Published in Oil & Gas Executive, Volume 2, Number 1, 1999, pages 30-36.
As global oil prices create new uncertainties and the industry enters a new era of knowledge-based E&P, many companies have intensified their quest for the Holy Grail of enterprise wide integration. In this business environment, it's easy for oil and gas executives to become hypnotized by the seemingly limitless potential of information technology (IT).
But technology is only part of the ultimate integrated solution. This article also explores the "softer" people and process issues that impact an energy company's ability to perform effectively in this new era.
Landmark started with one technology - a three-dimensional-seismic workstation - in one functional area: geophysical interpretation. As we expanded our product line to cover the full oilfield life cycle - geology, mapping, reservoir engineering, drilling - we quickly realized that we had to move from a functional view of the industry to a process view. We had to understand how to help oil companies use these technologies in more integrated ways. But that increased the challenge almost exponentially. Why?
As E&P companies approach the task of integration, they typically go through four phases, which we call the hierarchy of integration. Level 1involves integrating all the relevant technical, operational, and business data, making it readily accessible to users in digital form. That's not an easy task. Most companies accomplish this in one area at a time. Only then can they move up to Level 2 of the hierarchy. The second level entails integrating the work flow within a particular group, such as geology and geophysics, production engineering, or drilling.
Once that has been accomplished, they can move up to Level 3 - integration of operational processes across various groups. That presents an even greater challenge. In fact, we believe that most new technical and organizational innovations in our industry will take place in the "white space" between existing operational groups. For example, how can we better integrate reservoir engineering with geology? Drilling with the earth model? The surface with the subsurface? Despite progress in recent years, tremendous productivity gains can still be made in the gaps between various parts of the organization.