simulation begins by buildinga mathematical model of all the componentsthat comprise a complex system and the vari-ables that can affect them. Once this is com-pleted, the 4D Simulation is run using ad-vanced discrete event simulation software,which allows decision makers to see how dif-ferent components will interact – for exam-ple, what happens after there is bad weather,or truck congestion, or equipment break-down.

According to Mr Prast, the technologyhas been used to make a model of an entirereservoir and topsides, he said.

“We can go all the way though and lookat the condition of specific wells, we can pullin live data and see exactly what the state isat any given time, said Mr Prast.

Supply chains


3D PDF Technology for the supply chain3D CAD models of spare parts, embedded into PDFs, can be used to improve purchasing andmaintenance, says U.S.company EOS Solutions

Helping you workwith 3D pdfs - StevePrast, managingdirector, EOSSolutions

If you view parts you are about to purchase in 3D, usingfree Adobe Reader, you are more likely to purchase thecorrect part

You can watch the video of StevePrast’s talk and download slides athttp://www.findingpetroleum.com/video/376.aspx

22 April/May 2012- digital energy journal

Supply chains

Analytics on your inventoryBy doing an automated analysis of your inventory levels, you can work out ways to increase your chancesof having the part you need readily available, whilst reducing the amount of money tied up in inventory,says ASCI

By applying statisti-cal analytics tools(such as the ones de-veloped by Oniqua)to your inventory,you can achieve arare combination re-duced stock outagesand lower cost of in-ventory ownership atthe same time, saidScott Hawkins, Pres-ident, Chief Operat-ing Officer and co-founder of AdvancedSupply Chain Inter-national, speaking atthe Digital Energy

Journal Stavanger conference on Feb 28th,“optimising supply chains”.

Many people think optimizing invento-ry only means reducing the amount of inven-tory, but often the more useful improvementsare in making sure you have important partsreadily available when you need them sheaid.

If you have the right parts available, andso stock outages and maintenance delayswaiting for deliveries, “at the end of the dayyou save money,” he said.

Another benefit of doing automated an-alytics on inventory is that you have amethod to resolve disputes about whether acertain part should be stocked, or taken outof stock.

“New items keep coming. People willsay, 'it would be nice if you carried this'. It ishard to say no.”

“The maintenance community carries alot of clout and sway, and in the absence ofgood rigorous analytics and quantifiable an-swers, it becomes an emotional conversation- 'I need this' - 'no you don't' 'yes I do, youdon't know anything about maintenance'.

“That conversation happens 100 timesa month.”

But if you have a computer analyticsprogram to tell you the best answer, “itmakes it easier to say no if you don't need tostock the item and easier to say yes if itdoes,” he said.

If everybody agrees on the rules, suchas the stocking philosophy and criticalityclassifications, and if there is an understand-ing of the power of statistical tools, then it“builds a tremendous bridge” between mate-rials and maintenance organisations, he said.

It is important to explain to mainte-

nance staff how the classification systemworks, so they understand that importantitems are more likely to be in stock.

A common error is to neglect includingthe maintenance organisation in the invento-ry criticality classification process. If the ma-terials organisation just does the classifica-tion in a vacuum and fails to educate mainte-nance staff on the power of the tools, “thebuy-in that's so essential doesn't occur.”

Once those bridges are built, mainte-nance managers begin noticing a real differ-ence in inventory performance. For exam-ple, if the statistical tools drive warehouseservice level (availability of needed parts)from 95 per cent to 99 per cent, that is an80% reduction in stock outages. The main-tenance staff will definitely notice.

This means that out of 1000 orders, thenumbers out of stock has reduced from 50 to10.

“And of the remaining ten stock-outs,the items which were out of stock are farmore likely to be the less consequentialitems, because of the way the available us-age forecasting tools treat critical items.”

ReturnsOnce items have been purchased for a capi-tal project or even a major turnaround, if theyare not there is often a strong push to get thewarehouse to bring them into stock.

Here again, the analytics tools can set-tle the question. Tools such as Oniqua Inven-tory Optimiser can work out if you are betteroff paying the costs of returning items, in-cluding restocking fees, or if you should goahead and bring the items into stock basedon usage history for like items.

