Internet Technology's Pivotal Role in Innovating the Oil and Gas Industry

Hob Hairston, SVP of Business Technology, Mansfield Oil Company

Hob Hairston, SVP of Business Technology, Mansfield Oil Company

As a technology professional for the last two decades within the energy sector, I have seen many industry changes related to the use of technology. Early in my career, I had the opportunity to work on cutting edge solutions that were unfortunately too early for broad adoption. As the internet became a part of our everyday lives and various disruptive technologies emerged, the rate of change began increasing at dizzying pace. Today’s challenge is figuring out how to keep up and innovate faster.

IoT

In 1998, I was working for a consulting firm as a technology analyst. On one particular project, I had to develop integration with utility plant software so users could view the status of instrumentation on the web in real time. Engineers could monitor temperature gauges, pressure valves, leak detection devices, and other instruments from anywhere in the world. This was a major departure from the past, which often required boots on the ground to monitor the plant equipment. At the time, clients were fairly skeptical about trusting the software and were also unsure how to handle the inevitable impact on the workforce that this kind of capability would have.

A decade later, millions of energy control systems and other equipment were connected to the internet and became the expectation for any new projects. Today, we do everything on the web and the big talk is about IoT, where more than 200 billion devices are expected to be connected to the internet by 2020. Today, many consulting firms and technology vendors offer solutions and services designed to connect offshore rigs, refineries, power plants, pipelines, and other systems to the internet.

Cloud

In 2003, I was working for a SaaS provider that focused on procurement solutions for motor fuels used primarily by retail and fleet operators. Interestingly, “SaaS” and the broader term “cloud” were not even in use at the time. I recall being in a conference room while demoing our software for a global oil company that operated thousands of gas stations. At one point in the meeting, the IT lead from the oil company spoke up and said, “There is no way I will let you control my data and become the 800 pound gorilla.” Seeing how our small startup of less than 50 people was struggling to survive, it was an ironic comment. Today, cloud has moved beyond hype and has become commonplace amongst technology and business practitioners. In our company, we are moving as much to the cloud as possible. Today we leverage email, office applications, and business intelligence in the cloud, along with several other SaaS solutions for managing internal or external content management, travel expenses, employee performance, learning, and payroll. On the horizon is cloud software that uses machine learning to map our organization much like a living organism so that we better understand relationships, employee satisfaction, intellectual property, culture, and productivity, among other things.

Mobile

In 2006, I belonged to a team that decided to build a mobile application for drivers who delivered fuel to retail and commercial sites. We built the application on a Compaq iPaq and knew we were going to revolutionize downstream oil and gas. To our dismay, prospective customers laughed at us when we demoed the unit. They said there was no way a driver would ever be able to use such a device and said it was not rugged enough for the field.

Today, most technology vendors catering to haulers provide mobile options and some of them have completely moved away from traditional onboard systems, opting instead for mainstream tablets and wearable technology. And, because most people are accustomed to using some kind of smart device, fleet businesses are beginning to lean toward these options instead of the traditional solutions. Interestingly, some of those same companies that laughed at me and my colleagues a decade ago are using these solutions today.

Social

With disruptive technologies, such as cloud, mobile, social media and smart devices IoT becoming more pervasive, the expectation for the time it takes to get information is much shorter. At some point in the near future, the old ways of exchanging information will no longer be adequate. Some companies within the energy sector are beginning to look at social media as a model for how to do business. Instead of social networks, they are building B2B or B2C networks.

One such network delivers an industry backbone that provides authentication and authorization, services based integration, master data management and a unique many-to-many, multi-tenancy model that allows partners to share information in real-time. Imagine deliveries being confirmed through a mobile device and immediately provided to all counterparties without complex integration or delays in data transfer. One can consider applying big data analytics to aggregated supply chain information in order to predict supply disruptions before they happen. Or, imagine collaborators agreeing to share cost information in a “social” manner, obfuscating who the costs belong to, so that real-time buying benchmarks can be evaluated. The opportunities are many.

Open Innovation

So how do companies keep up? Many companies have begun to see the power of harnessing innovative resources beyond the borders of the enterprise and the risk of not pursuing such opportunities. In the oil and gas industry, companies such as BP, Chevron, and Shell have developed innovation networks that bring together customers, partners, technology vendors, venture capitalists, universities and others to solve problems. Statoil, an upstream energy company, has developed its own open innovation community and platform for tackling challenges associated with wind energy, subsea production, and inspection of offshore equipment, among other things. Schlumberger, the world’s largest oilfield services company, has developed an ecosystem of software developers and a development framework to drive collaboration on new solutions for exploration and production operations.

Conclusion

Without a doubt, the rate of change in technology is daunting and energy companies are struggling with how to deal with it. I have heard business leaders say they want to be “leading edge” and not “bleeding edge.” The problem is that the line between these two options is beginning to blur as the pace increases. The days of thinking we have years or months to make a technology decision are long gone.

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