API Unlocking Value in Big Oil

Unlocking Value in Big Oil:

125 Years of European Influence and Innovation

Delfina [email protected]

© Veritas Total Solutions LLC, All Rights Reserved. Proprietary and Confidential.2

Content

Oil Industry Fundamentals

Technology Innovation

Digital Innovation

Human Innovation


We dominate the markets

Global 500 2016: 5 out of the top 10 are oil companies

2013: 6

2012: 7


And with a fraction of the employees


Prices Break at Every Segment

Exploration&

ProductionTransportation Refining

Petrochemical

Commercial

Retail

UPSTREAM MIDSTREAM DOWNSTREAM

Businesses inside of businesses

77% 23%23%

EBIT

“Integrated” oil company is a misnomer


Exploration&

Production

Siloed Mindset All the Way to the Edge

Behavior reflects operating philosophies

Explore Appraise Develop Produce Abandon

Well Planning & Execution

Production Optimization

Completions/ Development

Maintenance Management Functions


Nonetheless, our industry is the MOST exciting

RiskyVolatileSpeculativeDIFFICULT

SpindletopPerdido


Let’s put production domination into perspective:

OPEC: 43% Europeans: 40%


European innovation has been significant…

The first successful oil tanker, the Zoroaster,

designed by Ludvig Nobel of Sweden

introduced in 1878

Schlumberger recorded the first-

ever electrical resistivity well log in France in

1927

The first FPSO, Shell Castellon, was built in

Spain in 1977

The first use of a spar in the oil industry was

Brent Spar 1976 in the North Sea. Technip is

now the leading manufacturer out of Pori,

Finland


…and will continue to be critical

Well complexity continues to increase

• Drilling deeper wells in deeper water

• Drilling longer lateral and horizontal sections

• Drilling into higher pressure and temperature regimes

• Running heavier casing strings

Finding and development costs have risen more than 600% since 1997.

Technological innovations will only get us so far


European influence will be needed in other ways

MB

OE

Prod

uctio

n

2005 20202010

1 to 3%

Low-risk placesUS, North Sea, Australia

High-risk placesKazakhstan, Iraq, Angola, Libya


1990’s 1999 2001 2003 2005 2007 2009

Chaotic ERP Deployments

eBusiness Floods Market- Oil Industry

Resists

Y2K Distraction

COP Deploys First Onshore

Operations Center

Pockets of IO Experimentation

Shell Reserve Write Down

Norwegian Shelf Regional

Commitment to IO

IO Benchmarking Study:

•COP Ekofisk IO program #1 location•BP #1Corp Program •Statoil IO just starting

Meta-Process Transformation Top-of-

Mind for Oil Execs

Digital Oil Field Initiatives Emerge:HAL: Digital Oil FieldSLB: Realtime OperationsBP: Field of the FutureRDS: SmartfieldsCVX: iFields

Norwegian Shelf Emerges as THE Epicenter for IO

Statoil #1 Corporate Program

IO Progress in the

Middle East

Statoil Plans to Embed IO into Overall Operating

Model

1

3

2

4

5

6

European influence and innovation paved the way in the digital space


Ekofisk: Pioneers in Leveraging Information & Communication Technology

19 PlatformsAge: 45 years

50-70k Operations Onshore Collaboration Center


1990’s 1999 2001 2003 2005 2007 2009



Resists

Y2K Distraction


Operations Center




Commitment to IO




Mind for Oil Execs




IO Progress in the

Middle East


Model

1

3

2

4

5

6



Ormen Lange Gas Field is an example of global influence

North Sea deepwater field in Northern Norway

2 Exploration wells in 2003 drilled before development

5 Partners agree on ownership but do not report relative reserves booked

Only Statoil had a 3rd party auditor

*Source: Simmons & Company International


1990’s 1999 2001 2003 2005 2007 2009



Resists

Y2K Distraction


Operations Center




Commitment to IO




Mind for Oil Execs




IO Progress in the

Middle East


Model

1

3

2

4

5

6



The Fleeting Promise of Information and Communications Technologies

Billions of dollars have been spent by governments and companies in building IT infrastructure and deploying systems and “solutions”

Yet, less than 1% of the terabytes of data that is collected is actually used

The path forward is not scientific or operational. The answer is anthropological.

Industrial Anthropology: the study of human behaviors - both that of employees and customers of an organization, and the elements and

environment that impact people.


$

Time

Settle for MediocrityPockets of partial adoptionQuestionable resultsIT Led Project

Program, Assess, Build, Deploy

Cajole People & ProcessesSlow adoption at best

Traditional IO Approach

A lot more time and $ for a lot less value a lot later on


$

Time

Drive Organizational AlignmentAlign metrics & rewards, Distribute decision rightsEstablish Line of Sight / KPIsAddress control vs accountability

Invest in People & ProcessesUnderstand “Why”Break down the barriers that create functional silosBuild collaboration Identify & develop new capabilities

Apply Fit‐for‐Purpose Technology

Expanding the IO Capability Platform

You can get 70% of the way there with NO NEW TOOLS

Integrate, Improve & ControlDrive competency developmentFocus on knowledge captureBuild a continuous improvement culture


Good News / Bad News

Average Age of the Current Workforce


Search results for images of “oil drilling workers”

Our public image isn’t always pretty…


Search results for images of “Google workers”

…hurting our efforts to attract talent


The Tough Questions

Are we prepared to admit we need a new set of capabilities?

Are we prepared to embrace the concept of human innovation?

Are we prepared to take on a new workforce?

Our European counterparts have paved the way. Will we follow?

Unlocking Value in Big Oil:

125 Years of European Influence and Innovation

Delfina [email protected]

Documents

API Unlocking Value in Big Oil