The leaps and bounds by which the IT industry has expanded has also affected the growth of another giant industry that mints money from barrels - the multi-million dollar oil and gas industry. We take a closer look at the relationship between IT and the fluid the world calls 'black gold'.
Historically, oil has affected almost everything from world politics and economies, to lifestyles. But oil has become an increasingly expensive commodity today, with prices spiralling upwards, as the supply surges southward and the demand northward. Needless to say, oil and gas companies have their hands full in trying to cope with this situation. And helping them cope and even enhance productivity, is IT. Â
Big Blue to the rescue
The company that the world knows as Big Blue is offering a number of solutions to the oil and energy sector. To begin with, the IBM PowerXCell 8i processor, originally developed for next-generation gaming consoles, is today powering the IBM BladeCenter QS22 supercomputers, which helps the industry to search oil fields much faster than existing technology.
A sophisticated imaging technology known as Reverse Time Migration (RTM) is used by Repsol, one of the 10 major private oil companies in the world, and the Barcelona Supercomputing Center (BSC) for oil exploration. RTM is, however, limited by its processing speed. Here, the IBM PowerXCell 8i has come to the rescue with its unparalleled speed for imaging algorithms. In fact, it has led to the development of a new class of seismic technology that enables locating oil reserves at 30,000 feet (of which 20,000 feet is below the water surface of 10,000 feet). Experts are foreseeing a revolution in exploration comparable to that in medical imaging technologies, such as MRIs, that today routinely provide detailed images from inside the body. Indeed, such simulations will help companies make significant headway in locating previously unknown energy reserves, which is the need of the hour.
Another area where IBM plays an active role is in its solution for an 'intelligent oilfield'. An intelligent oilfield is a collaborative environment for communication, data collection, reporting and monitoring, knowledge and information sharing. IBM offers an integrated approach that combines five key components for an intelligent oilfield (see box).
In the IBM executive brief, in a document titled 'The intelligent oilfield: Meeting the challenges of today's oil and gas exploration and production industry', there is a paragraph that sums up the role of technology in making an efficient oilfield. It says: "Innovations in various technologies are helping people make the intelligent oilfield a reality. For example, massive amounts of sensor data are being delivered to skilled people who then remotely search the data, convert it to usable knowledge and use it via advanced visualisation technology, avoiding cumbersome data stores and transmission by allowing raw data to remain at the source. This helps analysts automatically detect complex data patterns/problems such as sand production in wells, so the right person can be alerted to initiate a response before a problem occurs. Visualisation, modelling and analytics make it easier for decision makers to understand a wealth of complex information, which can lead to improved oil and gas reservoir management."
IBM also offers SAP and RFID solutions for petroleum and energy companies. Companies like HP are also trying to offer such viable solutions.
A ray of 'Sun-shine'
Data management is an important task for oil companies. A normal working day might produce more than a terabyte of data, and the amount is increasing exponentially. Here is where Sun Microsystems comes in with its Storage Area Network (SAN) architecture data management solution. It provides a comprehensive set of products and services that allow consolidation of storage resources on the network for better and more cost-effective management of data growth.
Another offering from Sun is its Sun StorEdge Performance Suite and StorEdge Utilization Suite software. These allow for automatic streaming of data to tape devices at fully rated device speeds, eliminating the need for traditional 'batch mode' back-up, thus increasing the quality of storage services. Additionally, costs are lowered because fewer hardware, software, and manual system administrators are required.
One must note that most storage networks in the oil and gas industry are highly heterogeneous, and need software/hardware solutions that can handle data on these.
Data, and yet more data
Today, data collection, its streaming to the right sources, and its conversion into usable knowledge is not 'just another task' in the oil industry. Millions of dollars go down the drain if the implementation of apparatus or drilling happens at sites which are wrongly identified to hold oil. Data management and analysis thus stands out as the single most important task in the oil industry. It is also highly necessary in light of the significant growth in the volume of seismic data after the introduction of 3D and now 4D.
Constant endeavours are on to work on the data aspect of oil mining. For example, in Norway, the oil companies and the Norwegian Petroleum Directorate (NPD) implemented a GeoBank initiative with IBM's Petrobank Technology. The aim was to establish a common database for the industry, ensuring minimum duplication of stored data, and rapid and efficient data access and data trade. Of course, the other focus was on cost saving. It was a state-of-the-art solution for raw exploration data, was online, multi-client and scalable - the reason why it was used in many locations all over the world.
A need to communicate
Communication and computation power have increased like never before. And with the multi-location work environment today, along with data management, data transfer is important for the oil industry. Communication technologies have powered many oil exploration projects, especially real-time online ones. With most well operations being online today, these are executed from an operation centre on shore. There has to be constant and consistent access to all operation information, especially because directions change on the fly and because of the huge data volumes involved. Sophisticated IT solutions for system control, telemetry, and real-time communication have enabled oil companies to make rapid decisions in real time from either the drilling location or remotely. And now, with better and more affordable communication technologies cropping up, the oil industry is set to make significant savings.
Better communication methods also help in detection of oil reserves via satellites. An example is that of the Satellite Imaging Corporation, which offers satellite imagery of remote and unexplored locations. The company's technology offers customised image processing services for its clients. It includes giving 3D visuals, detecting seismic fault lines, and sensing rock formations, among other things. Such digital imagery is not only cost-effective, it also reduces the risk involved in actual exploration.
