1. business and industrial

How to get Business Execu8ves to Understand Data is a very important Asset EnergyIQ Presentation
March 25th 2014
Prepared by: Colin Frost
Experience. Insight. Results. Copyright © 2014 EnergyIQ Consul8ng Key Oil and Gas Business Enablers
When business execu8ves talk about business performance enablers, we most oLen talk about people, process and technology – why not data? Exploration
Development
Production
Refining &
Marketing
Strategic objec7ves • Strategic goals for cri8cal business decisions to aim towards Strategy Standard organiza7onal model • Cri8cal decisions taken to achieve strategic goals People Segment-­‐wide common processes • Clear, consistent cri8cal decision making processes Process Technology/ Standard tools and applica7ons • Tools to simplify and accelerate process Tools Proac7ve management of the data 7er • Accurate, complete, 8mely, accessible data to drive decisions based on ground truths Data •  To Business Leader:-­‐ Decisions made with bad data are risky and poten8ally highly damaging to your business Copyright © 2014 EnergyIQ Consul8ng Essen8al, but not oLen present:-­‐ •  Communica8ons •  Understanding •  Collabora8on •  Op8miza8on •  Needs to be done in concert, all the 8me Ø  So, data does form the founda7on to any business Ø  How do we get execu7ves to understand that and to want to manage it as an asset? Page 2 ROI
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It is very difficult to put a $ number to the return on an investment in data management • 
The important point is to convey effec8vely the power and poten8al of data to business leaders, i.e. in their language •  reduced cycle 8me, •  fewer mistakes, •  regulatory compliance •  … • 
Companies spend a fortune trying to es8mate the ROI from data management – at the end of the day it doesn’t ma^er; it is the right thing to do and they should do it • 
Our job is to get them to see that and support data management investments Copyright © 2014 EnergyIQ Consul8ng Page 3 Simplify the message Process Start Process Y Monitor Valve Condi7on Tolerance Example – Well Preventa7ve Maintenance N Range Acceptable ? End Send PO to Authorized Vendor Create Purchase Order Process Data Actual Opera7ng Condi7ons Opera7ng Condi7on Tolerances Price Book Material Master Opera8ng condi8ons Re cri8cal valves Tolerance triggers for valve replacements Material details Purchase Order Vendor Master Authorized vendor details Data Vendor purchase Request Vendor pricing details Legend -­‐ Process Step -­‐ Process Decision -­‐ Data Object -­‐ Data A^ribute •  To Business leader :-­‐ this is your process and this is how data can make it hum Copyright © 2014 EnergyIQ Consul8ng Page 4 Learn from mistakes •  Explora(on -­‐ An individual (now re8red) happened to be talking to the head of Region as they were about to abandon explora8on rights. He pointed out that data had been acquired 15 years previously. The report was found under a desk, aLer searching the office. They almost missed a target worthy of explora8on which would have been given up due to the lack of good data management. •  Root cause – poor management of explora(on data. •  Subsurface -­‐ Field tapes containing cri8cal seismic lines went missing in a par8cular Business Unit. The poten8al consequences included loss of opera8ng licences and substan8al fines from the State. •  Root cause – poor management of seismic data. •  Wells – the geode8c references for two separate data sets on an onshore gas prospect were different. However, the two data sets were combined using the same geode8c reference. The resul8ng analysis concluded that prospec8vity was poor. Some 8me later an intern came across the anomaly and reported it. The appraisal was rerun and showed high prospec8vity. Appraisal well was drilled as a consequence. They were very lucky not to have lost one of the highest flow rate gas wells in North America. •  Root Cause – poor management of geode(c data •  Produc(on -­‐ Poor/inconsistent workflows across disciplines led to 3 self-­‐operated and 1 partner-­‐operated fields using faulty fluids models in fiscal alloca8on calcula8ons. For just one of these fields, the impact was losing $3mm/year -­‐ for 6 years. •  Root Cause – poor management of reservoir fluids data •  To Business leaders:-­‐ Go armed and forarmed! Invest in your data. Copyright © 2014 EnergyIQ Consul8ng Page 5 Express the Value Business Value of Good Data 1. Business Value of Good data-­‐
dependent decisions 2. Costs to Acquire Data 3. Costs to Manage Data 4. Business impact of bad data-­‐
