Exploiting the Digital Oilfield: 15 Requirements for Business Value

By Dutch Holland PhD

This book can help you and your organization implement digital oilfield technology and take it all the way to the bank. This book will show you how to excel at leading the changes needed to implement the Digital Oilfield and which is an absolute requirement for upstream organizational and personal success and only way that business people will be able to not only survive but also thrive in the days ahead.

The upstream managers who are successful in the worlds of today and tomorrow will be the ones who can look at waves of change and see opportunity; who can design a vision and strategy for a more positive future for their organizations by using digital technology; and who can implement their designs on target, on time, and on budget by capitalizing on the strengths of their organizations and their bright and dedicated associates.

You dont have to be afraid of change any longer! Dutchs work offers entertaining and simple solutions that will help you move swiftly and efficiently through the growing pains of organizational change. says Ken Blanchard, author of The Secret and The One Minute Manager.

• Language: English
• Publisher: Xlibris US
• Release date: Nov 20, 2012
• ISBN: 9781479726332

Dutch Holland PhD

Dutch Holland, PhD & Jim Crompton, MS ENG are highly regarded as “thought leaders” and as consultants who will tell it like it is. The authors’ collaboration combines management consulting experience in upstream with oil & gas domain expertise into important insights about creation of business value from digital technology. Jim and Dutch are both convinced that the Digital Engineer concept must be made a reality or the Big Crew Change will likely result in both “outdated roles” and replacements that may “fit the roles but not the digital future of the upstream business.”

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Copyright © 2012 by Dutch Holland, PhD.

Library of Congress Control Number:               2012918490

ISBN:                   Hardcover                         978-1-4797-2632-5

                               Softcover                             978-1-4797-2631-8

                               Ebook                                   978-1-4797-2633-2

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Dedication by Dutch Holland

This book is dedicated to the kids in my life: the little kids — Everett, Dean, David, Win and Hope — and the big kids — Eric, Wendy and Bear. May they continue to flourish – and God Bless!

My thanks to Digital Energy Journal for their support of my research and writing about the Digital Oilfield, and to Art Adair ([e-mail]) who never met a paragraph he could not improve.

ABOUT DIGITAL ENERGY JOURNAL

Digital Energy Journal helps you keep up to speed with new digital technologies which are rapidly changing the face of the upstream oil and gas industry, enabling many new discoveries of oil and gas, and viable production with low human, environmental and social risk.

We focus on new developments which are already adding value in the industry – and explain them so they are easy to understand. You will want to read our magazine and newsletters straight away, not add it to your pile of material you promise to read one day.

We provide a bimonthly magazine (on print and pdf), a biweekly e-mail newsletter and a free website news and archive service – and you can subscribe to our e-mail newsletter and pdf magazine free of charge.

Our magazine is supported by a comprehensive social network where you can get into direct contact with some of the people behind the technologies and engage in private (or public) discussion, and perhaps also make yourself available so other people can contact you.

our website serves as an encyclopedia of digital technologies in the oil and gas industry - we have written about almost every company and technology in our magazine so you can learn about almost anything.

www.d-e-j.com

TABLE OF CONTENTS

Introduction

Implementing DOF Technology

Business Value Architecture: Overview Chapters

Chapter One

Digital Oilfield Business Value Architecture

Chapter Two

Strategic Business Architecture

Chapter Three

Work Process Architecture

Chapter Four

Technical Process Architecture

Chapter Five

Vendor Architecture

Chapter Six

Intelligent Interfaces for Effective BVA

Chapter Seven

The Digital Oilfield Culture

Chapter Eight

Implementation of Business Value Architecture to Enable the Digital Oilfield

Supporting Chapters with More Details

Chapter Nine

Collaboration and Incentives for DOF Implementation

Chapter Ten

Portfolio Management for Digital Oilfield Projects

Chapter Eleven

Implementation Strategies: Deploy or Adopt? Success or Failure?

Chapter Twelve

Caution: Workflow Analysis in Progress

Chapter Thirteen

Models for Innovation

Chapter Fourteen

DOF Maturity Factors and Limiting Paradigms

Chapter Fifteen

A to Z Services from DOF Vendors? Not yet!