The 'wave' effect
Many oil-rich regions are located in politically volatile regions of the world. Hence, having the
|he Indian scenario
"After a period of relatively robust increases from 2002 to early 2004, India's oil product demand growth has slowed since the second half of 2004. However, growth is projected to accelerate over the coming years, India's oil demand in 2011 is forecast to grow by 4 per cent if the economy maintains an annual growth of 6-7 per cent. The demand for road transport fuels, including gasoline and diesel, should expand by some 5.3 per cent over 2006-2011, but the demand for fuel oil will remain stagnant...India.s demand however is much less compared to China's. India's economy is also less oriented towards energy-intensive manufacturing than is the case for China. India's impact on global oil demand growth will therefore be more limited over the forecast period." This is sourced from an International Energy Agency (IEA) Medium Term Report that forecasts demand-supply needs of oil in the world till 2011. There are also additional reports of oil sites becoming scarce in India.
As of now there is oil exploration and refining activity going on in many areas like Gujarat, Rajasthan, Andhra Pradesh, and the Bay of Bengal belt. And IT is obviously playing a substantial role. Drilling Engineering Officer, A. Mohammed of the Gujarat State Petroleum Corporation (GSPC), who is currently at the Krishna-Godavari (KG) basin, reveals: "Information technology has become the backbone of every industry known to man, be it a medical store or a vegetable retail store. IT and very advanced software are used in the oil industry for simulations, real-time data transfer, and many industry related operations. Developments in the IT industry have helped us in applying new technologies and using advanced systems in our constant search for oil and gas resources, even in harsh and extreme environments."
The glaring fact, however, is that not many Indian companies have their own software manufacturing divisions, unlike their Western counterparts. Most IT solutions are bought from external providers, which are customised according to needs. But an Indian Schlumberger field engineer (on conditions of anonymity) says, "Even though oil companies may not create their patented IT solutions, all of them, including Indian ones, have separate IT departments which handle the functioning on exploration sites. This implies that on-field engineers merely need to work on the machines and hardware solutions that are provided. Thanks to IT, work can be as simple as using a joystick while sitting in a chair. Of course, it requires our cautious judgments to handle the criticality and complexity that persists in oil exploration, refining and other processes. But IT personnel are almost always on hand to help."
maximum information possible about a region, from geological data to local politics, is vital for oil companies, before they invest millions of dollars for a new exploration project.
London-based Wave Technology has adopted a new IT innovation, Geographical Information Systems (GIS), in order to increase the information that companies can access through its digital mapping products. The group is leading the way in GIS reporting in oil-rich regions throughout the world. In the words of its managing director, Wyn Roberts, "Many industries already use GIS, but for some reason, the oil industry had been slow to jump on board. The information reports that oil exploration companies generally use are usually provided in hard copy and often span several volumes of printed material. Basically, 80 per cent of all this information can be related to a map. A GIS report takes all the different information that an oil company needs, geographical and other data starting from oil production to local politics, and from local taxes to population figures, and puts this information in one place: on a computer screen. On the front end, what you see is a map, but [with GIS] this map has a database behind it. This means that you can click on any item on the map, say a road or a pipelineâ€”and all information relating to that item can be readily displayed.:
Wave's GIS reports thus offer complete data reports that, far from being dense and bulky, are interactive and easily accessible.
IT is playing an increasingly important role in the oil industry and seems set to do so even more in the coming years. Workers are being trained using simulator tools. Web-based software is allowing companies to locate, consult, and utilise experts anywhere in the world and make global collaboration a reality. Solutions such as PowerSource and eSearch are helping document minute-by-minute account of on-site oil exploration process, result reports, well data, and even offer online archival services. Many PC-based applications are also aiding the oil industry, such as the Kingdom Suite and Geographix. Visualisation too has gone a step forward with better imaging techniques coupled with analysis and data interpretation tools, such as Magic Earth and GeoFrames. Sitting in one part of the world, one can visualise potential oil wells in another part and analyse whether their physical exploration is worth investing in. An article on MSNBC titled, "Can technology help find oil fast enough?" aptly describes the scenario in these words: "Today, with a click of a mouse you can travel halfway around the world and explore massive geologic formations, grab a 20 square kilometre block of rock on a site, and then zoom in to see what it holds. The journey is played out on an IMAX-like computer screen powered by a battery of high-end computers and graphics software that would make your average video gamer drool."
According to an International Energy Agency (IEA) Medium Term Oil Market Report, which provides a global overview of demand and supply trends through to 2011: "...steel prices have gained 50 per cent since the mid-1990s. Drilling day rates have been rising by at least 10-15 per cent per year, continuing into 2006, with deepwater facilities in particularly tight supply. Day rates for semi-submersible facilities have at times attained record levels nearing $550-600,000. There is a general perception that tightness in drilling facilities will persist for some time...Advances in information technology have provided alternatives to the drill bit as a way of locating and appraising incremental reserves, at least in the first instance. Ultimately, there is no alternative to companies going out and drilling to verify the viability of discoveries. However, in the initial phases, less capital-intensive technologies can be employed. Despite this, exploration seems to have become the high cost, high risk 'poor relation' in the upstream investment portfolio..."
The situation seems grim. But IT is trying its bit to help the oil and gas industry. Of course, costs remain a major issue as even software development and other IT solutions do not come cheap. But perhaps these are worth it, given the losses that could occur in their absence.