Oil and Gas Producers Discover Major New Reserves — In Data

Summary Bullets:

Ted Cuzzillo,
Principal Analyst – Data Analytics

• The bulk of the oil and gas industry came late to data analytics, which is so important now as the industry endures a long decline and competes with alternative energy

• Oil and gas companies should recruit for analytics skills and leadership, such as from alternative energy competitors

The oil and gas industry has been discovering a bounty of something perhaps more valuable than new reserves: new sources of data, much of it from new 5G and IoT installations. The big question is whether they can exploit data with the same level of skill they exploit new deposits.

Exploiting data has become especially important now as the energy industry begins to exploit solar, wind, and other types of renewable energy. This new energy could be a new game for them, and it likely entails new metrics. Traditional energy companies will be poring over those metrics hoping to find guidance.

So far, the oil and gas industry’s record with analytics fails to impress. Some in the industry complain that analytics was neglected for years, just when the sector should have learned to use it. Even a wet finger in the breeze would have reminded them of the industry’s long decline, thus the need for better navigation to survive tighter margins.

Some insiders must have warned other insiders. How could an industry ignore the vast amounts of data just begging to be analyzed and the competitive edge to be had? Perhaps, even with all that, the whistleblowers apparently couldn’t overcome the internal resistance. Today, one source puts the blame on good-old-boy cultures that kept so many newcomers out.

Not that the oil and gas industry was devoid of innovation. One famous instance came in the early 70s when Royal Dutch Shell used scenario planning to prepare for the possibility of a series of oil shocks. It was just one scenario among several the company prepared for, but when it did happen they had a plan. While Shell executed on its plans, its competitors took a licking. In the end, Shell came out of the crisis in even better shape than before the crisis.

Today, Shell continues to use scenario planning. It also uses sophisticated big data analysis to scope out the subtleties of site geology before drilling. Then as drilling commences, optical fiber cables transmit sensor data from inside wells to render 3D and 4D maps of the remaining crude.

Oil and gas companies should recruit analytics-savvy executives from outside the industry. Perhaps good recruits might be found in the alternative energy industries.

Alternative energy industries, meantime, should recruit smart people from the oil and gas industry. Those people know the mistakes to avoid.


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