Abstract

Long before the oil price collapse of 1998, the petroleum industry has been on a roller coaster ride that is not over yet. Despite the current high oil prices, slowly rebounding energy stocks and a general atmosphere of optimism, our industry faces a number of serious challenges in the coming years.

For one thing, our workforce is rapidly aging and enrollments in petroleum related university programs are at record lows. So, we are facing an impending shortage of intellectual capital, which will impact our ability to make wise decisions. Knowledge management, therefore, must become a way of life, not just another buzzword.

Furthermore, energy companies are still not as consistently profitable as other investment alternatives in the marketplace. The oil and gas industry must leave no stone unturned in its quest for greater efficiency and productivity. New Internet-based IT architectures will be necessary to enable us to sustain and grow profitability, not just at $25 per barrel or $4 per Mcf, but at any price. Part 1 of this paper explores the "people problem" and issues of knowledge management in more detail. Part 2 will describe an emerging IT infrastructure that promises to lower costs and maximize both efficiency and value industry-wide.

PART ONE: Anybody out there want a job in the energy industry? How many of you have recommended that Knowledge Management your own children pursue a college degree in petroleum engineering, geology or geophysics? That is how I have opened several recent presentations to executives of multinational oil companies. Not surprisingly, people laughed. Most industry executives know that there is a looming crisis, and luckily we can still laugh about it. Unfortunately, it is no laughing matter. If we do not do something, we could lose almost two-thirds of our current knowledge workers in the next seven years.

E&P According to a recent study, there are only about 2,000 petroleum engineering students in the Demographics United States today. The number of new hires entering the industry significantly lags the current attrition rate. For decades, overall headcount in the E&P business has been declining, and it has not hit bottom yet. During the 1980s, the size of the industry workforce reached an all-time high. Today it stands at less than half that number. I predict that we will reach a theoretical "base level" of perhaps 100,000 people within the next two decades (Figure 1).

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KNOWLEDGE MANAGEMENT AND NEW IT ARCHITECTURE WILL MAXIMISE UPSTREAM VALUE-CREATION*

Figure 1: Demographics of E&P Remarkably, during these past four decades of boom-and-bust cycles and declining headcount, the E&P industry has managed not only to sustain, but increase hydrocarbon production to meet world demand. Most of us fully expect that trend to continue into the f

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