Analytics tools can also help foster bet-ter working relationships between mainte-nance staff and materials staff, when mainte-nance staff find that the parts they need aremore likely to be immediately available.

“We're in the early years of a revolutionin business analytics,” he said.

“I think over the next 10 years you'll seethis type of thing become much more wide-spread.

“Mould”Unless attention is paid to it, inventory tendsto grow over time, much like mould, MrHawkins says.

“Once you have it, it tends to grow at acertain pace if you don't have a program tokeep it in check”

Stocking levels are often planned

around a certain level of usage for the item,and if the item starts to be used less, there isno process to correspondingly reduce stock-ing levels.

“Eliminating items is a lot more diffi-cult to do in most organisations than bring-ing new ones in,” he said.

It is also common that oil and gas com-panies don’t have a plan for dealing with ex-cess inventory. Oil and gas people are com-monly very good at making plans and put-ting them into action, but not so good at cir-cling back around to check on status and thenoptimise, Mr Hawkins says.

“Around supply chain, what we've ob-served, is that [planning and executing] getmost of the time and energy and there isn'tmuch left over for optimising, checking andre-optimising.”

Yet the oil and gas industry has made alot of effort to optimise other areas of itsbusiness, including reservoir engineering andexploration techniques.

Master dataA lot of the barriers to doing optimising workare with master data quality, because you canonly optimise a supply chain if the master da-ta is good, he said.

Master data, including catalogues andequipment lists, varies a great deal in quali-ty.

Equipment bills of materials, the list ofmaintenance parts a certain piece of equip-ment requires, also need to be accurate, oth-erwise the wrong parts get ordered.

“Without at least a modicum of masterdata quality it is very difficult to optimise,”he said. “It is very difficult to know whatyou've bought repetitively, to tease out theopportunities, when you have a catalogue rifewith duplicates and poor descriptions.”

There are many agencies around theworld which specialise in helping sort outmaster data, he said. “There are firms whichhave sprung up which can help you put prop-er taxonomy and nomenclature in place, doan initial data scrub, and even help maintainthe data over time.”

The data quality does not need to beperfect to generate enormous value, he said.The most important pieces of information arethe purchasing history of items and past or-der lead times.

Technology toolsAnother barrier to adopting analytics is thetechnology tools. Many companies spent

A better managedinventory is a “giftthat keeps giving” -Scott Hawkins,president, COO andco-founder ofAnchorage basedASCI

Supply chains

23


large amounts of money in the 1990s and ear-ly 2000s installing ERP systems and puttingall of their data into them, with a view tomaking this system the only system theyused.

But many ERP systems don’t have verygood data analysis tools, or other specialisedanalytics tools, and companies are reluctantto use software outside their main ERP sys-tem. That is a barrier, says Hawkins, becauseno single system can do everything. Special-ized functions such as advanced analytics re-ly on ERP system data and functionality, butcan greatly enhance the value and efficiencyof ERP systems.

Supply chains will not optimise bythemselves. And ERP systems won’t do it,either. It “takes some new energy, some ex-ternal third party stimulation, and some lead-ing edge tools.” he said.

ASCIASCI, or Advanced Supply Chain Interna-tional, is mainly a business process outsourc-ing company.

It has a sister company focusing on as-set management services, including cata-logues, equipment bills of materials, andtechnical aspects of enabling and operatingsupply chains, with a focus on optimisation.

The company employs around 250 peo-ple, with a further 75 involved in joint ven-ture projects in the Caribbean and Australia.

It helps companies which do high vol-ume transactions, companies making thou-sands or hundreds of thousands of purchaseand receipt transactions per quarter.

Criticality levelIf all of your stock has a defined criticalitylevel, that is useful for making decisionsabout stocking, he said.

The criticality can be defined as the costof not having the item when you need it, hesaid.

“A” criticality could be for an itemwhich, if not available when required, wouldlead to the platform being taken out of ac-tion.

“E” criticality is for items which wouldbe inconvenient to be without.

“Hands in the field wouldn't like it, butthere would be little cost in not having it,”he said.