dependent decisions Cost to Acquire Data • Acquisi7on cost reduc7on – benefits can run into tens of millions of dollars per year based on 5% op8miza8on • Revenue increase – improved finding efficiency and be^er opera8onal results from be^er informed decision makers Data Value Business Impact of Bad Data • Risk reduc7ons – sustaining licences to operate, maintaining the value of data assets, avoiding unintended data loss, preven8ng catastrophic loss through opera8ng with poor data Cost to Manage Data • Opex Op7miza7on – reducing the cost of data management by managing our data be^er and avoiding rework, running to 2% op8miza8on. •  To Business leader :-­‐ good data is the key to unlock a lot of $$$$ in value Copyright © 2014 EnergyIQ Consul8ng Page 6 Compare to Other Investments and Trends •  All business leaders want to ‘do the right thing’ for their business •  Look at the oil and gas trends and investments in health and safety in recent years. •  Expected to grow to $6.5 billion in 2017, up from 2012's $5.4 billion aLer increasing an average of 4 percent each year1. •  Largely about preven8ng terrible things from happening •  You can get a huge bang for your buck by inves8ng in data •  If you are doing it in HSE then do it in data too. •  To Business leader :-­‐ if you are inves8ng this much in safety (or whatever), then it makes sense to invest in your data too 1 2013 study of US oil and gas companies with total revenue of $1billion between them by independent analyst firm, Verdan8x Copyright © 2014 EnergyIQ Consul8ng Page 7 Focus and priori8ze •  Understand where your business is going, the role that data has to get it there and then priori8ze the associated paint points and opportuni8es - Highest Value Creation Business Activities
B3 Development Appraisal Commissioning and Start-­‐up Opera8ons Management Reservoir Management Fuels Value Chain Produc8on Opera8on Produc8on Unit Development Pipeline Development Well Development Explora8on Engineering Support Licence Acquisi8on Oil Opera8ons Concept Development and Basic Defini8on B5 Refining, Marke8ng, Transporta8on HSE Project Management Logis8cs Basin Selec8on Opportuni8es Assessment B4 Produc8on Maintenance Mgmt. B2 Explora8on & Appraisal B1 Opera8ons Support - ‘High’ dependency on fit for purpose data
Deal Opportuni8es Iden8fica8on Ship and Store Products Purchase and Sell Products Well Management Decommissioning Marke8ng Deals Administra8on •  To Business leader :-­‐ these are the areas we need to focus on, and here’s what we need to do first. Copyright © 2014 EnergyIQ Consul8ng Page 8 Show the way by illustra8ng ROIs of peer ini8a8ves • 
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Apply a systema8c approach to assessing data management ac8vi8es and performance in different assets or func8ons Iden8fy best prac8ces and associated business benefits and ROIs in investments Gently hustle business leaders of underperforming assets to follow suit •  To Business leader :-­‐ catch up with your peers to secure an a^rac8ve ROI that will save and make you $$$ Copyright © 2014 EnergyIQ Consul8ng Page 9 Pain points, Quick Wins and Business Cases opens doors •  Our approach is typically split into three key phases:-­‐ 1.  Rapid Diagnos7c – Applying the EnergyIQ DM Framework to diagnose current problems and opportuni8es, iden8fy poten8al solu8ons, priori8ze and develop high level plans and business cases 2.  Realiza7on -­‐ Implementa8on and benefits realiza8on 3.  Benefits Assurance -­‐ Sustaining the benefits Phase 1 : Rapid Diagnos7c 1B. 1C. 1A. Rapid Diagnos7c Joint Business and IT diagnosis of problems and possible solu8ons. Select Solu7ons Jus7fy / Approve Solu8on Assessment of scoping and the realisable selec8on – benefits, high defining a level planning, porxolio of what the performance challenges will improvement be, and how ini8a8ves much it will cost. Phase 3: Benefits Assurance 3A. 3B. Phase 2: Realiza7on 2A. Plan 2B. Detailed Design 2C. Pilot 2D. Roll-­‐out Review Benefits Sustain Benefits Ensure that all the benefits are a^ained and sustained . Re-­‐itera8on with feedback for Con8nuous Improvement Enable the benefits to be quickly realised, right across the organisa8on. Implementa8on of porxolio of ini8a8ves iden8fied in Phase 1 across different BUs/fields/
