Focusing on productivity...
- The World Needs the Oil Sands of Canada, Global Oil Consumption of 60 billion barrels in the last two years, yet no confirmed giant oil field discoveries.
Globalized market demands for energy expect the producers to innovate from this base. The challenge is daunting. But oil exists in the minds of oil men. With the commodities prices today, the motivation to fulfill the needs of the market will be met.
Innovation is highly dependent on engineering and earth sciences. As with most engineering problems, time is the factor that determines the results. To increase the engineering problem solving performance, it is necessary to increase the number of engineers and geologists in the business. This will solve the energy shortages that we may see in the near future. But well trained scientists are at a premium due to the existing demand from all industries, not just energy. Therefore, where are the scientists going to come from.
I believe fundamentally in the collaborative environments that are available today. (Read about microformats and structured blogging here). People can solve problems that are difficult, better, faster and in ways that could only be imagined a few years ago. I believe this is a revolution in problem solving capabilities. A collective wisdom is built based on the collective understanding of the participants which quickly percolate to the surface and becomes obvious to objective observers and participants.
Whether the well is being drilled to 34,000 or only 3,400 feet, the amount of science that goes into the decisions made has to be cutting edge. It is the scientific cutting edge that will be advancing in the next 3 to 10 years at a pace that will truly astonish. How will a company, built on an organizational model designed to deal with the business issues of the 1930's, during a time when computers and calculators had not been concieved, sustain the necessary science and technical capabilities of this future environment?
Technical and scientific decisions made by the participants of the joint operating committee are the companies scientists and managers of the scientists. Aligned by the same financial motivations, what would it take to have them all tied together electronically? How significant would the time savings be over the traditional means? The time spent waiting for the meeting to be arranged through all the conflicting schedules. Aggregating to one physical location could instead being handled collaboratively. Decisions would be made quicker, more effectively and asynchronously using today's Internet technologies. How many more decisions and actions can be taken through a collaborative environment.
How much opportunity is lost in a scenario such as this;
- Seeking approval to test a new idea or theory on a dry hole. The geologist realizes that the time necessary for the joint operating committee to meet and to decide if the theory should be tested, gives up realizing the rig will release in 5 hours. In the traditional environment, these opportunities are lost. Collaboratively, a learning experience is gained.
In addition to these types of time benefits of a collaborative environment. An effective environment would limit the amount of time engineers spent in their vehicles driving to work and back. Two hours a day is too much time that is being wasted when it is aggregated by all of the scientists employed in the industry. Synchronous telephone calls do not document these decisions or their associated transactions.
Oil and gas exploration and production operations are not operated on a 9:00 to 5:00 basis. The need for monitoring and managing of these operations in Genesys' collaborative environment will be managed more effectively. Based on the decision makers asynchronous availability, which is virtually any time. Genesys provides a dedicated oil and gas software development team at the disposal of those oil and gas scientists and engineers that need the software development support. The support of a system that documents these decisions, their results and the associated commercial transactions that are the natural implications of those decisions.
So if we assume that the Genesys portal is developed, in time, the decisions that are made electronically would manage much of the business attributes of those decisions. Complete accounting data about the assets and historical operations would be available to the authorized members as required.
Action-able items would also be part of the Genesys system. The ability to decide on the well location through interfaces with other systems like Accumap. Which wells should be drilled and when, capital budgets that were previously agreed to and subsequently generate the appropriate AFE's and begin the process of documenting the decision and collecting the costs. The contracts for the drilling and completion operations would be counterpart executed electronically by dully authorized officers. Operations would be monitored over key variables of interest based on the type of work being done, personal preferences and authorization level. All these attributes could then be reported to the engineer on an electronic portlet / dashboard. Wherever and when ever the scientists need the information.
I kind of side tracked there to get a vision of the systems capability out. What the McKinsey article discusses is the effective use of the surplus cash that is being generated in oil and gas companies. They suggest that like so many oil booms before this one won't be to much different. What they suggest is that oil and gas companies maintain their traditional capital budget discipline and either buy back shares, declare dividends or invest in future capabilities and capacities with the surplus cash. This last point really resonates with me for the obvious reasons.