You need expertise from maintenance

personnel to classify items in terms of criti-cality.

AlgorithmsThe calculation of whether a part should bekept locally in stock is a function of the crit-icality level, the amount you use the part(stock issues per year), and the costs of look-ing after the stock for each item, includingstorage, handling, capital tied up in invento-ry, and other costs.

You can plug this data into algorithmswhich can tell you the optimum stocking lev-els for your warehouse, and even flag ven-dor-held stock opportunities.

There are statistical algorithms whichhave been around for decades to analyse dif-ferent types of inventory, he said, with dif-ferent profiles for items.

By processing the data you can get ananswer which “everybody can agree on,” hesaid.

Some companies still try to use spread-sheet models to do tasks like this, but thesecan get terribly time consuming when youhave tens of thousands of items. The bottomline is that old fashioned spread sheet mod-els lack the robustness and productivity ben-efits of leading edge analytics tools.

Behind other industriesOther industrial sectors, such as manufactur-ing and retail, have been doing optimisationof inventory for many years, and are a longway ahead of the MRO (“maintenance, re-pair and overhaul”) sectors, he said.

“Oil and gas is one of the last industriesto embrace this.

“I have my own theories about why,” hesaid. “Industries with tighter operating mar-gins have more incentive [to optimise]”.

Ongoing processManaging inventory is not a one-off process– you have to continually re-examine inven-tory and keep up with staff training.

Once the system is in place, it is impor-tant to run annual training in how to use thesystem, or otherwise, as people move intonew roles, “this process, like any otherprocess, can wane,” he said.

Mr Hawkins recommends that you re-run the inventory analytics algorithmsmonthly so you can identify, every month,items which are in stock but don’t need to be;which items need better vendor management;and recommendations for items which wouldbe better stored in a different location (on-shore vs offshore), based on their criticalityand usage patterns.

You can identify items which have sea-sonal use patterns and set stock levels to ad-just accordingly.

You can also look at where the largestchanges are taking place in your spare partsconsumption and then examine them in moredetail.

The system will also match the supplyto current demand, not the demand 2-3 yearsago. “Demand patterns change a lot,” he said.

Case studyOne company ASCI is involved with, de-scribed as a “tier 1 multinational oil compa-ny,” worked with ASCI to help optimise in-ventory.

The company had varying levels ofmaster data quality in different parts of theworld.

The oil company employs a highly re-garded specialist in inventory analytics, whowas “able to get out front and pilot thisprocess and bring his peers along,” he said.

The company started with pilot imple-mentations of the analytics in the Arctic andIndonesia.

“That allowed the organisation to learnsome lessons to define some templatesaround setting up the cost model, and to val-idate the return on investment (of the effort,”he said. “Is the view from the top worth theclimb?”

The effort for Alaska took six months,and the “results were eye popping,” he said.The results for Indonesia were “equally im-pressive”.

So the company decided to make the ef-fort globally, running on a global analyticsplatform.

The company’s internal studies for thefirst year showed a 20:1 ratio of benefits tocosts for the project, including the costs ofthe software, set up, software maintenanceand implementation.

It will continue to get the same resultsevery year. “Having your inventory properlyoptimised on a monthly and quarterly basisis a gift that keeps on giving,” he said.

“The value was not limited to stock re-duction; it was also about increasing stock,particularly high criticality and medium crit-icality items,” he said.

“Having the correct items you needwhen you need them, and having process toeliminate items you don't need - generatesquantifiable value,” he said.

There were also intangible benefitsfrom the improved trust levels between ma-terials and maintenance departments.

How well do you know your inventory?

You can watch the video of ScottHawkins’ talk and download slides athttp://www.findingpetroleum.com/video/374.aspx

The oil and gas industry makes big use oflarge cargo aircraft, such as the Antonov 124(max 150 ton payload, with its own crane).

But these aircraft are not being built anymore, said Lesley Cripps, Group Sales Man-ager Energy with UK aircraft chartering spe-cialist Chapman Freeborn, speaking at theDigital Energy Journal supply chains confer-ence in Stavanger on Feb 28th.

The air heavy cargo industry has beendominated by Soviet aircraft since the end ofthe cold war, including Antonovs andIlyshin-76s (IL76), she said.

