EnergyFactor By ExxonMobil | Pespectives has a new home

Big data in the oil patch

One of the more intriguing sections in the McKinsey & Company “game changer” study I wrote about recently is the section on harnessing digital information to raise productivity.

“In the digital age,” the study notes, “the world is awash in data, gleaned from sensors, transactions, GPS trackers, medical and legal records, videos, and much more.” Furthermore, “thanks to advances in computing power and the development of software that can extract useful information, this sea of data can now be transformed into insights that provide economic and societal benefits.”

McKinsey’s report looks closely at the potential of “big data” to raise U.S. economic performance, particularly with application to the retail, manufacturing, health care, and government-service sectors.

The group estimates that the widespread use of big data and analytics could produce up to $610 billion in annual productivity gains and cost savings. In manufacturing, they estimate these productivity gains could translate into $325 billion in additional annual GDP by 2020.

Those are striking numbers, but what jumped out at me was big data’s application for the leading-edge technologies of the oil and gas industry.

Someone who understands this is Manhattan Institute energy expert Mark Mills, who recently touched on the subject in a RealClearEnergy article noting the demise of the peak-oil blog The Oil Drum.

The piece is worth reading as an obituary for the theory of peak oil in this era of soaring domestic production. But Mills’ take on data and technology shouldn’t be missed either:

While hydraulic fracturing (“fracking”) shale is often claimed as the proximate cause of the energy revolution, the enabler has been smart drilling. Fracking has been around for decades, as has horizontal drilling. The new abundance comes from knowing where to drill, (dry wells are a thing of the past), where to steer in the subsurface, and how to manage production in real time. Subsurface imaging, sensors and analytics are revolutionary. The hydrocarbon future is like everything else now, all about information technology. As Bill Gates recently said: “The one thing that is different today [in energy] is software, which changes the game.” It sure does. And innovation is bottomless too.

Big data has come to the oil fields, and not just for Big Oil but for the tens of thousands of small and mid-sized oil and gas companies that have been responsible for the American hydrocarbon resurgence.

A smart and insightful piece, though I will point out that dry holes are unfortunately not a thing of the past, particularly in the exploration phase when we are drilling in untested areas. However, there is no doubt the industry has developed exciting high-technology solutions that dramatically improve drilling results and our ability to understand what’s going on miles below the ground.

ExxonMobil has pioneered many such technological advances, like advanced seismic data collection and analysis to enable development of sophisticated subsurface modeling, as well as record-setting extended-reach drilling that increases energy production while reducing our environmental footprint.

Still, Mills’ comments offer a good flavor of just how our industry is capturing the energy opportunities the McKinsey study identifies.

Appreciating this fundamental role of innovation can help citizens and our elected leaders put in place sound energy policies that enable the long-term planning and investment that makes such revolutions possible.  And that is how we can all contribute to economic growth, job creation, and environmental protection in the decades ahead.

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