| Industry
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| The oil industry is making sophisticated
operational use of KM, Campbell McCracken
reports. |
The
oil and gas industry spends over $150 billion a year
drilling and maintaining oil wells. With such large
numbers, savings of a few percentage points will make a
huge impact on the bottom line. Naturally the biggest
savings are to be made in the areas where there is the
biggest spend. In the case of oil and gas, this is in
the area of 'complex services'.
Complex services are products and services that
are uniquely tailored to the intent of the operation and
well environment. They account for approximately 65% of
all capital expenditures in exploration and production,
and include such diverse services as equipment hire,
cementing and the manufacture of specialist parts.
"The
Government got behind the whole of the UK's oil industry
and said 'The oil industry in the UK must remain
competitive' and that's about driving down cost," says
Stephen Birrell, marketing director of Vardus, a KM
consultancy focussing on oil and gas. "The way the
industry can drive down cost is by attacking the areas
of huge cost which are facilities and drilling. And if
everyone follows best practice and shares their
learning, you won't have people making the same mistakes
twice. And that ultimately saves money."
Knowledge is valuable
Tim
Burnett, head of energy at Oracle's UK consulting
services, agrees. "Knowledge is so important and so
valuable in oil and gas 'upstream' (the stages involved
between exploration and eventual delivery to the
refinery) that as long as what is viewed as an overhead
is in fact just the expense of making sure that the
corporate knowledge has most value then it pales into
complete insignificance compared to the value of that
knowledge."
"The
capital cost of a well is anything between $4 million
and $28 million in the UK," continues Birrell. "Time is
money and when you've got a $28 million well on the line
you're probably paying between $100,000 and $200,000 a
day. So a saving of one day because you haven't made a
mistake is a lot of money."
And
the impact of making mistakes is not getting any less.
"There is a general industry wide increase in the
prices that companies are charging," says Stephen Cross,
business development manager for manufacturing and
utilities at Convera, a provider of cross-lingual,
multimedia search and content management solutions.
"As
the costs of the projects go up so do the costs of the
mistakes."
Communities of expertise
One
of the most successful methods of sharing knowledge in
the oil industry is setting up knowledge communities.
The size, shape and permanence of these communities can
vary enormously. At one end of the spectrum, engineers
embarking on a new project will invite peers to
volunteer their experiences on similar projects. At the
other end, companies have set up online knowledge
communities either individually or collectively to
provide a means and a location for the extraction and
sharing of tacit knowledge.
One
such community is the Common Knowledge site created by
Vardus to serve the oil industry. The site uses Organik,
Orbital's knowledge sharing software. Organik allows
users to ask questions of the community database. If a
question has already been asked then the software
retrieves the answer. If the question (or a similar one)
hasn't been asked or if the retrieved response doesn't
satisfy the user, then Organik can escalate the question
to a human expert to answer, thus facilitating the
extraction of tacit knowledge from the expert.
"Orbital's Organik, for us, was a great tacit knowledge
and expertise tool," says Vardus' Stephen Birrell.
"The
oil & gas industry is experiencing a high churn in
human capital at the moment, not least because of its
ageing demographic. As companies lose staff so they lose
the information they hold," says Stephen Cross of
Convera. Using tools such as Organik to extract tacit
knowledge can help stem this loss of information.
Atofina, the petrochemical branch of merged
Total, Fina and Elf, has deployed a bilingual version of
Organik across its US and European research and
development departments. It operates simultaneously in
English and French, allowing users to find people and
expertise and ask questions in either language,
surpassing linguistic and cultural differences normally
experienced when employees operate from disparate
locations. The first phase of this deployment is
currently rolling out in France, Belgium and the US to
650 employees. The rollout to a much larger user base
will take place later this year.
The
move towards multilingual functionality is a growing one
according to IDC. "Multi-language capabilities are
becoming increasingly important as organisations focus
on global expansion," said Greg Dyer, IDC's senior
research analyst for KM services. "While some
organisations have declared English their common
language, the ability of users to interact in local
languages will enhance the user experience and increase
buy-in."
The
need for multi-language applications has been noticed by
other suppliers. "One of the key areas in which Convera
is noticing this demand has been in multiple language
searching," says Convera's Stephen Cross. "As more
companies merge and their knowledge repositories grow,
so the number of languages that a repository contains
will also grow." Convera offers cross-lingual searching,
which is the ability to search multiple languages
simultaneously as opposed to one at a time.