Production of the IL76 has been muchreduced since the 1990s. There are just 30Il76 aircraft certified to fly in Europe, andthe remainder in the Arabian Gulf and Africa.

Production of the Antonov 124 (whichcan carry 150 tons and has its own crane) wassuspended in 2004, and there’s a fleet ofaround 20 aircraft.

The US manufactured Lockheed Her-cules aircraft has a 23 ton payload, althoughit is no longer in production. Only 118 wereever built, 48 were written off, 8 withdrawn,so only 62 are in service, of which 40 arewith government.

“In the near future, unless someonecomes up with a source or start building newaircraft, they will soon die up,” she said.“Those are the only aircraft that can carrysome oil and gas equipment.”

Oil companies often charter aircraft tocarry pipe lengths between Stavanger andAberdeen. Not many aircraft are long enoughto take the pipe. “The Aleutians andAntonovs are such a key player in the energyindustry.”

Oil Spill Response Ltd, an organisationwhich runs a network of oil spill response or-ganisations around the world, keeps a Her-cules on standby to drop dispersants on anoil spill.

Chapman FreebornChapman Freeborn is 30 years old and hasover 30 offices around the world, and char-ters both helicopters and fixed wing aircraft.Its head office is near Gatwick Airport, Lon-don.

It has offices in many oil and gas loca-tions and can arrange aircraft in under 2hours.

It was very involved in providing air-craft to evacuate oil and gas personnel fromLibya and Egypt during the recent unrest.

It provides assistance with permits,knowledge about airports, and talking to lo-cal governments.

Chapman Freeborn vets the aircraft op-erators, and also has 3rd party liability insur-ance to cover its costs if there was an acci-dent.

Aircraft adviceFor geological surveys, you have to choosebetween a helicopter and fixed wing aircraft.Helicopters can maintain a constant groundposition and land in trickier areas, but aremore expensive to operate and can only cov-er about a third as much distance. They alsoneed more maintenance work per flying hourthan fixed wing aircraft, she said.

People usually choose helicopters be-cause they provide a higher resolution sur-vey because they move more slowly.

“In most cases an aircraft has to bemodified if special survey equipment isused,” she said.

Chapman Freeborn also advises on thebest way oil and gas operations can be set up.

Petrobras, for example, needed helicop-ters able to cover 300km to its offshore pre-salt fields, which is beyond the range ofmany helicopters. Chapman Freeborn sug-gested setting up a hub part of the way off-shore, so smaller helicopters could shuttlebetween the platforms and the hub.

Runway adviceChapman Freeborn can also give adviceabout the nearest runway to your operationswhere you can land your cargo.

As an example, in Norway, the closestairports to the oil and gas activities inSnøvhit and Shtokman is Hammerfest air-port, which has a 6025 feet runway, whichlimits the size of aircraft which can land onit to a De Havilland Dash 7 and Dash 8.

The runway can be closed for days dueto strong winds. The next nearest airport, Al-ta, is 2 hours away by road, but can take anAntonov 12 aircraft, which can carry 20 tonsof cargo. But there are limits to the weight ofcargo which can be handled at Alta.

Bardufoss airport (South of Tromsø)has an 8,000 feet runway, which means anAntonov 124 can land, but there are limits inthe weight it can carry.

The nearest airport which can take verylarge equipment is in Bodø, which is 17hours trucking time away.

It is possible that the runway at Ham-merfest could be increased, if the local gov-ernment wanted to.

There have been examples of airportsbeing extended just for oil and gas projects,in Papua New Guinea, when an airport wasis being extended to be able to take largeraircraft for a LNG project.

Supply chains


A shortage of cargo aircraft?The oil and gas industry uses a lot of cargo aircraft, many of which were built by the Russians during theCold War and are not being built any more, said Lesley Cripps of aircraft charterers Chapman Freeborn.This could mean problems in the future

Capable of carrying 150 tons – the Antonov 124 – but no-one makes it any more

You can watch the video of LesleyCripps’ talk and download slides athttp://www.findingpetroleum.com/Lesley_Cripps/390.aspx

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