Chapter Sixteen

Organizational Culture of Support for IT

Chapter Seventeen

Implementation Principles

Chapter Eighteen

DOF Leadership Roles

Chapter Nineteen

Who Does What for Digital Oilfield Value

Chapter Twenty

Go-No-Go Criteria for DOF Implementation

Chapter Twenty One

The Leadership Last Stand

Chapter Twenty Two

The Sweet Spot for DOF Professionals

Chapter Twenty Three

Big Ideas for DOF Implementation

Chapter Twenty Four

Integrated Risk Management for the Digital Oilfield

Chapter Twenty Five

The Test for DOF BVA Fatal Flaws

Conclusion

Implementing Digital Oilfield Technology

A NOTE TO THE READER

The wonder of our backgrounds causes us to want our content served up in an almost infinite number of ways. And we wish we could get the answers we want from just a few memorable sound bites. Sorry, the explanation of weighty and important concepts takes more than sound bites. We have, however, written this book to be as accommodating as possible with four options for getting value from our content. Good luck!

The organization of this book

The basic principles of Business Value Architecture are presented in the first seven overview chapters. The remainder of the book, Supporting Chapters, is more like a reader, in which a variety of DOF subjects are handled as separate topics. The majority of the subjects in these supporting chapters have been published articles or white papers and written at separate times (and moods) over the past few years.

Option One: Just the meat, please!

If you only have time to read a few chapters, then read Chapters One through Six — the Overview Chapters. In fact, you might want to read them twice. Chapters one through six are written to be a short digest of Business Value Architecture for the Digital Oilfield. Then go straight to Chapter Twenty Four and take the Fatal Flaws test. Pass that test and you have the meat of Business Value Architecture.

Option Two: No structure for me. Can’t I just skip around in the book?

Of course you can! Skip around. Just take a look at the table of contents to find chapters that are interesting to you or that relate to your current situation. Better yet, identify those chapters your boss needs to read and strategically position those chapters or important ideas from those chapters right in front of him or her.

Option Three: I want everything, big picture down to Details!!

If that is your goal, just keep reading straight through the book, making sure that you follow the instructions at the end of each overview chapter, instructions that will identify the Support Chapter(s) you might read before returning to the next overview chapter.

Option Four: I am only going to read one, get that, one chapter!

OK, read Twenty Three: Big Ideas for DOF Implementation. Knock yourself out.

INTRODUCTION

Implementing DOF Technology

Implementing digital technology for business value is one of the single most difficult endeavors any company will undertake! Fortunately, the principles for implementation are down in writing at last!

Implementing Digital Technology

SEVERAL RARE DECADES of implementation of digital technology for business value has proven to be both good and bad. The good news is that, when successfully implemented, such technology can be a major boon to a business. The bad news is that implementations are far more complex and difficult than anyone had imagined. Learning about implementation has been slow … but sure. The most significant learning has to do with managing different kinds of risks.

FigureI.1TheThreeCriticalRiskspdf.jpg

Figure I.1: The three critical risks

Business Value from implementing new digital technology is totally dependent on the successful identification and management of three separate but inter-related risks:

• Technical risks (will the technology work?)

• Organizational risks (if it works, will the organization use it?), and finally

• Business risks (if it works and is used, will the company gain business value?).

This book that describes the business value architecture for implementing the Digital Oilfield has been written with this great risk management learning taken into account in every dimension of the architecture we describe here. Now let’s move on to the specific kinds of digital technology that is the subject of this book.

Will DOF be a Game Changer or just another Resource Hog? The time for management to decide is now.

Implementing the Digital Oilfield

The marketplace is recognizing the potential business value of digital technology. The Digital Oilfield, led by numerous vendors, is off and running toward digital solutions. Correctly applied, digital technology can be a game changer for the upstream business of the future (UBF). What is at stake? He who exploits new technology first will have an edge until others catch up. But applying digital technology is easier said than done as many companies are finding out.

Initial DOF projects have shown good potential but many have been degraded because of implementation problems, due to both technical and business lack of readiness. In terms of implementation, company approaches to DOF are all over the map with many approaches developed around existing vendor products rather than around work processes they wish to improve. Upstream companies must mature their understanding of DOF to be able to regain control and use the full power of DOF.

Phases of Learning from the DOF experience … so far

• Phase One: Oops! It’s not just technology!

• Phase Two: Whoa! It’s people, processes, AND technology!

• Phase Three: Wait! It’s business performance realization that counts!

• Phase Four: It takes top-to-bottom Business Value Architecture to fully exploit DOF value!

