eBusiness; Adding Value in the Upstream Energy Business
Authors: Schroeder Art J. , Archer David 
Published: October 2008

This set of speaker notes introduces the subject, which is the topic of a panel discussion for the 2002 Offshore Technology Conference. Participants include;Mr. Satish Pai, President, Schlumberger Information SolutionsMr. Steve Peacock, BP's VP for Upstream Digital Business worldwideMr. Robert Peebler, CEO and President, Energy Virtual Partners.Mr. William Warren, Managing Director, AccentureMr. John Gibson; President and CE, Landmark Graphics CorporationMr. Stewart Robinson, Director of IT, Oil and Gas Directorate, UK Department of Trade and Industry

Introduction

The upstream oil and gas industry stands on the threshold of a new and vastly improved way of doing business. Just as the well know technology innovator Wal-Mart wiped out many competitors by investing in and utilizing IT to cut costs, those operators and suppliers / service companies that adeptly employ today's sophisticated IT tools in the ExP industry will rule in the low cost producer environment. New 'virtual' corporations will take shape, focusing on their particular niche, and then farm out ancillary work to other specialist companies. The billions of dollars invested in infrastructure and technology to prepare for Y2K issue will be used toprovide connectivity and to exploit synergy between these virtual companies. With the transaction costs between these federations of companies reduced to near zero, a new level of efficiency will be achieved, providing to some extent a 'leveling of the playing field' allowing in some smaller, more entrepreneurial companies to effectively compete with the current industry giants. Internally, leading companies are already building and gaining some value from knowledge management systems.

(Figure available in full paper)

As down hole technology advances, fiber and wireless platforms will connect lab-on-a-chip and other down hole innovations with seafloor processing systems and shore-based expert systems that will drive large increases in ultimate recovery of reserves while boosting production rates. On a day-to-day basis the changes will appear evolutionary, but the results for leading companies will be almost revolutionary when viewed in retrospect, sharply dividing the competition and leading to even more consolidation at one end of the spectrum and spawning hundreds of small niche companies at the other.

(Figure available in full paper)

Key Points from Mr. Gibson

"Asset P&L Model Will Optimize Industry Profitability"

The petroleum industry continues to yield lower overall returns on investment, despite ongoing consolidations and cost-reduction initiatives. Today, the industry has too few technical professionals, and more producing assets than it can support. Many properties are managed for total production or reserves rather than for improved profitability. Profit and loss (P&L) statements are generated for companies, but not for individual assets. In fact, few energy companies have a means of accurately tracking the true P&L of an asset. Yet, aggregating assets tend to hide poor performers and drain profitability from the top performers.