Events like Macondo and San Bruno have got the oil and gas industry talking about situational awareness. According to M.R. Endsley in "Toward a Theory of Situation Awareness in Dynamic Systems" (Human Factors 37(1), 32--64, 1995), situation awareness -- also referred to as situational awareness -- is "the perception of elements in the environment within a volume of time and space, the comprehension of their meaning, and the projection of their status in the near future". Situational Awareness, long applied in the military, was the theme of "Best Practices for Oil and Gas" conference, sponsored by SAP. The conference provided an opportunity for SAP to present its product vision and connect the dots between mobility, big data and analytics, and cloud to the oil and gas industry. What most attendees went away with were an understanding of what is coming up in latest releases -- upstream operations performance analytics, asset management and operational risk management, finance - along with some practical ways to apply the offerings of SAP and the oil and gas ecosystem to immediate business problems.

One of the keynote speakers, Mario M. Coll, set the tone of the conference by presenting a highly comprehensive assessment of what an oil and gas company needs to do to support safety and environmental management. Safety starts with leadership and a culture of safety, clear accountability and responsibility, clear designation of authority, well defined safety and risk metrics. Training, safe work practices, advanced maintenance practices, pre-start-up reviews, emergency response and control, and standard operating procedures are essential. The lesson from Macondo is that contractors and partners are not exempted from safety. From an IT perspective, companies must maintain up-to-date asset information on critical equipment and having that accessible, the ability to assess risk before executing the operations and track near misses. According to Coll, it is an atmosphere now of "Sox for Ops". There is no one killer app, but multiple applications that can work together -- environmental health and safety, asset management, incident management, content and document management, and reporting and analytics. GIS technologies provide an intuitive view of data and geography. Workflow supports best practice business processes.

Here's a sampling of what we found most notable at the conference:

  • In-memory Analytics. The use of in-memory analytics to speed production allocations. SAP's UOM application has been mounted on SAP's HANA platform and has proven in a lab setting to increase the production allocation speed by 1000 times.
  • Participation of Customers in Development. The consortium of production revenue accounting (PRA) - made up of a group of oil and gas customers - is involved in the development cycle from specification to testing for PRA.
  • Operational Performance Management. This will be a new release in 2012 which promises to put production measurements and allocations together with asset data to give the user an opportunity to assess what needs to be done with the assets from an operations and maintenance standpoint to maximize production and minimize risk. It's a mouthful and we look forward to learning more about the use cases.
  • Lost Production Analysis. There was a demonstration on how in memory and business analytics might be used to analysis the root cause of lost production. As demos go, this was pretty nifty, especially given the speed from question to answer, all plotted and displayed. Planned and actual production data is plotted to view production loss over a 10 year period for 1000 gas wells. The hypothesis is that equipment failures may be at the root of production losses. Part failures have increased over time and are determined to be associated with fuel filters. One equipment model is found to be responsible for fuel filter failure. Then equipment models are associated with wells. Then the wells where the highest production is expected are plotted, along with expected revenues for those wells. A correlation is performed to target wells to work on. So this whole concept is nothing new. Oil companies have been doing analysis like this for years. The difference was that this was done in a matter of minutes. And it can be done on a tablet.
  • User Interfaces and Visualization. SAP continues to work towards developing more user friendly applications. It was clear from some of the presentations and conversations that acceptance by engineers in the field would be made easier by visualization. For example, one company is using Prometheus to enhance plant maintenance. The lost production analysis described above is for the visually oriented as well.
  • Cloud. An upstream company with projects in the Marcellus shale has implemented Hubwoo which is cloud procurement solution built on SAP. Procurement is a fairly generic function across industries, although oil and gas companies tend to procure more services than other industries. This company was working on a contract punch out system which directs suppliers to the contract to pick out authorized services when invoicing. It is interesting to think about how punch outs might change the relationship between owners and oil field services companies.

Do you agree that the oil and gas industry needs more venues like Best Practices for Oil and Gas to discuss business applications? As always, your thoughts are welcome.