FigureI.2Fourphasesoflearningpdf.jpg

Figure I.2: Four phases of learning from the DOF experience

After some years in a DOF 1.0 environment, characterized by a one-project-at-a-time mindset and technology experimentation, it is time to move our thinking and our capabilities to the "enablement" of maximum value from digital technology. Enablement, an approach which provides means and opportunity, is dependent on three key factors:

1. Management purpose, will and commitment,

2. A business improvement imperative, and

3. The use of Business Value Architecture

If DOF is going to be used to achieve management’s purpose and for maximum business results, companies must prepare the garden in which DOF fruit can grow. The garden, in this case, is the company’s capability to put DOF resources to work for business value: it’s Business Value Architecture, the arrangement of the organization’s moving parts from the organization’s strategy for DOF, to its organization and incentive structure, to its operational and technical work processes.

The garden should enable organizations to move full steam ahead in the exploitation of digital technology to maximize business value. DOF must be enabled with the right organizational structure, the right work processes, and the right technical capability.

Figure1.3Requirementsforfullvaluepdf.jpg

Figure 1.3: Enablement of maximum value from the Digital Oilfield

But before there can be a revolution in business value, there must be a revolution in the way companies manage their businesses using digital technology. Why do we need a revolution in the way we manage DOF? Aren’t we doing fine now? DOF in most companies is managed a project at a time, not as the company-wide planned adoption of a valuable new technology that will serve the company and the industry for some time to come.

What is your organization’s state of readiness for the Digital Oilfield?

New technologies seem to come in waves. New technologies can make or break companies or careers. The challenge is to get your company on the bandwagon with a strategy that fits them. The challenge for you is to get on the bandwagon and help, not resist. We know that new technology doesn’t just get absorbed and used until the operations guys get on board.

Upstream companies are all over the map in the ways they are approaching the Digital Oilfield, from passive and unprepared to fully-prepared to exploit.

FigureI.4StatesofReadiness.jpg

Figure I.4: States of Readiness to Exploit the Digital Oilfield

What are your organization’s next steps for building readiness for the Digital Oilfield?

1. Assess your organization and your state of readiness.

2. Determine exactly what is at stake for your organization and for you and your team.

3. Plan the steps needed to move to the fully-prepared position, and

4. Implement your plan.

Summary and key points

The wave is coming and it is going to make money for companies and make or break careers for managers and engineers. To advance their careers, engineers will need to be proactive to help their companies win. Stepping out and being the leader in the introduction of DOF will be an act of leadership that will serve an engineer well. Who knows? Maybe a hard-charger can become a digital engineer!

Business Value Architecture: Overview Chapters

CHAPTER ONE

Digital Oilfield Business Value Architecture

When an upstream company decides to go for it to maximize the use of Digital Oilfield technology for business value, the organization’s architecture, its moving parts, must be altered and configured specifically to exploit that technology.

JUST SAY THE magic words to fully realize Digital Oilfield (DOF) business potential. The DOF movement is here, and it offers great potential. But how does one realize that potential for his company? Simple. All that is necessary is getting executive management to speak the magic words … as in the interview below:

Scene 1

(An annual stockholders meeting of a public company)

AUDIENCE MEMBER (A WALL STREET ANALYST)

I‘ve been reading about the Digital Oilfield, and it sounds important. What are you guys doing in DOF?

CEO

Good question. We fully realize the value of digital technology as a key performance improvement tool. We’ve successfully completed two DOF projects thus far, and I’ve given the full speed ahead signal to fully realize the business value of DOF. In fact, gains from DOF deployment are now specifically identified in our corporate strategy and goals.

COO (in charge of Upstream Operations)

I agree with the CEO. We in operations have examined every inch of our technical and business workflows, and we’ve identified those steps where applications of DOF technology can produce the most business results. We have specific goals in place to realize that business value, and our guys are hard at work with our IT and Engineering folks to take advantage of those opportunities.

CIO

My organization thoroughly understands those processes in the business where digital technology can add value. We’ve worked both inside our shop and outside with our vendor community to nail down the technologies and tools that we’ll need to bring to the workplace to meet those specific business goals. Let me read a letter I just received from our DOF vendor. Thank you for selecting our company to be your lead Digital Oilfield technology provider. Your specific explanation of your needs and goals will allow us to meet your needs now and in the future.

ANALYST

Great … and thanks for your very specific answers… (Interview concludes)

Simple, right? Those are indeed the magic words for full DOF exploitation. But what’s behind those words from the CEO and his team? More than words are needed. The DOF revolution centers on the way that upstream companies configure their organizations for maximum use of digital technology.

Exploiting DOF through Business Value Architecture

Architecture may be a fancy word, but it is being used today to describe how an organization or an enterprise is put together. Enterprise architecture (EA) is a comprehensive description of an organization’s elements, i.e., its moving parts, including enterprise goals, business functions, business processes, organization, roles, business information systems, software applications, and computer systems.

When an upstream company decides