By Alex Code
This blog post was originally written in 2019 and has been updated for 2020.
Technology in our personal lives has been taking leaps and bounds over the past decade. But for small businesses this technological acceleration has been hard to keep up with. Today’s consumers often have better tools for managing their personal lives than many small businesses do for managing their core operations.
With so many constantly evolving options, it’s hard to know what to focus on first when it comes to modernizing your operations:
What technology should your oil and gas company be using in 2020?
How do you reap the most benefits while operating on a far-less-than-Chevron budget?
What functionality delivers the most value per dollar cost of the technology?
Small businesses need to maximize every dollar and technology can be very expensive. This means that standard articles like “How to employ BIG DATA in your operations” really aren’t a good fit. Big data, AI, and machine learning are all expensive and don’t get at the core needs of a smaller business.
Instead, smaller operators are best served focusing on the places where the cost:benefit ratio delivers maximum value at the lowest cost. The good news is that the most tried and true technologies have been around awhile and their costs have fallen substantially over time.
On top of that, cloud services like Azure, Amazon Web Services and Google Cloud can provide enterprise-level security and cloud accessibility without the need for businesses to manage servers themselves and at a fraction of what such services used to cost.
When it comes to investments in technology, the best place to start will depend on your specific circumstances. However, most small- to mid-size oil and gas companies describe the following needs:
Make information (well records, production data, maps, etc.) easier to find
Ensure data you’re collecting is high quality
Make it easier to analyze and glean actionable insights from that data
Ensure you can meet compliance needs (State, Federal and investor)
Fulfilling these needs requires a few fundamental technologies that can serve as a digital backbone to your organization. The aim of this article is to give you a brief overview of the three most cost-effective technologies small- to mid-sized oil and gas companies should be using in 2020 and to give you an idea for how to get started with each.
Technology #1 - A Modern, Cloud-Based Database
Oil and gas companies collect lots of information. Some of that information helps you improve production and some is simply required by law or by contract. In either scenario, having information easy to find and retrieve makes your organization more efficient and cuts down on the part of the job most people don’t like – paperwork. Centralizing your data storage into one accessible database is the first step toward oil-field digitization.
Full-featured databases come in multiple forms, but the most common are SQL Server, PostgreSQL, MySQL, and Oracle. A full-featured database can handle all of your production information, store well construction information, and facility attributes along with associated location details. As your company grows, these databases can expand to store huge record sets and records can be easily imported and exported from them as your company acquires or sells assets.
Not only can these kinds of databases centralize nearly limitless amounts of information, but they also makes that information easily accessible to multiple people in the organization at the same time with built-in backup functionality. This provides a single, secure source of “truth” for your organization that all employees can access and understand.
Many companies get by using Excel spreadsheets and/or Microsoft Access for a while. The problem with these solutions is that they are single-file solutions. Single files can easily be moved, corrupted or deleted. Excel in particular can’t integrate multiple datasets and has size/performance limitations – the more data you store there the slower and more unwieldy the dataset becomes. The data within these files can also be easily changed or deleted by anyone who has access to the file. Microsoft Access provides some better controls but suffers many of the same problems.
If your company is small and currently utilizes Excel and/or Access, there are a few things you can do to improve and future-proof your data management systems.
Start by converting your Access databases to use SQL Server as a database instead of using Access’s file-based data storage (more info on this here). You will still have the same Access-based interface but benefit from SQL Server’s features to handle multiple users at the same time, gain more control over who can edit data, and to automate backups. Microsoft makes this easy to do through a wizard interface and SQL Server Express can be used for free on databases with less than 10 GB of data - plenty for most small companies. (We’ll be posting an article on how to migrate your Access database to SQL Server in the near future – sign up for our newsletter to get it delivered to your inbox.)
Then follow up by starting routine back-ups in SQL Server. These should be set up to be stored in a cloud drive or off-site location. For a simple solution, you can look to Microsoft OneDrive or G Suite’s Backup and Sync solutions. Once this is set up, back-ups can occur regularly without you needing to intervene. Then you can rest assured that should fire or theft happen in your office, your data won’t be lost with the hardware.
If you don’t already have a database, want to add more functionality to a preexisting database, or hit limitations when trying to analyze your existing data, consider hiring some professional help from someone who has experience in oil and gas data management. Data management is a profession in its own right because it requires thinking about how to structure data, model it, and make sure it will be flexible as your operations grow while serving current needs.
If you’re on a budget and want to create your own database, consider connecting with the Professional Petroleum Data Management Association (PPDM). They provide guidance and training on managing oil and gas data.
But your database is only as useful as the accuracy of the data stored in it which brings us to technology #2...
Technology #2 - Customized Application Interface
Oil and gas data is used to make deals worth millions of dollars. That means it’s of vital importance that your data is the highest quality possible. In other words, you can trust that it’s accurate. When even small decisions have thousands of dollars on the line, organizations don’t want to find out that they made decisions on typos or data that either wasn’t entered at all or was entered incorrectly.
That’s why it’s valuable to use software interfaces that are customized to your industry’s needs. Some information is nice to have and other information is absolutely critical. How do you make sure your team knows what information is required and what is optional? Data quality can be addressed through training, but the safer bet is to make human error virtually impossible with intuitive applications catered to your organization’s specific needs. Adding information requirements into an application ensures that the information the organization is using to make big decisions is complete and accurate.
What exactly do I mean by “customized application interface"? Most applications you purchase or subscribe to will have their own user interfaces that control data quality. These generally come as form screens with data fields that have rules applied to them. The most common example of this is a “Required” field, which means that the user must fill out that field before saving the form. Additional rules might be that a field can only take number values or that a date entered must be past or present but cannot be in the future.