func8ons, with pilots as appropriate SPRINGBOARD Copyright © 2014 EnergyIQ Consul8ng Page 10 Delivering and Sustaining significant benefits •  A dis8nc8ve aspect of EnergyIQ’s approach is how we pay a^en8on to delivering prac8cal benefits and then sustaining them – a key part of building trust and understanding with execs •  All performance improvement opportuni8es must make a change to a KPI – i.e. a performance metric which is fundamental to the successful realiza8on of the company’s strategic objec8ves •  The example below depicts reduc8on of Unit Technical Cost (UTC) through improved DM performance over 8me -­‐ it shows that once benefits have been realized, complacency can lead to reversion to old behaviors and recurrence of the same problems •  It is therefore important to have a balanced focus on realizing and sustaining benefits. Unit Technical Cost Phase 3: Benefits Assurance Phase 2: Realiza7on Highly successful implementa8on. Reversion to old behaviours. Δ+ Δ-­‐ Current Value Leakage prevented by Benefits Assurance phase ‘Quck Win Ini8a8ves’ ‘Big Win Ini8a8ves’ Target As-­‐Is UTC profile Accelerated UTC reduc8on UTC without Benefits Assurance Copyright © 2014 EnergyIQ Consul8ng Time Page 11 Case Studies •  Some real examples… Client What our consultants achieved Supermajor 1 -­‐ Global Subsurface Successfully secured EVP, Global Subsurface and Upstream CIO approval and visible support of global Upstream DM ini7a7ve, leading to successful $multmillion, mul7year investment •  ALer client failed in several previous a^empts to do the same •  Gathered evidence – over 60 stretching back 25 years •  Performed assessment (Rapid Diagnos8c type approach), iden8fying quick wins and longer term strategic wins •  Determined priori8es, produced strategy and prac8cal implementa8on plan, developed business case and engaged with key business stakeholders to create business led program •  Delivered against expecta7ons, showing results in produc7vity (up to 100% in some cases) Supermajor 2 -­‐ Global Produc7on Opera7ons Successfully secured EVP, Global Produc7on Opera7ons and VP Reliability and Maintenance, leading to $mul7 million, mul7 year investment •  Built Data Value Model •  Demonstrated impact of data on produc8on opera8ons performance •  Determined priori8es, produced strategy and prac8cal implementa8on plan, developed business case and business led program •  …same pa^ern as Case Study 1 •  Led to reduced opera7onal costs (up to 10%) and helped reduce produc7on down7me Successfully secured EVP, Wells, support leading to $mul7 million, mul7 year investment Large Independent – •  …same pa^ern as Case Study 1 and 2 •  Led to measurable reduc7on in drilling costs and greater produc7vity Global Wells Copyright © 2014 EnergyIQ Consul8ng Page 12 A quick word on Unconven8onals •  U.S. drilling success rates rose from an average of barely 50 percent in 1972 – a coin-­‐flip, hence “wild cat” drilling – to over 85 percent today •  With the advent of unconven8onal resources, a key success factor is the rate at which wells can be cost-­‐effec7vely drilled •  Each well in shale or 8ght forma8ons requires fraccing in several zones to s8mulate produc8on, however today only 1 in 4 zones end up producing •  ‘Miscroseismic’ technology enables listening to how fractures have been formed and what parts of miles of 6 to 12-­‐inch pipe thousands of feet down are producing – thus a basis for performance improvement •  Improved drilling efficiency can be achieved through the effec7ve management of effort to improve produc7vity •  The old adage “8me is money” applies here with results showing up as lower drilling costs per foot and cost per well •  The general trend shows u7liza7on rate is suffering as total footage drilled increases significantly •  Efficient access to trusted data is more cri7cal now than ever before Sources: IEA, IHS CERA, IHS Herold Copyright © 2014 EnergyIQ Consul8ng Page 13 Conclusion •  Data has significant value in oil and gas businesses subtext -­‐ which is not necessarily recognized by execu:ve management The value can be ar7culated subtext -­‐ and the consequences of not managing the data as an asset can be understood • 
The value jus7fies a rigorous approach to its management subtext -­‐ which is different from what we typically see today •  In our experience, execs will buy into the data asset, if you message it in the right way subtext – they all want to do the right thing for the business and will respond Call to Ac7on: •  Iden8fy your business stakeholders •  Perform your assessment (our Rapid Diagnos8c will do it) •  Engage effec8vely through the techniques and tools we have outlined •  Build understanding and collabora8on •  Plan and Execute •  Deliver and Sustain business value •  Celebrate and do it again. © 2014 EnergyIQ Consul8ng Copyright • 
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