Procurement Tools
The
use of electronic forms and online information is
another way that the oil and gas industry gathers and
communicates information and streamlines its processes,
especially in the procurement of complex services.
Previously the plans for a project would be drawn out
and paper copies passed out to subcontractors. There
could be as many as five or six layers of contractors
beneath prime contractor and paper plans and drawings
could be passed up and down through all these layers. As
amendments and suggestions were made, more drawings were
produced and distributed.
"With large documents shipping backwards and
forwards between engineering departments, you can't
afford to run a dialog with more than a very small
number of suppliers because of the overhead," says
Oracle's Burnett. "There are always clarifications and
modifications through that process and that's where the
cost savings come in."
By
putting the information on a relatively simple web-based
'design and procurement' portal you can work with more
suppliers, with obvious economic benefits. Houston,
Texas applications service provider Wellogix' Workflow
Navigator allows operators to specify details down to
individual hole sections in each well and to share
access with other team members working in remote
locations on a single product. Team members are given
different levels of access to the project. Instead of
sending our paper drawings, operators can e-mail details
or refer contractors to a URL.
Another advantage of the portal approach is that
it allows the smallest of operators to be included in
the process too. Even in a sophisticated industry like
the upstream oil industry, small organisations that
might be excellent at machining valve parts may not have
sophisticated IT. But they all have PCs and can all
access the Internet. "It's much easier to put in
information via that portal than not to, certainly much
easier than paper," says Burnett.
Workflow
Once
the complex services have been agreed and procured, they
still have to be managed. The very nature of the
upstream business means that frequently the services
cannot proceed as planned and quantities of materials
used or time spent can often exceed what was ordered.
For example, although a contractor is awarded the job of
doing a particular job on a particular day, a lot of
things could happen. There could be a blow-out, or more
pressure than anticipated which could mean that the job
could take longer. Once the job is over, there has to be
some way of resolving the invoiced costs against the
budgeted costs.
For
example, if a job was going to be $20,000 and the
invoice comes in at $30,000, a red flag goes up - why is
it now $30,000? "People are saying 'I get 40,000 of
these invoices every month and it takes me a long time
to process them because I have to follow who signed
where, when this happened, and things like that'," says
Wellogix' chief knowledge officer Bill Chikirivao.
Wellogix has introduced a paperless system called
eFieldTickets that provides an effective tool for
reconciling invoices with purchase orders. "If you have
an electronic trail you can see that this service was
done on this particular day, who was there, and what the
particular parameters were," says Chikirivao. "You can
also see why it changed and why, when they said they
were going to spend two days, they actually spent four
days. It begins to merge and make sense."
Oil
companies also build up their knowledge of their
operations by creating 'well files'. All information on
operational events, each day's activities, is captured
on operational reports that go into the well file. The
companies analyse these reports to improve processes,
reduce costs, and reduce the risk of hazardous events
during an operation. However, since this documentation
is exceptionally data intensive, analysing these files
is extremely time consuming and can hamper oil companies
making the right decisions. Wellogix has developed an
electronic version of the well file where engineers can
enter information into templates that can then be saved
into a virtual well file.
Data Mining
The
next logical step in applying KM techniques is to put
all the information gathered so far, information from
procurement, operational data and financial data, into a
repository. Once there, it can be used to produce
operation reports on a daily basis, or be used to help
calculate costs and parameters for other similar wells.
"The more data you accumulate, the more data you can do
analytics on, the more value that you can build into the
system. So the system actually gains value with time,"
says Bill Chikirivao.
One
problem that Wellogix came across in doing this was that
the data is not actually held in a common database.
"What you have is a lot of data in multiple formats, on
heterogeneous systems," says Chikirivao. To get around
this problem, they tag the data using WellXML.
WellXML is a specific subset of XML that allows
companies to transfer information without having to
reformat the data for use by other computers. By using
WellXML tag sets, service providers and operators can
instantly and correctly interpret and use each other's
data without spending long hours duplicating data entry.
"WellXML allows us to combine the financial data,
the procurement data and the operational data into a
repository, or repository metadata, that allows us to do
analytics on the data."
"It
used to said that there were three factors in production
- land, labour and capital," says Oracle's Time Burnett.
"Land, labour, capital and knowledge are pretty well
accepted as being a fairer representation of where
organisations can get or extract shareholder
value."
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