When analyzing your software options, data quality controls are an important consideration. Depending on your specific business needs and budget, it may be hard to find suitable software “out of the box.” It may be worth building or customizing your own data collection application where you can design your own screens and define the rules that determine data quality standards yourself. The user interface can be desktop, web, mobile, or (ideally) cross-platform but either way it should integrate with your database and feed it clean information that provides your organization with the information it needs.
With the distributed nature of oil and gas teams, it makes sense for organizations to focus on web and mobile technologies today. The cost of operating them is a little higher, but they bring the benefit of letting employees collect and view information from anywhere – in the field, in the office, or at home if they come down with a cold and work from home. This not only saves time for travel and speeds up decision-making, but also allows your organization to provide more workplace flexibility which reduces time lost to illness and can improve employee retention in today’s highly competitive labor market.
A customized interface doesn’t have to be difficult or expensive to create but it does take time and attention. Small organizations can accomplish this through Microsoft Access, which can be used to build simple application interfaces that will send data to your SQL Server database. This step by itself doesn’t provide remote access unless you deploy the database in a cloud environment. However, it is the lowest cost point of entry.
In Access, fields can be marked as required in the form building wizard and you can even apply other rules to data fields. It’s worth thinking through what it means to have good information and what rules might be useful. For example, a good rule for production records is to not allow a date in the future to be entered. A more complex rule could be that production can’t be reported for a shut-in well. This would force your team to update both the well records and production records regularly. In general, start by keeping your rules simple and then progress to applying more rules to fields where you see bad data coming in.
If you don’t want to build your own interface and have some funds, look into one of the cloud solutions available or contact a software development company. Building your own solution can end up costing you more time (and therefore money) than working with the right software company. Pre-built solutions, like Bensis, are cheaper to get running than paying for custom software because the upfront cost has been spread over many accounts. For these you’ll have to adapt some of your business processes but they can import your data (sometimes for a fee) and get your team set up quickly. Hiring a software development contractor to build you a custom application costs more upfront, but you have the flexibility to match the software to your exact processes and needs. Which one costs more depends on the complexity of your needs, but custom software always comes with a higher up-front cost. Expect to pay $50k or more for anything but the simplest of custom built applications.
Technology #3 - Geographic Information Systems (GIS)
A Geographic Information System is simply a system that adds location to your data, allowing you to put information into the context of the real world. GIS has lots of fancy statistical tools and applications, but the most immediately useful part of GIS for oil and gas companies is the ability to visualize information on a map. GIS can help oil and gas companies store key well information and then use that information to make production decisions.
Do you know where all of your assets (wells, facilities, pipelines, leases, etc.) are? The answer to this basic question should always be yes. Many times, someone in the company knows, but what happens if that person leaves the company or becomes unavailable for some other reason? It’s crucial for operators to know where their assets are and to be able to share that information easily. While not all state agencies require detailed location information on all assets, more and more will be requiring more detailed information in the coming years. Add to that the fact that the oil and gas industry has an aging workforce and newer workers tend to move around more, and it becomes clear that companies need to shift from having information belong to individual employees to having the information belong to the business as a whole. The only way to achieve this is to have stored records of the information, and when it comes to storing well location data, GIS is the go-to solution.
But GIS also has more immediate commercial benefits for oil and gas beyond business continuity and regulatory compliance. As more and more oil and gas fields have lived out their primary recovery lifecycle, companies are starting to look to secondary recovery. GIS analysis of your data, combined with public data, can highlight fields which might present good secondary recovery opportunities. GIS can combine and visualize field information such as cumulative production, oil gravity, and current production rates. This can help you easily spot patterns and hotspots.
The nice thing is that GIS doesn’t have to cost a lot. Esri’s ArcGIS is the most well-known GIS solution as it is taught in many universities. It provides a great deal of features and functions but also comes with a big price tag. However, there are lesser-known, but equally powerful open source solutions (such as QGIS) that are free and offer all of the functionality most companies need. At Line 45 we use both systems on a regular basis and have defaulted to QGIS for most of our work.
If you’ve set up a database (see technology #1 above), you can pull information directly from the database into your GIS and see what assets have locations and which do not. If you’re storing information on the age of infrastructure or the last time someone visited a well for maintenance, you can map these things and visualize them with colors and icons so you can quickly see which areas need more attention.
We’ll also be publishing a more in-depth guide on how oil and gas companies can use GIS to streamline their operations. If you want to learn more, sign up for the Line 45 Data Newsletter below to be notified when the guide is available.
Closing thoughts
The technologies outlined in this article work together to build a robust data system upon which decisions can be made and regulatory compliance verified. Data collection is useless unless you have a secure, well-designed database that makes the data accessible and usable. A well-designed database is useless unless it is populated via data collection forms that ensure complete and accurate data points. GIS visualization and analysis is useless unless you have a high-quality database that allows you to easily pipe in the information you need.
To get started, spend some time doing an honest assessment of yourself and your organization. Do you have the skills and time to handle some or all of these pieces? If not, work with someone who does. Create a list of the goals you want to achieve and the data you need to make better decisions. Spend some time looking at your budget and where technology might be able to improve profitability (i.e. pay for itself), mitigate risk, or just plain make work easier for you and your team. Use assessment to refine and prioritize your goals. By first getting clear about your desired outcomes and then evaluating your technology options, you’ll be able to help your company realize the benefits of digitization.
If you read this and don’t know where to start or want help with your technology upgrade, you can email us at contact@line-45.com or call us at (833)254-6345.
